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Healthcare expenses for hospital employees increase in 2020, survey shows

Last year, executives said their first priority was to attract and retain talent; this year they are most concerned about mitigating rising costs.

Healthcare expenses are increasing for hospital employees, according to Aon's 2020 Benefits Survey of Hospitals.

This year, expenses per hospital employee per year grew to $14,466, up 4.2% from $13,881 in 2019. Prices ranged from about $7,700 to $23,600 from the hospital with the lowest claims to the one with the highest.

Each month, the average hospital paid about $500 per covered member for medical claims.

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The rising costs of medical expenses are reflected in what the survey respondents said was their top benefits concern. In 2019, health executives said their number one priority was to attract and retain talent. In 2020 that changed, with executives reporting they were most concerned about mitigating rising costs for the employer.

Health system executives aren't just concerned about what these rising costs mean for them. The report showed that health systems are about equally concerned for the hospital (91%) as they are for the employees (88%).

The survey included more than 2.2 million health system employees representing more than 1,000 U.S. hospitals. It was conducted from mid-February to the beginning of June.

WHAT'S THE IMPACT?

In an effort to mitigate what the employee has to pay, 56% of hospitals said they aim to pay at least 80% of their employees' healthcare costs.

Further, the majority (93%) offer wellbeing programs or services to their employees and 77% have a comprehensive program that includes financial and emotional wellbeing.

Hospitals are also making efforts to accommodate low-wage employees, with 59% lowering employee contributions and 29% creating lower out-of-pocket cost shares.

THE LARGER TREND

Healthcare costs are not a new concern. Last year, 93% of employers said healthcare affordability was their top concern in a Willis Towers Watson survey.

That same survey showed that nearly two-thirds of employers thought healthcare affordability was the most difficult challenge.

Since the survey was taken, hospital budgets have been stretched thinner because of the COVID-19 pandemic. With operating margins falling 96% in July, hospitals are struggling to cover many of their expenses.

All hope is not lost for hospitals to recover financially, however. Stakeholders have developed plans that hospitals can use to model their recovery. Others predict an uptick in M&A activity in 2021 as smaller health systems seek out partnerships with larger, more financially-sound systems.