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Two area hospital companies saw a significant increase in labor costs, a hit in profits and a drop in stock prices surrounding their first quarter results. Health care workforce recruitment and retention were themes in both HCA Healthcare’s and Community Health Systems’ recent first quarter conference calls. 

For CHS, contract labor expenses were up to $190 million, compared to $70 million in the first quarter of 2021 and $140 million in the fourth quarter of 2021. Overall, the company reported a net loss of $1 million in the first quarter, and its stock price dropped nearly 5 percent on the day of the conference call Thursday. With the Delta and Omicron waves of COVID-19 in the previous two quarters, rates for contract workers remained elevated, but the organization expects usage and rates for contract labor to decline again as the year goes on. 

“The contract labor was higher than we anticipated,” said Tim Hingtgen, CEO of CHS. “Unlike prior COVID waves where we saw contract labor expenses moderate relatively quickly, the expense remained elevated throughout the first quarter. Contract labor was necessary as we upheld our commitment to provide essential health care services in the communities we serve.” 

HCA sang a similar tune on its conference call last week. The company’s stock dropped nearly 20 percent after announcing its higher-than-expected labor costs, which hurt the company’s profits. HCA is budgeting for higher costs of contract labor for the remainder of the year, as the company anticipates it taking longer than previously forecasted to normalize. 

While the company did not give exact numbers, CEO Sam Hazen estimated that the company is spending double what it did in 2019 on contract labor. HCA has $600 million less in profits this quarter, with more than three quarters of that figure a result of higher labor spending. 

“I do believe over time we can recover some of that lost margin as we continue to appropriately align our workforce with a more permanent workforce or more efficient workforce coming from the contract labor category,” Hazen said on the call. 

HCA is looking to strengthen the health care workforce on the front end. The company announced its intention to donate $1.5 million to expand faculty and offer scholarships at Florida International University’s nursing college. This is in an effort to “increase enrollment and help address the national nursing shortage,” a press release noted.  

Earlier this week, software company HealthStream also discussed its intentions to preserve the health care workforce through enhanced training during its Q1 conference call

Ahead of the first quarter results, CHS announced enhanced employee benefits to the tune of $40 million. Benefits include a student loan repayment program that allows most clinical employees to have CHS pay a portion of loan premiums up to $20,000 per employee. CHS is also offering reimbursement for further education and training.

Hingtgen said this investment should improve retention and help with recruitment of new employees as well as recruiting back those who left for travel nursing while helping the company tap into the international workforce. CHS also completed a centralized nurse recruiting platform with 60 recruiters in the first quarter, and upped their hiring rate 10 percent in the last year.  

“We're very focused on direct outreach to those individuals who may have left our health care system,” he said. “We are seeing some improvements in the international nursing pipeline, seeing increased orders being filled, and being able to onboard new international nurses, which is another component of helping rebuild a really solid and stable internal workforce.”