Dr. Kenneth E. Thorpe, PhD, MA Robert W. Woodruff Professor Department of Health Policy & Management Rollins School of Public Health Emory University A longitudinal analysis of hospital costs (2008 - 2022) June 2025 Table of Contents: 2 Abstract Study Aims Introduction Methodology Study Findings Discussion Conclusion Appendix 3 4 5 7 8 19 21 22 Abstract: Background: Hospital cost growth has long mirrored the evolving complexity of care delivery, but the financial architecture of hospital operations has become increasingly shaped by interacting cost driver. This report aims to extend the current evidence base by offering a multivariate, time - sensitive view of hospital cost determinants — supporting a more integrated understanding of how financial, clinical, and structural factors have shaped the economics of care delivery over time. Methods : This analysis examines longitudinal trends in hospital expenditures from 2008 to 2022 using data from the American Hospital Association (AHA) Annual Survey and National Health Expenditure Accounts. Descriptive and regression - based findings highlight that between 2013 and 2021, hospital expenses per adjusted admission rose by 38.5%, with notable growth in payroll (31.3%), pharmaceutical (42.2%), and other operating expenses (53%). Full - time equivalent staffing per bed increased from 6.2 to 6.9, while case mix severity rose by 15%, and Medicaid revenue share became more positively associated with cost over time. Results: Regression models identified statistically significant associations between hospital ownership, region, staffing levels, and case mix index and both expenses and margins. Operating margins remained negative throughout the study period, while total margins narrowed yet stayed positive. Conclusion: Taken together, the findings point to a more distributed and variable cost landscape than in previous decades, with non - labor inputs contributing more prominently to recent expenditure growth. Key words: hospital costs, case mix, care delivery economics, labor intensity, Medicaid, cost drivers, hospital finance, regression analysis, U.S. hospitals 3 1. Identify the main contributors to hospital expense increases between 2008 and 2021, with particular attention to trends observed between 2013 and 2021. 2. Describe overall hospital expense trends during the study period and evaluate how payer mix and component costs (e.g., case mix) have influenced these trends. 3. Assess the influence of pharmaceutical spending, medical supplies, contract labor, and patient case mix on hospital expenses per adjusted admission and per patient day. 4. Assess how evolving payment models (such as value - based arrangements, bundled payments, shared - risk models, and accountable care organizations) affect overall hospital spending trends and margins. 5. Investigate the relationship between staffing levels and hospital cost dynamics. 6. Explore other contributory factors to total hospital expenses, including the impact of changes in payer mix, patient complexity, and the role of Medicaid expansions and increased coverage from the Affordable Care Act (ACA) in altering hospital spending patterns. 4 7 American Hospital Association. (n.d.). AHA annual survey database. Retrieved September 10, 2023, from: https://wrds - www.wharton.upenn.edu/login/?next=/pages/get - data/american - hospital - association/ 8 Centers for Medicare & Medicaid Services (CMS). National health expenditure data: Historical. U.S. Department of Health & Human Services. Retrieved May 1, 2024, from: https://www.cms.gov/data - research/statistics - trends - and - reports/national - health - expenditure - data/historical Study Aims: Introduction: Viewed overtime, hospital spending patterns offer a quiet chronicle of how the care economy has evolved to meet the changing scale and severity of patient needs. In recent years, the effects of these shifts have surfaced more plainly in hospital financials, as expenditures adjust with the rising demands of high - acuity care environments. This shift is perhaps most evident in the period between 2019 and 2022, when operating costs surged by nearly 18 percent – eclipsing the 7.5 percent increase in inpatient Medicare reimbursement. 1 Labor - related expenditures were central to this growth, climbing by approximately 21 percent, largely driven by heightened outlays for nursing and contract labor services. A related trend analysis of more than 1,300 U.S hospitals and health systems found that contract labor spending alone rose nearly 260 percent from during the pandemics most acute operational years. 2 Concurrently, full - time equivalent (FTE) staffing climbed by 140 percent, with the steepest increases observed in nursing and emergency department roles. 3 While much of this growth was concentrated in the early pandemic era, labor pressures have not meaningfully abated. By 2024, labor costs totaled $890 billion and remained the single largest category of hospital spending – comprising 56 percent of total costs. 4 While the pandemic undoubtedly intensified these pressures, retrospective studies suggest that a range of preexisting structural drivers – particularly rising patient acuity, multimorbidity, and case mix severity – had been taking root well before the crisis. As early as 2010, adults managing five or more chronic conditions incurred about $18,000 more per capita in annual healthcare spending than those without chronic illnesses. 5 By 2021, this figure had increased to $32,000 for privately insured adults, pointing to the elevated resource requirements of caring for an aging, increasingly comorbid patient population. 5 Building on these long - term patterns, national financial data from 2023 and 2024 suggest a growing prominence of non - labor cost drivers – such as pharmaceuticals, supplies, and outsources services – even as labor - related cost pressures begin to stabalize. 6 This rebalancing of cost categories signals an inflection point in hospital economics and service delivery structures, with implications that warrant closer empirical examination. Even so, there remains a relative paucity of research that fully captures the complex, interdependent forces driving hospital expenditure growth. While recent reports provide valuable snapshots of input - level cost components, most rely on bi - variate analyses that fall short of isolating which variables exert the greatest weight over time. This analysis addresses that gap by examining trends in total hospital costs, costs per adjusted admission, costs per patient day, and hospital margins from 2008 to 2022. In doing so, it considers the combined influence of workforce composition, changing patient demographics, evolving payer mixes, and Medicaid expansions on hospital spending trajectories. This report seeks to deepen understanding of hospital cost trajectories by examining longitudinal expenditure data and their impacts on care delivery economics. 6 1 American Hospital Association. (2023, A pril). The financial stability of Ame rica’s hos pitals and health s ys tems is at ris k. R etr ieved from: https://www.aha.org/s ys tem/files/media/file/2023/04/Cost - of - Caring - 2023 - The - Financial - 2 Stability - of - Americas - Hospitals - and - Health - Systems - Is - at - Risk.pdf 2 Syntellis Performance Solutions, & American Hos pital Ass ociation. (2023). Hospital Vitals: Financial and Operational 3. Trend s Q 1 – Q2 2023. https://www.stratadecision.com/sites/default/files/2023 - 11/aha_q2_2023_v2.pdf 3 Centers for Medicare & Medicaid Services, Office of the Actuary. (2024, December 18). National health care spending in 2023: Gro wth ac celerates as pandemic effects wane. Health Affairs. 4 American Hospital Association. (2025, A pril 28). Cos ts of caring: 2024 update on hospital financial pressures . https://www.aha.org/c ostsofc aring 5 Thorpe, Kenneth. E. (2024). The role of c hronic disease and multiple chronic conditions on the level and change in per capita he alth care spending, 2010 – 2021. Journal of Chronic Diseases and Management, 8(1), Article 1035. January 04, 2024. https://www.jscimedcentral.com/public/assets/articles/chronicdiseases - 8 - 1035.pdf 6 Kaufman Hall. (2024, November). National Hos pital Flash Report: September 2024 Metrics. https://www.kaufmanhall.c om/s ites /default/files/2024 - 11/KH - NHFR_Report - September - 2024 - Metrics.pdf Methodology: Data Sources: Annual data on hospital costs and the components of spending are derived from the American Hospital Association (AHA) Annual Survey of Hospitals, covering 2008 through 2021. 6 This dataset includes detailed financial, operational, and staffing information from more than 6,200 hospitals and 400 health systems across the United States. To extend the timeframe through 2022 and validate national expenditure trends, we supplemented these data with National Health Expenditure (NHE) statistics from the Centers for Medicare & Medicaid Services (CMS). 7 Analysis: The study concentrates on cost components that notably drive hospital spending, especially labor, pharmaceuticals, supplies, and administrative services. These expenditures are then examined in the context of hospital payment methodologies, such as capitation, value - based payment models, and shared risk agreements, as well as in relation to changes in payer mix, patient complexity (case mix), and Medicaid expansion policies. The analysis documents both average annual and cumulative growth in hospital expenses per adjusted admission (calculated as total admissions multiplied by the ratio of total gross patient revenues to gross inpatient revenues) between 2008 and 2021. Statistical Methods: Descriptive statistics and regression analyses were used to isolate and quantify the impact of various factors on hospital expenditures. Specifically, a generalized linear model (GLM) with a gamma distribution and log - link function was applied for the years 2013, 2015, 2018, and 2021. Using STATA (version 12), this approach estimated the marginal effects that each independent variable — such as staffing levels, ownership, geographic region, payer mix, and the Medicare case mix index — had on hospital expenses per adjusted admission. Models controlled for bed size, teaching status, and other hospital characteristics. An ordinary least squares (OLS) regression was also performed to gauge the influence of these same variables on total margins, providing insights into how cost drivers intersect with financial performance. The results are presented in Table 6. 7 Study Findings: The descriptive analyses revealed that hospital operating expenses continued to rise steadily over the 2008 – 2022 period, with labor and service delivery inputs propelling much of this growth. As shown in Table 3 (Share of Inpatient Hospital Costs by Key Inputs, 2002 – 2018), employee compensation as a share of total hospital spending decreased by approximately (7%) percentage points, a shift explained in part by an increase in outsourced administrative and professional services. These contracted services rose by more than (4%) percentage points, indicating that many hospitals have replaced some direct employee roles with external vendors for functions such as management consulting, billing, and accounting. When both direct compensation and administrative contracts are considered together, labor - related costs remain a major share of hospital spending – though their rate of growth has been slower compared to other key expense categories. Notably, pharmaceutical expenditures grew by (42%) percentage points as a share of inpatient hospital costs during the same period, underscoring the broader diversification across input categories. 8 Descriptive Statistics: Overall Expense Trends (Tables 1 - 3) Contracted services rose by over 4%, suggesting hospitals are increasingly outsourcing roles once filled by direct staff. Labor remains a primary cost driver for hospitals, though its growth has lagged behind other input categories As shown in Table 4, hospitals consistently accounted for about (30%) percent of total healthcare spending across the study period. However, the pace of hospital cost growth has not been uniform. Between 2008 and 2015, hospital expenses outpaced overall healthcare spending. However, from 2015 to 2022, that growth moderated to an average of (4.4%) percent annually – slightly below the 5 percent growth rate observed in overall health expenditures. A closer look at expenses per adjusted admission shows a nearly (40%) percent increase between 2013 and 2021, with a sharper (23%) percent rise occurring between 2018 and 2021. Table 4 (Key Factors Associated with the Level and Growth in Hospital Spending) further shows that during this latter three - year window, pharmaceutical spending jumped by (42%), payroll costs grew by more than (31%) percent, and other operational expenses increased by (53%) percent. In the same period, hospital total margins remained positive over the years examined, though they declined from (2.16%) percent in 2013 to (1.64%) percent by 2019. In contrast, operating margins remained consistently negative, falling from ( - 2.16%) percent to ( - 3%) percent over the same period. 9 Hospital expenses per adjusted admission rose nearly 40 percent between 2013 and 2021. In the same period, pharmaceutical spending rose 42%, payroll costs climbed over 31%, and other operating expenses surged by 53%.” Several factors help contextualize these spending and margin patterns. First, patient severity of illness increased markedly, as reflected by a (15%) percent rise in the Medicare case - mix index between 2013 and 2021. Staffing intensity also grew: the number of full - time equivalent employees (FTE) per hospital bed rose from (6.2%) percent in 2012 to nearly (7%) by 2021, reinforcing the influence of staffing on expense escalation. Meanwhile, the share of hospital revenue derived from capitation or shared risk held steady at just over (5%) percent by 2021 — signaling incremental shifts in payer arrangements that could affect long - term spending. Contract labor as a percentage of total expenses also increased by about 1 percentage point over the study period. Although staffing levels, as reflected by the increase in FTEs per bed from 6.2 in 2012 to nearly 7 by 2021, have risen — contributing to higher expenses per adjusted admission — the remaining hospital descriptive statistics, such as ownership and overall revenue mix , remained relatively constant over time. 10 Patient acuity increased significantly, with a 15% rise in the Medicare case - mix index between 2013 and 2021. Capitation and shared - risk payments remained just over 5% of hospital revenue in 2021 — signaling gradual shifts in payment models that could shape long - term spending. 2002 Compensation 60.0% 59.6% 60.3% 55.8% 53.0% 0.3% - 7.4% - 7.0% Wages and Salaries 48.2% 47.2% 47.2% 43.4% 41.2% 0.3% - 6.0% - 6.9% Employee Benefits 11.8% 12.4% 13.1% 12.4% 11.7% - 0.9% - 1.4% - 0.1% Utilities 1.3% 2.2% 2.2% 2.5% 2.3% 1.3% 0.0% 1.0% Fuel: Oil and Gas 0.2% 0.4% 0.4% 1.3% 0.8% 1.0% 0.3% 0.6% Electricity 0.7% 1.6% 1.7% 1.0% 1.5% 0.2% - 0.2% 0.8% Water & Sewerage 0.4% 0.1% 0.1% 0.1% 1.0% - 0.1% - 0.4% Professional Liability Insurance 1.6% 1.7% 1.3% 1.2% 1.0% - 0.2% - 0.3% - 0.6% Malpractice 1.6% 1.7% 1.3% 1.2% 1.0% - 0.3% - 0.3% - 0.6% All Other 31.7% 36.5% 36.1% 40.5% 43.8% - 0.3% 7.7% 12.1% All Other Products 20.3% 19.5% 19.5% 17.4% 18.4% 4.4% - 1.0% - 1.9% Pharmaceuticals 5.9% 5.4% 5.4% 5.9% 7.1% - 0.9% 1.7% 1.3% Food: Direct purchase 1.7% 4.0% 4.2% 2.3% 1.6% 0.0% - 2.7% - 0.1% Food: Contract Services 0.6% 1.3% 1.8% 2.5% 1.2% 1.8% Chemicals 2.1% 1.5% 1.5% 0.9% 0.6% 0.6% - 0.9% - 1.5% Blood and Blood Products 1.2% 1.1% 1.1% 0.8% 0.6% - 0.6% - 0.5% - 0.6% Medical Instruments 1.9% 2.8% 2.6% 2.9% 4.1% - 0.1% 1.5% 2.1% Rubber & Plastics 2.0% 1.7% 1.6% 0.8% 0.6% 0.6% - 1.1% - 1.4% Paper & Printing Products 1.9% 1.5% 1.5% 1.5% 0.9% - 0.4% - 0.6% - 1.0% Miscellaneous Products 2.6% 0.5% 0.5% 1.1% 1.2% - 0.4% 0.7% - 1.4% All Other Services 11.3% 17.1% 16.6% 23.1% 25.3% - 2.1% 8.7% 14.0% Labor - Related Services 9.2% 9.2% 12.5% 5.3% - 9.2% 0.0% Professional Fees: Labor - related 5.5% 5.4% 5.5% 6.8% 8.6% 9.2% 3.1% 3.1% Administrative & Facilities Support 0.6% 0.6% 1.0% 1.1% 0.0% 0.5% 1.1% Maintenance and Repair Services 2.4% 2.4% - 4.4% 2.4% 2.4% All Other: Labor - related Services 3.2% 3.1% 2.3% 2.6% 0.6% - 0.5% 2.6% Nonlabor - Related Services 7.9% 7.4% 10.7% 10.7% 3.1% 3.3% 10.7% Professional Fees: Nonlabor - related 4.1% 3.7% 5.1% 7.0% 7.4% 3.3% 7.0% Financial services 1.3% 1.2% 3.0% 1.4% 3.7% 0.1% 1.4% Financial Services 1.3% 1.0% 1.0% 1.7% 1.8% 1.2% 0.9% 0.5% Telephone Services 0.5% 0.6% 0.6% 0.8% 0.4% - 0.3% - 0.2% 0.0% All Other: Nonlabor - related 5.3% 0.9% 0.9% 0.1% - 0.9% - 5.3% 11 Source: Available at Market Basket Data | CMS 2006 2010 2014 2018 2002 - 2010 2010 - 2018 2002 - 2018 Table 1. Share of Inpatient Hospital Costs by Key Inputs, 2002 - 2018 Toal Inpatient Hospital Price Growth % Point Change in Share of Hospital Costs 1 12 Hospital Spending Hospital Spending % of Total Total Spending Per Capita Hospital Spending Per Capita 2008 $2,402 $721.6 30% $7,858 $2360 2009 $2,493 $771.0 31% $8,081 $2499 2010 $2,590 $808.8 31% $8,323 $2599 2011 $2,677 $833.2 31% $8,529 $2654 2012 $2,783 $878.0 32% $8,789 $2772 2013 $2,857 $906.8 32% $8,946 $2839 2014 $3,003 $940.5 31% $9,325 $2920 2015 $3,165 $989.0 31% $9,750 $3046 2016 $3,307 $1,035.4 31% $10,107 $3164 2017 $3,447 $1,077.6 31% $10,452 $3267 2018 $3,604 $1,122.7 31% $10,851 $3380 2019 $3,757 $1,193.6 32% $11,238 $3570 2020 $4,144 $1,267.8 31% $12,335 $3773 2021 $4,255 $1,323.9 31% $12,626 $3928 2022 $4,440 $1,335 30% $13,125 $3946 Average Annual Growth 2008 - 2015 4.0% 4.6% 3.1% 3.7% 2015 - 2022 5.0% 4.4% 4.3% 3.8% 2008 - 2022 4.5% 4.5% 3.7% 3.7% Table 2. Total Health Care Spending and Hospital Spending (Billions) and Spending Per Capita, 2008 - 2022 Source: Source: CMS Office of the Actuary, National Health Expenditure Projections 2023 - 2032. Retrieved April 6, 2024, from: https://www.cms.gov/data - research/statistics - trends - and - reports/national - health - expenditure - data/projected 12 Year Total Spending 2 13 Table 3: Trends in Key Hospital Costs Determinants, 2013 - 2021 Source: American Hospital Association, Annual Survey of Hospitals, 2013 - 2021 * 2019 Figure ** Significantly different 2021 - 2013, p<=.05 13 Measure 2013 2015 2018 2021 % Increase 2013 - 2021 % Revenue Capitated 0.8% 0.6% 1.4% 2.0% % Revenue Shared Risk 1.2% 1.6% 2.0% 3.4% FTE Per Bed 6.2 6.4 6.9 6.9 Residents to Beds 0.08 0.08 0.09 1.0 Contract Labor % Total 2.7% 3.1% 3.3% 3.6%* Medicare Case Mix Index 1.50 1.55 1.64 1.7** Percent Medicare Revenue 50.7% 51.5% 52.1% 50.8% Percent Medicaid Revenue 18.9% 20.0% 20.2% 20.3% Hospital expenses per adjusted admission $10,481 $10,956 $11,806 $14,520 38.5% Payroll expenses per adjusted admission $4,062 $4,102 $4,352 $5,332 31.3% Interest expenses per adjusted admission $173 $159 $151 $164 - 5.2% Supply expense per adjusted admission $1,941 $2,041 $1,884 $1,993 2.7% Pharmaceutic expense per adjusted admission NA NA $706 $1,004 42.2% Other expenses per adjusted admission $2,768 $3,078 $3,361 $4,235 42.2% Total Margin 2.16% 1.76% 1.59% 1.64% Operating Margin - 2.16% - 0.15% - 1.91% - 3.0% 3 Results from the generalized linear model (GLM) regressions confirm that multiple variables significantly influence hospital expenses per adjusted admission. Independent variables used in the analysis included percent of the hospital’s revenue that is capitated, percent of revenue with shared risk, hospital ownership (government, not - for - profit (public omitted variable), bed size indicator variables, region, full - time equivalent employees per bed, the Medicare case mix index and percent of hospital revenue derived from Medicare and Medicaid. The results presented in Table 4 ( Factors Associated with Hospital Expenses Per Adjusted Admissions, 2013 – 2021) showed significant differences in hospital spending across regions of the country, by bed size, teaching status, ownership and source of hospital revenue. In 2021, ownership structure had a notable impact on these expenses, with government - owned hospitals incurring over $3,215 higher costs per adjusted admission than for - profit facilities, and nonprofit hospitals exceeding for - profit costs by approximately $1,287. These differences are especially significant given that in 2013, ownership was not a significant determinant, but by 2021, both government - owned and not - for - profit hospitals experienced a faster rise in expenses relative to for - profit institutions. By 2021, both government - owned and nonprofit hospitals saw a faster rise in per - admission costs than for - profit hospitals. In 2021, ownership structure had a notable impact on these expenses. Regression Results: Factors Accounting for the Growth in Hospital Spending (Tables 4 - 5) 14 Geographic region also emerged as an important factor, with hospitals located in the East being among the most expensive. Compared to hospitals in the Midwest, those in the East were nearly $2,500 more expensive, and hospitals in the South were approximately $2,240 less expensive per adjusted admission than their Eastern counterparts. Staffing intensity was another critical factor influencing hospital expenses. An increase in the full - time equivalent (FTE) ratio by one unit, for instance from 6.9 to 7.9 FTEs per bed, was associated with roughly a $350 increase in expenses per adjusted admission , while overall growth in FTEs per bed over time corresponded to an additional $245 increase in expenses per adjusted admission. The impact of payer mix evolved over time as well. In 2013, each one percentage point increase in Medicaid revenue as a share of total revenue was associated with $24 lower expenses compared to private insurance and uncompensated care; however, by 2021, each additional percentage point of Medicaid revenue was linked to $75 higher expenses per adjusted admission. This reversal likely reflects the growth in Medicaid enrollment and changes in the composition of enrollees following the Medicaid expansion under the Affordable Care Act, as well as the higher costs associated with more medically complex Medicaid patients during the period observed. 15 A rise in the Medicare case - mix index from 1.6 to 1.7 was linked to a $9,300 increase in per - admission expenses Each additional FTE per bed was linked to a $350 increase in expenses per adjusted admission. Turning to margins, the ordinary least squares (OLS) regression indicated that higher patient severity , measured through the Medicare case - mix index, was associated with stronger total margins, although this positive effect diminished over time. For instance, in 2019, an increase in the case mix from 1.5 to 1.6 was associated with an increased total margin of 1.2 percentage points. Moreover, margins varied by hospital ownership, with government - owned hospitals generally having total margins that were 0.7 to 1 percent lower than those of for - profit hospitals, and not - for - profit hospitals also exhibiting margins about 0.5 percent lower than for - profit facilities. Hospitals located outside of the East consistently demonstrated margins approximately 1 percent higher than those in the East. While it might seem counterintuitive, hospitals with higher levels of FTE personnel per bed experienced slightly higher margins. However, these gains were offset by a larger share of contract labor, as every one percentage point increase in the proportion of contract staff was associated with a 0.1 percentage point erosion in total margins, reflecting the higher cost per FTE for outsourced workers. 16 Each one - point increase in contract staff share was linked to a 0.1% decline in total margins — reflecting the higher cost per FTE for outsourced labor. Margins varied by ownership: both government - owned and nonprofit hospitals had total margins that were generally 0.5 - 1 percentage points lower than for - profit hospitals. 17 Source: Tabulations from American Hospital Research annual survey, 2013 – 2021 *Significantly different from zero, p< .05 ** Significantly different from zero, p< .10 Significantly different 2021 - 2013 N/A Not Available 17 Variable 2013 2015 2017 2019 2021 % Revenue Capitated 40.5* 6.7 27.7 - 23.4** - 4.81 % Revenue Shared Risk 10.9 13.6 23.1 4.8 22.0** Govt Owned - 47.5 856.2* 1523.2* 1315.2* 3215.7*ü Not - for - Profit - 346.8 247.5* - 17.0 - 94.7 1287.3*ü Bed size 100 - 249 97.0 702.1* 1138.3* 1210.0* 1125.6* 250 - 399 709.8* 903.2* 1529.0* 1634.1* 1162.5* 400+ 1286.5* 1871.8* 2501.5* 2421.7* 2948.6* Region Midwest - 1132.4* - 1240.8* - 991.8* - 1412.2* - 2492.3* South - 1719.7* - 2170.0* - 1679.9* - 2237.2* - 2240.1* West 1163.4* 1214.9* 1500.9* 1922.0* 662.9 Staffing, Ownership, and Revenue Contract Labor as % Total Labor 32.4 46.0** 43.3** 22.1 N/A Full Time Equivalent Employees/Beds 246.7* 309.8* 327.2* 333.6* 347.9* Teaching Hospital 794.2* 719.4* 784.8* 1313.7* 845.0* Medicare Case Mix Index 6254.0* 6996.5* 7398.4* 7526.2* 9293.6*ü % Medicare Revenue - 54.0* - 49.4* - 25.1* - 17.8** - 7.9 % Medicaid Revenue - 24.2* 7.1 22.0* 41.5* 74.7*ü Table 4: Factors Associated with Hospital Expenses Per Adjusted Admissions, 2013 – 2021, Marginal Effects 4 18 Table 5: Regression Results for Factors Associated with Total Hospital Margin, 2013 2019 Source: Tabulations from American Hospital Research annual survey, 2013 – 2021 *Significantly different from zero, p< .05 ** Significantly different from zero, p< .10 Significantly different 2021 - 2013 N/A Not Available 18 Variable 2013 2015 2017 2019 % Capitated 0.24 .001 - 6.004 0.015 % at Risk - .006 .008 - 0.009 - 0.002 Govt Owned - 0.7* - 0.64* - 0.98* - 0.14 Not - for - Profit 0.96 - 0.52* 0.18 - 0.16 Bedsize 100 249 - .06 - 0.44* 0.17 0.08 250 - 399 0.15 - 0.6* 0.73* 0.62* 400+ - .025 - 0.64* 0.42 0.30 Region Midwest - .025 - 0.64* 0.42 0.30 South 0.14 0.55* 0.63* 1.0* West 0.33 1.03* 0.79* 1.26* Staffing, Ownership, and Revenue FTE/Bed 0.095* 0.037 0.98* 0.067* Teaching Hospital - 0.62 - 0.21 - 0.30 - 0.45* Case Mix Index 2.03* 1.67* 1.30* 1.20* % Medicare - 0.054* - 0.03* - 0.04* - 0.03* % Medicaid - 0.07* - 0.03* - 0.45* - 0.035* % Contract Labor - 0.59* - 0.11* - 0.12* - 0.028 5 Discussion: This retrospective analysis suggests that the resource intensity associated with complex care delivery continues to exert sustained operational and financial pressure across the system. The regression analysis presented in Table 5 highlights increased patient acuity as one of the most consequential factors associated with rising hospital expenses over the study period. This rise in acuity occurred alongside notable shifts in patient composition, most visibly in the expanded presence of Medicaid beneficiaries and a growing concentration of high - cost, high - need hospitalized cases. 9 Despite continued growth in care demands, hospital operating margins remained negative throughout most years observed, reflecting enduring challenges in aligning expenses with existing reimbursement environments. Rising clinical complexity also reshaped hospital staffing demands, further intensifying cost pressures. Labor costs emerged as a particularly significant source of strain. Between 2013 and 2021, the number of full - time equivalent (FTE) employees per bed rose by 11 percent, a staffing increase associated with higher expenses per adjusted admission. In parallel, hospitals expanded their reliance on contract labor, amplifying overall cost intensity and contributing to downward pressure on total margins 19 Regression results point to rising patient acuity as one of the most significant contributors to hospital expense growth during the study period.” Between 2013 and 2021, the number of full - time equivalent (FTE) employees per bed rose by 11%, a staffing increase associated with higher expenses per adjusted admission. 19 Although direct employee compensation declined modestly as a share of overall expenses, broader shifts toward outsourced clinical and administrative services continued to reshape the cost profile of hospital operations. Pharmaceutical and supply costs also played a substantial role in overall spending growth, reflecting national trends toward more resource - intensive models of care delivery. Financial data from the years following the study period suggest that these non - labor cost drivers have continued to accelerate, even as volatility in labor markets has begun to moderate. 3 Patient characteristics and ownership structures further shaped hospital cost trajectories. Not - for - profit and government - owned hospitals with higher Medicare case mix experienced sharper increases in expenses relative to for - profit institutions. While this study does not isolate causal mechanisms, the observed differences may reflect differences in institutional orientation and patient complexity profiles, particularly a greater share of publicly insured patients and wider investments in local healthcare infrastructure. These dynamics may contribute to more enduring cost pressures for hospitals balancing resource stewardship with broader mandates for community health investments. 20 Pharmaceutical and supply costs also played a substantial role in overall spending growth, reflecting national trends toward more resource - intensive models of care delivery. Patient characteristics and ownership structures further shaped hospital cost trajectories.