What is a hospital’s biggest expense? (2024)

FAQs

What is a hospital’s biggest expense? ›

Wages, Benefits, and Labor Costs

Spending for hospital care represented the largest share of personal health care expenditures.

Staffing is usually the largest cost in a healthcare operational budget, and it must not only account for fixed costs, like salaries, but overtime hours, potential overstaffing, and other variable costs.

Staff salaries and benefits typically represent the largest expense for a medical practice, usually accounting for 25% of total revenue or about one-half of the overhead.

Hospitals' labor costs increased by more than $42.5 billion between 2021 and 2023 to a total of $839 billion, accounting for nearly 60% of the average hospital's expenses.

Wages, Benefits, and Labor Costs

While percentages vary from hospital to hospital, across the board the biggest expense for hospitals are wages and benefits which on average account for 56% of the total expense of a hospital.

The three biggest budget items for the average U.S. household are food, transportation, and housing. Focusing your efforts to reduce spending in these three major budget categories can make the biggest dent in your budget, grow your gap, and free up additional money for you to us to tackle debt or start investing.

Some of the most expensive medical treatments in the world are mostly present here, which is why many people even consider going to Mexico for cheaper medical treatments. It's also not surprising that likely the most expensive hospital bill ever also took place in the U.S. in Florida, worth $9.2 million.

What is the most expensive medical expense? ›

The price of medical care is the single biggest factor behind U.S. healthcare costs, accounting for 90% of spending. These expenditures reflect the cost of caring for those with chronic or long-term medical conditions, an aging population and the increased cost of new medicines, procedures and technologies.

The highest expense for most practices is payroll, followed by real estate. Real estate encompasses your monthly rent or mortgage payments, along with the property's operating expenses, maintenance fees, utilities, and janitorial costs.

Top earning departments in hospitals include cardiovascular surgery, invasive cardiology, orthopedics, neurosurgery, and gastroenterology. Notice how these are all specialties with plenty of interventional care which pays way more than diagnostic, general medical, and preventative services.

In 2017, aggregate hospital costs for 35.8 million hospital stays totaled $434.2 billion. The five most expensive inpatient conditions were septicemia, osteoarthritis, liveborn (newborn) infants, acute myocardial infarction, and heart failure.

Cardiovascular surgeons generate the most revenue for hospitals on average, according to Merritt Hawkins' 2019 Inpatient/Outpatient Revenue Survey. Merritt Hawkins emailed a survey to 3,000 hospital CFOs and other financial managers across the U.S. from October 2018 to December 2018.

Final answer: The highest category of expenses for most health care organizations is usually personnel, which includes salaries, benefits, and training for the medical and administrative staff.

Hospitals and emergency departments are essential sources of care for acute, chronic, and emergency conditions. Hospitalization is one of the most expensive types of health care use, resulting in an average adjusted cost of $14,101 per inpatient stay at community hospitals in 2019 (1).