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Report: Arizona hospitals experiencing more financial challenges

The Arizona Hospital and Healthcare Association says inflation and labor costs are putting a greater financial strain on local healthcare facilities.

PHOENIX — Some of Arizona's healthcare facilities have financially taken a nosedive this year as local hospitals attempt to adjust to a post-pandemic environment. 

A report released Friday by the Arizona Hospital and Healthcare Association shows the net operating margins of local facilities fell from an average of 4.6% in 2021 to -8.7% in the second quarter of 2022. 

“These losses have been driven by extraordinary inflation in the labor and supply market, with contract labor increasing by 188% in the first quarter of 2022 and by 263% during the second quarter compared to the same periods in 2021,” said Ann-Marie Alameddin, president and CEO of AzHHA, in a statement.

The association's report represents the financials of about 20 reporting hospitals in Arizona.

The costs of drugs and medical supplies have increased over the last year, AzHHA says, but the financial assistance allocated by the government during the pandemic hasn't kept pace with the growing costs.

“Payments from public payers and commercial payers alike must account for the extraordinary strain on hospital and health system expenses in this post-COVID world,” Alameddin added.

AzHHA members say recruiting and retaining employees have become created a major financial challenge since hospitals must now spend more money on overtime and contracting third-party labor to fill shifts. 

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