September 17, 2020 – Banner Health had figured out how to get ahead in the modern healthcare industry.
The Phoenix-based nonprofit hospital system relentlessly focused on costs. It trimmed labor, the largest expense for any hospital. Last year, it carried 2.1% fewer employees for every bed filled, compared with the year before. It also moved away from pricey hospital settings. Visits at free-standing clinics and surgery centers grew 12% in 2019, while its hospital emergency rooms were flat.
The result was a financial powerhouse with $6.2 billion in cash and investments and a bond rating that is the envy of corporate financial officers.
But when the pandemic hit, the strategies that had helped it become a model for other hospital systems suddenly became weaknesses.
In early June, as Arizona’s count of Covid-19 cases began to rise by 1,000 a day, Banner’s hospitals filled with very sick patients needing one-on-one help from critical-care nurses. There weren’t enough.
Banner and other well-funded hospitals muddled through, but in doing so they overtaxed existing nurses, had to train others on the fly and relied heavily on rapidly hiring temporary staff, including more than 1,000 nurses and respiratory therapists on expensive short-term contracts.
Those moves helped drive up prices for traveling nurses, putting them out of the reach of neighboring hospitals. Nurse pay for contracts signed by the state, which eventually did much of the hiring, rose to $145 an hour from $85 for intensive-care specialists.
Draining that limited pool meant that poorer hospitals were unable to find help when they needed it. Medical research concludes that being short-staffed at any time leads to worse outcomes and higher hospital death rates.
The staffing pain in Arizona is emblematic of what took place in hospitals across the country during the pandemic, according to…