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Contract nursing cost spike turns Pardee budget 'upside down'

The Board of Directors of UNC Health Pardee heard last week that higher operating costs driven by the dramatic spike in the cost of contract nurses resulted in a total operating loss was $13 million through the first three quarters of the 2022-23 fiscal year, almost $10 million higher than a budgeted loss of $3.7 million.

Finance Committee Chair Hall Waddell during the March 29 meeting reported that:

  • Total admissions were 6.6 percent behind budget and 1.1 percent higher than fiscal year 2022.
  • Total surgeries and endoscopies were higher than budget by 6.1 percent and were 0.5 percent better than last year.
  • Emergency room visits were 8.3 percent higher than budget and 20.7 percent higher than FY 2022.
  • Gross patient revenue was below budget by .3 percent or $2.4 million.
  • Total consolidated operating expenses were higher than budget by $14 million, or 6.3 percent.
  • Total operating margin was minus 5.8 percent compared to a budget of minus 1.7 percent.

“In short, we do not have a revenue problem,” Kirby told the directors. “Margins are good. People continue to choose Pardee. Our payor mix is good. We have an expense problem and that expense problem continues to revolve around the continuing national issue of contract labor. We pay doctors $130 an hour and we’re having to pay contract nurse companies that same amount and it doesn’t take long to get upside down.”

Smallest hospital in Top 20

The board got much better news in the form of a report on Pardee’s high rankings from numerous quality, safety and patient satisfaction surveys released in March. Business North Carolina magazine in its 2023 Best Hospitals ranked Pardee 20th, making it the smallest hospital in the top 20. Pardee also was recognized by Blue Cross Blue Shield for bariatrics and knee and hip replacement surgeries, rated for high performance for treating COPD by US News & World Report and ranked 13th best in North Carolina in a survey by the Lown Institute, a nonprofit health care think tank that bases its ratings on outcomes, values and ethics.