Contract labor costs and financial performance at high and low surgical volume hospitals

Samuel J Enumah, Xue Wu, Xueya Cai and Yue Li

PLOS ONE, 2026, vol. 21, issue 8, 1-13

Abstract: Background: Rising labor costs negatively impact hospitals’ financial stability. Poor hospital financial performance raises the probability of bankruptcy and closure, which limits patients’ access to critically important medical and surgical care. The objective of the study was to determine the association between contract labor costs and hospital financial performance and examine if this relationship is modified by surgical volume. Methods: We used data from the National Academy for State Health Policy, the American Hospital Association, and the RAND Corporation to analyze general and financial characteristics of U.S. hospitals. The primary outcomes were hospital operating margin, total margin, and financial distress. Generalized estimating equations were used to identify associations between contract labor costs and financial performance. Results: Our sample included 22,366 hospital-year observations from 2,914 hospitals. Higher contract labor costs were associated with lower operating margins (coefficient −0.13, 95% confidence interval (CI) −0.17 to −0.10; p

Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:plo:pone00:0356994

DOI: 10.1371/journal.pone.0356994

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