Hospital Compensation Costs Continue to Slow

Total compensation costs for hospital employees grew 0.6% in the first quarter of 2010, and 2.1% in the last 12 months ending in March, slightly outpacing wage and benefits growth in the overall economy but significantly slower than historic trends. Hospital wages and salaries—usually about 70% of total compensation costs—increased 0.3% in the first quarter of 2010 and 1.8% over the last 12 months ending in March, new Bureau of Labor Statistics not-seasonally adjusted data show.

"If we look at the hospital index, compensation costs have been shrinking quite a bit," says BLS Economist Elizabeth Ashack. "Look at December 2008 to December 2009 it was 2.1% and now we are at March 2009 to March 2010 it's at 1.7%. That was a contraction. You are still seeing diminishing wage growth. It is still positive but the trend is downward."

"You know there are highly unionized occupations in hospitals, so you wouldn't think there would be that much downward pressure because union contracts and collective bargaining agreements are in effect for three or five years. But we are seeing it in the data. It is not immune to the ills of the recession," Ashack says.

Compensation costs for all civilian workers in the overall economy increased 0.6% in the first quarter of 2010, and 1.7% for the 12-month period ending March 2010—as compared with a 2.1% increase for the 12-month period ending in March 2009, not-seasonally adjusted BLS data show.