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Healthcare Insights

Hospitals with the highest contract labor expenses

U.S. hospitals are increasingly working with contracted labor to keep their facilities staffed to provide quality patient care. While provider burnout rises and facilities face staffing shortages, the healthcare staffing market is also projected to grow 5.6% from 2022 to 2030.

What is contract labor?

Contract labor refers to the hiring of independent contractors. Usually, the hiring organization and the independent contractor must complete a labor agreement contract prior to the start of work.

Employee vs. independent contractor

Independent contractors provide their services on a temporary basis and are not hired as full-time employees. Independent contractors within the healthcare industry can help fill in gaps in staffing, thus supporting healthcare organizations’ ability to care for their patient population.

How many hospitals use contract labor?

The Definitive Healthcare HospitalView product tracks contract labor expenses for more than 3,200 U.S. hospitals. Data is sourced from the Medicare Cost Report, and results in the following analysis are aggregated from the most recent 12-month interval tracked in our database.

How much do hospitals spend on contract labor each year?

The average hospital contract labor expense in the U.S. is $7.6 million based on our analysis of HospitalView data and makes up about 3.5% of a hospital’s total expenses.

The following table lists the top hospitals with the highest contract labor expenses.

Top 20 hospitals by total contract labor expenses

RankDefinitive IDHospital nameLocationTotal contract labor expenseExplore dataset
1185Banner Estrella Medical CenterPhoenix, AZ$363,030,311 Explore
2526Fontana Medical CenterFontana, CA$259,751,283 Explore
3873AdventHealth OrlandoOrlando, FL$251,577,167 Explore
4588Stanford HospitalStanford, CA$215,630,428 Explore
53329OU Health - University of Oklahoma Medical CenterOklahoma City, OK$202,304,791 Explore
62706University of New Mexico HospitaAlbuquerque, NM$200,010,838 Explore
7535Kaiser Permanente Zion Medical CenterSan Diego, CA$195,460,140 Explore
8366Los Angeles Medical CenterLos Angeles, CA$194,053,916 Explore
9303Oakland Medical CenterOakland, CA$187,568,741 Explore
102442Barnes-Jewish HospitalSaint Louis, MO$185,522,801 Explore
11553293Roseville Medical CenterRoseville, CA$183,231,076 Explore
121914The Johns Hopkins HospitalBaltimore, MD$182,135,951 Explore
13593Santa Clara Medical CenterSanta Clara, CA$176,204,375 Explore
144374UW Medical Center - MontlakeSeattle, WA$163,655,504 Explore
15482Orange County - Anaheim Medical CenterAnaheim, CA$161,149,279 Explore
161981UMass Memorial Medical Center - University CampusWorcester, MA$158,258,231 Explore
172444SSM Health Saint Louis University HospitalSaint Louis, MO$149,273,787 Explore
18513South Sacramento Medical CenterSacramento, CA$148,939,241 Explore
194310University HospitalCharlottesville, VA$148,680,192 Explore
20274110UK Albert B Chandler HospitalLexington, KY$146,391,777 Explore

Fig. 1 Data is from the Definitive Healthcare HospitalView product and sourced from hospital Medicare Cost Report. Accessed October 2023.

Which hospitals have the highest contract labor expenses?

Banner Estrella Medical Center in Phoenix, Arizona, has the highest contract labor expenses at a reported $363 million. Fontana Medical Center in Fontana, California, spent nearly $260 million on contract labor.

The average contract labor expenses for the hospitals on the list is $193.6 million. For all U.S. hospitals, the average is $7.6 million.

Nine of the hospitals on the list are in California. Hospitals in the western U.S. have the highest average contract labor expenses at more than $13.6 million. In addition, California has a high cost of living and also some of the hospitals with the highest salary expenses are located in the state. Eight of the hospitals are part of the integrated delivery network (IDN), Kaiser Permanente, one of the largest healthcare systems in the U.S.

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