Average salary expense at U.S. hospitals

Physician and hospital staff salaries, along with costs for contracted labor, are some of the biggest hospital expenses that impact a hospital’s bottom line.

In this Healthcare Insight, we review average salary and labor expenses at U.S. hospitals and compare metrics by hospital bed size and location. The latest data is based on the January 2024 release of the Medicare Cost Report, and results in this analysis are aggregated from the last five full calendar years of hospital financial data tracked in our database. Staffing and recruiting companies can use data points like these from the Definitive Healthcare platform to identify new opportunities and target healthcare organization prospects.

What is the average hospital salary expense?

Based on data from more than 3,500 hospitals in the Definitive Healthcare HospitalView product, the average salary expense in 2021 for U.S. hospitals was $113 million in 2022, the most recent full year of data available.

Average U.S. hospital salary expenses, 2018 to 2022

Fig. 1 Data is from the Definitive Healthcare HospitalView product and sourced from the Medicare Cost Report. Accessed March 2024.

How much do hospital salary expenses increase each year?

Hospital salary expenses have increased by about 5% on average annually from 2018 to 2022. In comparison, hospital expenses have risen about 7% each year in the same timeframe. Salary and labor expenses make up about half of a hospital’s total operating expenses.

Salary expenses by hospital bed size

Fig. 2 Data is from the Definitive Healthcare HospitalView product and sourced from the Medicare Cost Report. Accessed March 2024.

Hospitals with 25 beds or fewer spent on average about $15.5 million on salary expenses in 2022 compared to hospitals with more than 250 beds, which spent more than $314 million on average.

Hospitals with more than 250 beds had the highest average annual increase in salary expense since 2018 at more than 5%.

Interestingly, salary expenses made up a smaller portion of total operating expenses for these large hospitals – 35% for hospitals with more than 250 beds compared to 42% for hospitals with 25 beds or fewer. The large physical size of these hospitals with a high bed count, as well as their higher operating expenses, likely contribute to this trend.

Salary expenses by region

Fig. 3 Data is from the Definitive Healthcare HospitalView product and sourced from the Medicare Cost Report. Accessed March 2024.

Hospitals in the Northeastern United States have the highest salary expenses, with an average of $171.6 million reported in 2022. Factors such as large cities and states with high costs of living in the region affect this high average.

Between 2018 and 2022, hospitals in the Northeast and Southeast had the highest average annual increase in salary expenses at 5.5%.

Salary expense is more than half of the hospital’s overall operating expense in the Midwestern and Western U.S. Hospitals in these regions have salary expenses of 57.4% of operating expense and 52.0%, respectively.

Which hospital departments have the highest salaries?

In addition to the total salary expenses, HospitalView tracks a number of cost center and departmental level salaries.

The top five cost centers based on average hospital salaries are:

• Adult and pediatric salary costs: $14.5 million
• Surgical ICU salary costs: $10.8 million
• Clinic Salary Costs: $10.4 million
• ICU Salary Costs: $6.9 million
• Coronary Salary Costs: $6.1 million

Some of these departmental salaries are similar to the specialties of the highest paid physicians in U.S. including cardiologists and surgeons.

What is included in hospital salary expenses?

Hospital salary expenses are sourced from the Medicare Cost Report and include direct salaries and wages, amounts for related paid vacation, holiday, sick leave, other paid time off, severance pay, and bonus pay paid to hospital employees.

Learn more

Healthcare Insights are developed with healthcare commercial intelligence from the Definitive Healthcare platform. Read about how healthcare staffing companies use Definitive Healthcare data on a daily basis or find out which hospitals have the highest salary expenses.

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