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A shortage of nurses and other workers are driving up costs for hospitals and will continue to erode their financial performance into 2022, according to a new report by Moody’s Investors Service on the impact of labor shortages and cost pressures on health care subsectors. 

“Given their substantial reliance on government reimbursement sources, such as Medicare and Medicaid, most healthcare providers maintain limited pricing flexibility to offset the costs of higher wages,” the report notes. “…Health insurers are less affected by labor shortages, wage pressure and potentially burgeoning inflation than many other healthcare sectors. Aided by the short-term nature of the product it sells, the industry has the flexibility to offset inflationary pressures.”