4sight Health March 16, 2023
David W. Johnson

In 2006, Warren Buffett quipped that, “GM is a health and benefits company with an auto company attached.” [1] America’s largest car manufacturer had just announced that the medical bills of its employees and retirees cost the self-insured company around $7 billion that year, compared to only $2.2 billion in net revenues on total revenues of $207 billion. [2]

Given the financial and strategic importance that workforce management plays in hospitals today, Buffett could describe health systems as human resource organizations with care delivery businesses attached. Like GM with healthcare in 2006, few health systems today control this essential aspect of their business.

Labor is hospitals’ biggest expense, averaging 50% of overall costs. [3] Nurses represent around half of those...

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