Financial Impact on Healthcare from Regulated Wage Increases

Financial Impact on Healthcare from Regulated Wage Increases

Anna Rue
Anna Rue

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PPG was commissioned by legal representatives of a healthcare industry trade association to prepare an independent expert report assessing the potential impact of proposed regulated wage increases.

Our analysis was conducted for submission to a national industrial relations tribunal reviewing wage structures across multiple industries.

Our independent analysis employed three complementary modeling approaches to estimate the expected change in labor costs.

Key Findings:

  • Cost implications: The proposed wage increase would translate into an industry-wide labor cost increase of between $1.7-$2.4 billion annually.
  • Profit implications: This would reduce industry earnings by $441 – $610 million annually, a 56-78% decline in profitability.

Without additional government funding, providers would likely respond through cost cutting, including:

  • Workforce reductions
  • Closure of less profitable service locations (e.g. rural areas)
  • Industry consolidation

PPG conducted further modeling based on granular workforce data, concluding that full implementation of the tribunal’s proposed determination could materially affect employment growth, job security, and service accessibility for patients.

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