Hospitals have increased their employment of advanced practice nurses during the recent hiring surge, and the trend is expected to accelerate.

Aug. 12—Increasing registered nurse (RN) salaries will create growing financial pressure on not-for-profit hospitals in the future, according to a ratings firm.

Fitch Ratings warned this month that signs are emerging of pressure on wages and greater spending on nurse-agency workers in certain markets, particularly for certain specialized services such as ICU and surgical nurses.

The number of non-primary care advanced practice nurses (APNs) in all surgical fields was projected to increase by 181 percent between 2010 and 2025, according to projections by the Health Resources and Services Administration (HRSA).

The geographic impact of the rising nurse wages is already being seen in metropolitan areas with low unemployment rates, growing populations, and numerous healthcare providers, according to Fitch. Wage pressures also may affect providers in markets that are more isolated and have a smaller pool of nurses and nurse assistants.

“While the number of registered nurses increased by 11 percent from 2011 to 2015, the emphasis on wellness, post-acute services, and the growth in outpatient services has increased the overall demand for nurses and nurse assistants at a faster rate,” a Fitch analysis stated.

Fitch expects the demand for nurses to remain high amid looming retirements. About half of nurses are over age 50, according to the American Nurses Association. Demand for nurses also will be fueled by the number of Baby Boomers entering old age.

“In our view, the effect of the growing competition for nurses and the associated wage, agency, and turnover costs is touching certain markets,” the Fitch analysis stated.

The growing financial pressure from nurses’ compensation has had a limited impact on hospital operating performance so far. But the continuing trend “could have an impact on hospital operating performance and ratings in the long run.”

Hiring Trends

From 2010 through 2014, hospitals’ hiring of RNs increased by 2.6 percent, or about 39,000, according to a recent report from the Medicare Payment Advisory Commission (MedPAC). Those hires came as the numbers of licensed practical nurses and licensed vocational nurses declined by 30 percent, or about 44,000.

The tradeoff suggested “a continued shift toward employing nurses with a higher level of training,” the MedPAC report stated.

In more recent years, hospitals have launched a broad hiring spree—including the addition of 172,000 positions in 2015, or more than quadruple the 2014 total of 42,000, according to an Altarum Institute report. However, less data is available on what types of employees were part of that hiring surge.

Ani Turner, co-director of Altarum Institute's Center for Sustainable Health Spending, noted recently that preliminary findings of her ongoing examination of occupational employment statistics data identified APNs as being among the professions that hospitals were hiring the most.

The Bureau of Labor Statistics (BLS) included nurse practitioners on its list of the fastest-growing professions from 2014 to 2024. In the next 10 years, BLS expected the number of nurse practitioners to increase by 35 percent to 171,000. Nurse practitioners had a median annual wage of $95,350.

In all, APNs were expected to account for increasing numbers and roles, according to projections by IHS Inc. The 2016 report concluded that 2014 APRN totals included 143,300 nurse practitioners, 46,400 certified registered nurse anesthetists, and 11,300 certified nurse midwives. By 2025, total APRNs were expected to exceed the number required to maintain current staffing levels by approximately 90,100.

The roles for those future nurses are unclear due to “uncertainty” around whether those providers “might take on new roles or address currently unmet needs, rather than taking on workload historically provided by physicians.”

According to HRSA, the share of APNs in the non-primary care healthcare workforce will increase from 19 percent in 2010 to 30 percent in 2025. The supply of non-primary care APNs was expected to increase by 141 percent in that time.

Other Challenges

Among the other challenges that Fitch expects not-for-profit hospitals to face in future years is reduced revenue from the increasing role of consumerism in health care.

The expansion of value-based and risk-based contracting could continue the shift of risk from payers, particularly Medicare, to providers.

“However, we expect ratings to be stable in the short term as the sector's improving liquidity and leverage positions provide a solid financial cushion to absorb potential operating volatility,” the analysis noted.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C. office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Friday, August 12, 2016