Healthcare Workforce Outlook

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March 4, 2009

HFMA's Healthcare Finance Outlook 2009 has just been released, and it shows that workforce issues--especially regarding the employment of clinical staff--are top of mind for healthcare finance professionals.

The 2009 Outlook , which is sponsored by Siemens, draws on the insights of more than 100 healthcare thought leaders to forecast issues likely to affect healthcare finance over the next 10 years. Areas of focus include workforce, the payment system, physician integration, technology, and capital planning.

The Outlook 's findings will be presented in an audio webcast led by members of HFMA's own thought leadership team on Thursday, April 16, 2:00 to 3:45 p.m. Central time. Here, we offer a first look at the future of clinical staff employment for hospitals, focusing on nurses and physicians.

The Healthcare Workforce Today

Growth in labor cost is the single most important factor driving up the cost of care today. Sixty-two percent of annual cost growth is related to rising costs of goods and services purchased by hospitals to deliver care and accomplish their mission goals. Two-thirds of that annual cost growth is related to wages and salaries and employee benefits.

Hospitals face continuing shortages of skilled clinical staff, including registered nurses. The current recession has temporarily softened some of the upward pressure on labor costs as nurses who were not working re-enter the workforce, but 37 percent of the Outlook respondents believe that the nurse shortage will exceed 20 percent in 10 years.

Another trend is the rapidly accelerating employment of physicians by hospitals. A 2007 review of physician recruiting incentives shows that hospitals offered employment to physicians nearly twice as often in 2007 than in 2006 and 2005. Forty-five percent of the Outlook respondents believe it is highly likely or extremely likely that nearly all hospitals will employ a majority of their physicians in the next 10 years.

Strategies for Addressing the Nursing Shortage

The average age of RNs in the workforce today is 44. Retaining these nurses in the coming years is important, because they have the insight and experience necessary to help hospitals optimize care as payment systems become increasingly outcome-based.

A major component of a nurse retention strategy will thus focus on the needs of older nurses in the workforce. Some hospitals are already doing this by improving the ergonomic environment, minimizing the need for lifting, stopping, and other forms of physical or mental stress.

A shortage of new nurses entering the workforce pipeline will create both supply and demand issues. Hospitals will need to examine staffing processes and optimize the resources available to them. An important future trend for nurses--and all types of healthcare professionals--will stress flexible career paths. The healthcare workplace will be made more attractive by offering employees mobility through the system in response to their preferences, priorities, and desires at different times in their careers.

For more information on recruitment and retention strategies for nurses and other issues affecting nurse managers, consider subscribing to HFMA's award-winning Business of Caring newsletter

Physician Employment Issues

Outlook respondents identified development of a business plan for integrating physicians as the single most important near-term action. Employment has emerged as a key strategy in physician integration to counter growing shortages of physicians in cognitive fields, ensure call coverage by trauma and surgical specialists, and respond to outcome-based and bundled forms of payment. And today, hospitals' desire to employ physicians is matched by physicians' desire to be employed.

Still, employment strategies must be carefully thought out to avoid mistakes of the 1990s, when hospitals ended up losing more than $90,000 per physician each year because guaranteed payment tended to reduce productivity. Compensation structures should vest physicians in the viability of the hospital and include incentives for meeting quality or pay-for-performance measures. Compensation should also reflect fair market value and include regular updates.

Physician employment may not be the best strategy in all situations. Also, employment of certain classes of physicians--such as intensivists or hospitalists--may be more effective than across-the-board physician employment.

HFMA's Physician Alignment Forum offers original material, peer-shared content, and aggregated resources on issues surrounding the physician-hospital relationship. Learn more .

For more information on HFMA's Healthcare Finance Outlook 2009 , join our audio webcast on Thursday, April 16.

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