Ken Perez: U.S. demographic realities and the productivity mandate for healthcare
With COVID-19 cases and hospitalizations on the decline in the United States, at least as of late April, it’s fashionable to reflect on the pandemic’s impact on the U.S. healthcare system — and on the healthcare workforce in particular
As part of the broad “Great Resignation,” in which massive numbers of Americans quit their jobs in 2021, including 24 million between April and September 2021, healthcare lost 524,000 workers from February 2020 to September 2021.a
Optimists are quick to assert that the workforce decline is transitory, a temporary blip. They say, “The healthcare workforce ebbs and flows. Workers leave, but they come back. They have to work, right?”
Maybe. But perhaps in a different role or setting. The biggest reason for the resignations was the cumulative stress and burnout caused by COVID-19.
And these pressures continue. A nationwide survey of 11,964 nurses conducted by the American Nurses Foundation in January found that the top three feelings experienced in the 14 days prior to the survey were all negative: stress (71%), frustrated (69%), and exhausted (65%).b In addition, 53% of the survey respondents reported having an extremely stressful, disturbing or traumatic experience due to COVID-19.c One must wonder whether the pandemic will leave an indelible stain on the profession.
Not surprisingly, 23% of those surveyed said that they intended to leave their position. Applied to the total registered nurse workforce, that translates to almost 700,000 resignations. That figure dwarfs the annual number of registered nurse graduates, which was 155,000 in 2018, before COVID-19. Even then, a Health Affairs article posited that, “The inflow of new RNs each year may not be sufficient to meet projected future needs for registered nurses due to the leveling off of the number of RN graduates.…”c
And if one thinks that foreign nurses could make up the shortfall, the Philippines, the biggest source of foreign nurses for the United States, produces 19,000 nurses in total annually, and they are dispersed throughout the world.d
COVID-19’s impact on nursing is undeniable. But focusing too much on the pandemic can obscure longstanding and inexorable demographic trends.
The graying of America is accelerating. The U.S. population grew only 0.1% in 2021, exacerbating the slower growth the nation has experienced for several years.e
In fact, the U.S. Census Bureau projects the population will grow on average by just 0.6% per year thru 2040.f In 2020, 16.9% of the population was 65 years or older. By 2040, according to the Census Bureau’s projections, that percentage will grow to 21.6%, and it will reach 23.4% by 2060.
Healthcare labor shortages
The nursing workforce is aging as well. In 2021, the average age of registered nurses in the United States was 43.1 years versus the median age of 38 for the total population.g Although the demand for nurses will grow at least 5% in the next five years, more than 900,000 will leave the profession for good, according to a projection from global advisory firm Mercer, a unit of Marsh McLennan. That means that facilities will need to hire more than 1.1 million nurses by 2026, and 29 states will most likely be unable to meet demand.h
The pharmacy technician is another job category that is experiencing severe shortages. According to two surveys conducted by the American Society of Health-System Pharmacists (ASHP) in November 2021, a majority of hospital and health system pharmacy administrators reported turnover rates of at least 21% during 2021, with one in 10 saying that they had lost 41% or more of their pharmacy technicians.i
Learning from Japan
Japan is a country that has gone through slowing population growth and even net declines in its population. After reaching a peak of 128.1 million in 2010, Japan’s population has steadily decreased, and it is expected to drop to 110.9 million by 2040.j In 2020, people 65 years or older made up 29% of the population, the largest share ever, and the labor pool is shrinking significantly.k
In response to these demographic trends, as Nikkei Asia reports, “[There is] … an urgent need for productivity growth to keep the economy expanding as the labor pool dwindles.” The working-age population is projected to contract by 14% in 25 years.l
And the productivity growth will have to be accomplished through application of digital technology and advances such as artificial intelligence. In healthcare, labor-saving productivity gains resulting from the use of automation, robotics and data intelligence will be essential to meet the aging population’s increasing demand for medical care and to slow the growth in health expenditures.
In 1979, Ezra Vogel published Japan as Number 1: Lessons for America, an analysis of Japan’s transformation into one of the world’s most effective industrial powers, most notably in terms of economic productivity. Over four decades later, given that the United States seems to be following in Japan’s demographic footsteps, the island nation’s mission to improve productivity — especially in health care — looks like another lesson for America to learn.
a. Pitt, S., “The No. 1 reason people quit jobs during the Great Resignation, according to MIT research — and it’s not pay,” Grow, Jan. 22, 2022; and U.S. Bureau of Labor Statistics, “Employment situation news release,” Oct. 8, 2021.
b. American Nurses Foundation, “COVID-19 impact assessment survey – the second year,” accessed March 19, 2022.
c. Salzberg, E.S., “Changes in the pipeline of new NPs and RNs: Implications for health care delivery and educational capacity,” Health Affairs, June 5, 2018.
d. Government of the Philippines, The Philippines business primer, March 14-18, 2022.
e. Rogers, L., “U.S. population grew 0.1% in 2021, slowest rate since founding of the nation: COVID-19, declining birth rates and international migration resulted in historically small population gains,” United States Census Bureau, Dec. 21, 2021.
f. Vespa, J., et al., “Demographic turning points for the United States: Population projections for 2020 to 2060,” February 2020.
g. U.S. Bureau of Labor Statistics, “Household data annual averages: 11b. Employed persons by detailed occupation and age,” accessed March 19, 2022; and ArcGIS, “2021 USA Median Age,” June 25, 2021.
[h] Bateman, T., et al., U.S. healthcare labor market, 2021.
[i] Bailey, V., “Poor compensation spurred pharmacy technician staffing shortages in 2021,” RevCycle Intelligence, March 16, 2022.
[j] National Institute of Population and Social Security Research, “Population projections for Japan (2016-2065): summary,” accessed March 19, 2022.
[k] Statistics Bureau of Japan, Statistical handbook of Japan 2021, accessed March 19, 2022.
[l] Nikkei staff writers, “Japan’s shrinking labor pool sharpens quest for productivity,” Nikkei Asia, Dec. 1, 2021.