Labor Cost Management

Amid Full Employment, Hospitals Keep Hiring

September 10, 2018 12:48 pm

A federal analysis projects healthcare jobs will be among the fastest growing through 2026, accounting for about 2.3 million new jobs.

Sept. 7—Hospitals, like much of health care, continued their steady hiring streak in August, even as the pool of potential new hires appeared almost dry.

Healthcare employment increased by 33,000 jobs, with 21,100 positions created in ambulatory healthcare services and 8,000 at hospitals, according to the latest report from the Bureau of Labor Statistics (BLS). The hospital rate of job creation was on track with the monthly rate of 7,800 over the last 12 months, when those organizations added a total of 94,600 positions.

“I see continued, solid growth,” said Ani Turner, co-director of sustainable health spending strategies for Altarum.

The latest hiring surge began in mid-2014, and Turner had expected it to taper down by now.

“But we seem to be at this more of a steady state of just under 2 percent [hiring] growth, an average of 25,000 to 26,000 increase in jobs,” Turner said, referring to monthly healthcare hiring numbers dating back to 2017. The hiring also comes as annual wage increases range from 2.5 percent to 3 percent and overall healthcare spending increases by 4 percent to 5 percent per year.

“Most of the growth has been in ambulatory, but hospitals are still hiring,” Turner said.

The healthcare hiring growth also is tracking job creation rates in the overall economy, which has reached a 3.9 percent unemployment rate—generally considered full employment.

Meanwhile , labor is the largest single component of hospital costs, according to a 2017 Deloitte report based on interviews with 20 health system CEOs. Deloitte estimated that labor expenses make up roughly 50 percent of total operating costs for most hospitals.

Job Types

Although federal data tracking newly created positions lags by more than a year, Turner has found that as of May 2017 the most common job created in the healthcare sector was registered nurse positions. The number of registered nurses (RNs) in health care reached more than 2.9 million by May 2017. Separate Census Bureau data found that total nurse employment increased by about 20 percent from 2010 to 2017, reaching more than 3 million, according to an analysis by Montana State University.

The other positions with the fastest growth were nurse practitioners (NPs), physician assistants (PAs), and technicians.

“Overall, it is the more highly skilled medical-specific professions that are growing slightly faster than the support occupations and the non-health jobs like food service, administration, legal, and grounds-keeping,” Turner said in an interview. “Those jobs are growing a little bit but less so than the healthcare support, health professional, and technical occupations.”

RNs also comprise the bulk of newly created positions for hospitals specifically, Turner’s early analysis shows.

However, the data does not show whether the new positions are being created on the outpatient or inpatient side of hospital services. Many other data sources indicate inpatient utilization is flat or declining while outpatient utilization has grown in recent years, Turner said.

An August report from Moody’s Investors Service found that the not-for-profit hospitals it examined, as of 2017, had a median 1 percent increase in inpatient admissions—the lowest rate of growth in the last three years. Outpatient visits had a median growth of 2.2 percent—down for the first time in five years.

The decline in the median increase of outpatient surgeries to 0.8 percent “speaks to the increasing supply of competing sites providing these more lucrative services,” Moody’s noted.

In Medicare, the share of healthcare workers per Part A enrollee has steadily declined since the 1990s, while the number of Part A enrollees has steadily increased, according to a recent staffing analysis by the Medicare Payment Advisory Commission (MedPAC).

Among the not-for-profit hospitals studied by Moody’s, the median number of employed physicians between 2013 and 2017 increased by 58, or 36 percent, to reach 218.

The proposed Medicare physician fee schedules for 2019—seen by Moody’s as a credit positive for community hospitals and a credit negative for academic medical centers and certain rural hospitals—would simplify billing by reducing fee-schedule evaluation and management (EM) codes from five to two. The change would effectively increase payments to primary care physicians and reduce payments to specialists, thereby encouraging more of the latter to seek hospital employment, according to Moody’s.

In contrast to RNs, licensed practical nurse (LPN) employment at hospitals has declined over the last five years, Turner said. Across the healthcare sector, the number of LPNs and vocational nurses reached 724,500 in 2016 and was projected to increase by 12 percent over the next 10 years, according to BLS data. Turner found that LPN hiring increased in nursing homes.

Hospitals and other healthcare providers have increased their hiring—at a faster rate than with RNs—of advanced practice nurses (APNs), NPs, and PAs, she said.

Meanwhile, a recent analysis by Mercer found that the costly challenge of high turnover in a tight labor market is affected primarily by overtime and inefficient staffing schedules that lead to burnout, as well as insufficient pay that leads to poaching by regional competitors.

“It’s important to note that money isn’t always the issue,” the Mercer analysts said.

They suggested conducting an analysis using internal workforce data that can find root causes of the turnover, which will vary by hospital.

Future Outlook

Hiring over the next 10 years of APNs, NPs, and nurse midwives was projected to surge by 31 percent over the next 10 years, according to BLS data. An even bigger hiring boom for PAs, with a 37 percent increase in positions, also was projected.

Healthcare jobs will be among the fastest growing through 2026 and account for about 2.3 million new jobs, according to a BLS projection.

Amid a changing healthcare workforce, the Mercer authors suggested that providers precede any big workforce investment with analyses to better understand the impacts of workforce change on readmissions or patient satisfaction metrics, like those in the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey.

“For example, our research suggests that human capital factors such as pay or staffing can have a statistically significant impact on readmission rates in some clinical settings,” the Mercer report stated.

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


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