Labor Cost Management

Healthcare labor update: Employment data and research findings underscore ongoing challenges

January 10, 2022 10:00 pm
  • Hospital jobs in December decreased by several thousand for a second consecutive month.
  • New data show the extent to which the nursing workforce became constrained during the first 16 months of the pandemic.
  • Shortages of allied health professionals are causing hospitals to seek temporary fill-ins.
  • The resulting spikes in wages are hampering hospitals financially.

As highlighted in new employment data and newly published study and survey findings, the healthcare labor market continues to pose difficulty for hospitals.

Preliminary December data from the U.S. Bureau of Labor Statistics shows a reduction of 5,100 hospital jobs. Combined with a decrease of 3,900 in November, the latest numbers indicate a downward trend that seemed to have been halted in prior months, with hospitals gaining jobs in July, August and October. The year-over-year drop-off in December was 42,000.

Many of those job losses likely are voluntary separations, as employees grapple with burnout — and in some cases, decline to get vaccinated as required by their state or employer — during the COVID-19 pandemic. In October, a Morning Consult poll found that 18% of U.S. healthcare workers had quit and 12% had been laid off during the pandemic.

Hiring nurses becomes increasingly difficult

A new Health Affairs study that examined nurse employment between February 2020 and June 2021 found a 2.2% decrease in hospital nursing jobs. The reduction was 0.7% in physician offices, while nurse employment at outpatient centers increased by 2.6%.

After a net gain of 600,000 jobs between 2011 and 2020, RN employment across healthcare decreased by 1% during a five-quarter period ending in June 2021. The same time frame saw declines of 20% for licensed practical nurses (LPNs) and 10% for nurse aides (NAs).

A key finding was that even as demand for healthcare services rose and wages increased over the course of the pandemic, employment levels of nurses remained low compared with historical norms.

“This suggests a tightening labor market in which employers could not hire as many nurses as they wanted,” the researchers wrote.

As for long-term trends, the researchers noted that an estimated 660,000 baby-boomer RNs have continued to work during the pandemic and are expected to retire by 2030. If substantial numbers push up their departures, “The size of the nurse workforce could decrease more quickly and disrupt nurse labor markets throughout the country.”

Another key question is whether the pandemic will diminish interest in nursing. Without drawing conclusions, the researchers noted that the number of applicants to four-year nursing programs increased by 1.5% in 2020, compared with 4.5% and 8.5% the previous two years.

Allied healthcare professionals also are hard to find

A survey conducted in August and September 2021 by AMN Healthcare found that among 204 responding facilities, including 159 hospitals, 75% were seeking temporary allied healthcare professionals. The primary reason was to fill gaps during searches for permanent workers or after departures, according to responses, while the primary benefits were described as preventing burnout of existing staff and maintaining treatment continuity of patients.

Among specific roles being sought, respiratory therapists were cited by 26% of respondents, followed by laboratory technologists (25%) and radiologic technologists (23%).

“The widespread use of temporary allied healthcare professionals signals an emerging shortage of these workers,” Robin Johnson, divisional president with AMN Healthcare, said in a news release. “The same patterns of labor shortages prevalent in nursing and medicine now are affecting the allied healthcare professions.”

When asked about impediments to hiring temporary allied healthcare professionals, 56% of respondents cited costs. Nearly half said the cost of bringing in such workers was either somewhat unreasonable (35%) or extremely unreasonable (12%).

Staying well-staffed becomes more expensive

The shrinking supply of nurses inevitably led to higher wages between the spring of 2020 and June 2021, the Health Affairs researchers found. Earnings increased by 2% for RNs, 9.4% for LPNs and 5.7% for NAs. In hospitals, the increases were 2.5%, 18.6% and 11.3%.

In its latest monthly report on hospital financial data, Kaufman Hall wrote that labor expenses remained a problem for hospitals in November. Per adjusted discharge, labor expense was 2.7% higher than in October despite a 1% drop in FTEs per adjusted occupied bed. Compared with November 2019, the expense increase was 26.4%.

“Widespread labor shortages are driving up already-high labor expenses, posing significant operational challenges for our nation’s hospitals,” Erik Swanson, senior vice president for data and analytics with Kaufman Hall, said in a news release. “Hospitals are grappling with higher labor costs despite lower staffing levels, due to intense competition for qualified healthcare workers.”

The Health Affairs study, the AMN Healthcare survey and the Kaufman Hall report don’t account for the ongoing COVID-19 surge fueled by the omicron variant, which could make the labor-related challenges more daunting in the weeks ahead. Given the short-term uncertainty and the need to continue supporting the workforce after the pandemic, organizations should recognize the need for innovative solutions.

“The pandemic has accelerated the changes that we had already begun to address,” said Rick Gundling, FHFMA, senior vice president for healthcare financial practices with HFMA. “We will need to engage our workforce in many ways as we see younger generations wanting to work in more flexible modes. We’ll also need to strongly apply technology, including artificial intelligence that can reduce the need for certain duties to be done by workers and allow those workers to be redeployed to fill critical roles.”


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