The Truth Behind Staff Shortages in Healthcare

From a labor perspective, healthcare is experiencing the perfect storm. Over the past few years, high COVID-19 patient volumes increased employee burnout, which created a medical staffing shortage throughout all sectors of healthcare . Employee retention, already a touchy issue in healthcare, took another hit as we entered a new era known as the Great Resignation. 

The pressures of these healthcare workforce trends negatively impact care delivery, patient satisfaction, workflow efficiency, and even worker retention. How can healthcare providers overcome staffing shortages to improve care delivery?

What Is Healthcare’s Biggest Problem Today? Staff Shortages

Ask any healthcare leader today and they will tell you their biggest single challenge right now is a staffing shortage. Over the past two years, the industry lost somewhere between 20 to 30% of its skilled workforce. Those that remain struggle with burnout and many say they will consider a job change in 2022. 

In January 2021, U.S. News & World Report listed the states hit hardest by staffing shortages, including:

1. New Mexico
2. Vermont
3. Rhode Island
4. West Virginia
5. Arizona

A national Mercer study released in 2021 gives us concrete evidence that the labor shortages long predicted in healthcare are coming to fruition. The study states that:

• A lack of lower-income, unskilled workers in the healthcare space will limit our ability to provide homecare services 
• A lack of physician primary care talent will increasingly place the burden of care on mid-level providers (note the term mid-level refers to scope of practice, not quality of care delivered)
• Most markets will experience nursing shortages (read our post about the nursing shortage)
• Demand will rise for mental health professionals, which will create “a six-figure hiring rush”
  

Lack of Unskilled Labor

There is evidence that the shortage of lower-income workers will be acute, with the need for medical assistants, nursing assistants, and home health aides expected to top 10 million by 2025. The Mercer study suggests these numbers are even perhaps too low; given the latest trends they also predict that 6.5 million of these workers will likely leave during this time. 

Physician Shortages

At the higher end of the labor spectrum, physician shortages have long been predicted by the Association of American Medical Colleges. Primary and specialty care are both impacted, with the demand far exceeding the supply by 2034. Primary care expects a gap of 48,000 doctors nationally, however, there are signs that the pace of retirement since COVID will increase these numbers. Currently about 12% of the primary care workforce (including family medicine, OB/GYN, and pediatrics) are 65 years or older. This will increase demand for these doctors by 4% over the next five years and place more pressure on physician extenders to handle patient volumes. 

Nursing Shortages

More than 900,000 nurses will permanently leave the field by 2026, which is the same year that the demand for nurses will reach 5% higher than previous years. The study states, “If current trends hold, 29 states will not be able to fill the demand for nursing talent, coming up with almost 100,000 nurses short in the next five years.” 

Demand for Mental Health Professionals

The pandemic raised awareness of the importance of mental health. However, more than 500,000 jobs in this field will be left unfilled by 2026. This will drive healthcare organizations to increase salaries of skilled workers, which in turn will drive up costs. Mercer predicts that even with these increases, 27 states will simply be unable to keep up with demand for these services.

The Fitch Ratings agency is keeping a close eye on the economic impact of these shortages. They suggest that increasing staff shortages due to the pandemic will “not easily be resolved even if the pandemic is brought to heel.” 

Exacerbating an already difficult staffing issue in the healthcare sector is a new workforce trend in the United States called the Great Resignation. What is it and why does it have healthcare staffing teams concerned for their ability to hire and retain staff?

What Is Healthcare’s Great Resignation?

There is evidence that our workforce is ready for change. That evidence began in April 2021, a time now known as the Great Resignation. That’s when a record number of Americans in all work sectors quit their jobs. Over the course of three months, more than 11 million people resigned from their jobs. That was approximately one year after the pandemic began. The “big quit” movement, if it can be called that, seriously impacted service and product delivery from the supply chain down to the point of purchase.

While the national quit rate burgeoned to 3.1%, the highest ever recorded by the U.S. Bureau of Labor Statistics, the hospitality industry took the greatest hit of resignations. In April, 5.4% of the entire hospitality industry literally threw in the towel en masse. By May, another 5.7% of food service, hotel, and other hospitality workers walked away. They joined 3.6 million workers in other sectors who quit that month.

By June, there was enough data to realize that this shift was less a fluke and more of a trend, with another 3.87 million people joining in what became known as the Great Resignation.

 While hospitality was the number one industry to feel the effects of mass resignations, healthcare was second. The difference, though, was that a sharp increase in the number of COVID hospitalizations paralleled the big quit phenomenon. By late 2021, one in five healthcare workers had quit their jobs. That was 18% of the workforce in a field that knew—even before the pandemic—that they couldn’t afford to lose a single skilled worker.

The pandemic simply exacerbated the shortages already predicted by organizations such as the Association of American Medical Colleges. Nearly 80% of healthcare workers say these shortages impacted their jobs even before COVID hit. With the pressures of the pandemic, many healthcare workers simply walked away to take new jobs or leave the field entirely. We now have data on what these frontline worker shortages are doing to the healthcare paradigm. It turns out the impact of healthcare labor shortages, no matter what’s causing them, is and will be grim.

What Are the Effects of Staff Shortages on Healthcare Delivery?

Healthcare staffing shortages negatively impact patient care delivery, patient satisfaction (and hospital revenue), workflow efficiency, and certainly, worker retention. All of these impacts lead to higher healthcare costs.

Patient Care Delivery

Healthcare workers say that not only have their workloads increased as a result of the staffing shortage, there’s been a corresponding drop in patient care excellence. We know that nursing shortages lead to higher morbidity and mortality rates and that increases in nurse-to-patient ratios lead to higher hospital readmission rates. Short-staffing increases the risk of death for patients by 4 to 6%. 

Hard data from October 2021 again confirmed correlation between adequate staffing and high quality patient care. Healthcare-associated infections, after years of decline, spiked again during the pandemic. Since national healthcare data on safety and quality lags behind the patient experience by several months or years, this is the first real concrete evidence associating staffing shortages with a negative impact on care delivery during the pandemic. 

Patient Satisfaction

Understaffing means the work falls on a smaller pool of labor, who typically work harder to fill the gap. This takes a toll on the emotional and physical health of the worker while negatively impacting the quality of care and satisfaction of the patient. Burnout in doctors is directly linked to lower patient satisfaction scores. One study correlated negative patient perceptions with a delay or missed care resulting from nursing shortages. As the industry is moving toward patient-centered care, customer satisfaction not only impacts a hospital’s reputation but also its bottom line.

Workflow Efficiency

During the pandemic, the shortage of healthcare workers required existing teams to carry additional tasks above their job description. The concept of “highest and best use of staff” was tossed out the window during the unprecedented demand for urgent care during the crisis. These workflow inefficiencies created an undue burden on staff while also creating safety risks for patients. 

Healthcare Costs
Physician burnout and turnover alone cost $4.6 billion annually. There are huge costs associated with replacing skilled knowledge workers. The average cost of replacing even one doctor starts at $250,000 and can range as high as a million dollars, depending on the specialty.

Staffing is already the largest expense for most healthcare facilities. Yet in August 2021, there was an 8.5% increase in hourly hospital wages from the prior year. Residential care and nursing facilities increased hourly wages by 11.5% in an effort to attract more talent. 

These increases hit the hospital bottom line like a boulder. Particularly so in rural settings where the recruitment enticements of community-based facilities can’t compete with their urban counterparts. Fitch predicts, “We expect operating margin pressures to become more pronounced as labor shortages drag on.” 

Worker Retention

In 2020, before COVID, the average staff turnover at U.S. hospitals was close to 20%. Since 2016, the average hospital experienced a 90% turnover of its entire workforce. Burnout plays a huge factor in these numbers; 70% of nurses and 50% of doctors report burnout symptoms. It’s a safe assumption to say these numbers are higher post-COVID and are behind the numbers we call the Great Resignation.

All of these trends roll into the higher costs of care. What can healthcare organizations do right now to control the damage?

What Strategies Can Mitigate Healthcare Staffing Shortages?

The Great Resignation has forced many companies to look at their culture, pay, and work responsibilities to figure out how to create a better environment to attract and retain talent. Healthcare organizations everywhere are facing the same kind of reckoning.  

Despite all the staffing shortage data, the country’s biggest nursing union, National Nurses United, says there actually isn’t a nursing shortage at all, but a shortage of nurses “willing to risk their licenses or the safety of their patients by working under the unsafe conditions the hospital industry has created.” While this aggressive statement may fuel controversy, studies of healthcare workers show 77% disapprove of how their clinical employers handled the COVID pandemic. Poor communication, safety protocols, low pay, and “a general sense of being disposable,” drove healthcare’s Great Resignation, according to the survey. 

The surges in COVID-19 variants forced healthcare facilities to run leaner again. This created recruitment and retention challenges that must be addressed before these organizations can mitigate the damage we’ve experienced. While there are signs that larger industry changes will increase the flow of new nursing, physician, and other talent into the market, these are overarching changes that ultimately remain out of our control. What healthcare organizations can control is their effort to attract and retain the best available talent.

A recent American Medical Association (AMA) study suggests that a healthcare employee’s feeling of value within the organization is strongly linked to increased retention. Citing the study, Fierce Healthcare recommends that organizations “implement strategies to enhance healthcare workers’ sense of value, establish nurturing environments and decrease work overload through better teamwork that aims to limit stress and avert turnover.”

Whether you are an independent small medical practice or a multi-state hospital system creating an environment where employees feel valued is the key to mitigating the recruitment and retention issues we’re facing. The Healthcare Financial Management Association (HFMA) suggests that value can be created as early as during the recruiting process for new talent. Since your healthcare organization faces intense competition for both clinical and administrative positions, they recommend eliminating any bottlenecks to the hiring process for a better candidate experience. Mercer suggests digitizing and automating recruiting and onboarding to help keep pace with hiring needs and improve the candidate and new hire experience. 

HFMA also recommends improving the employee retention process, including:

• Conducting a review of compensation and benefits at all levels of your organization
• Identifying and addressing any management issues that add to a stressful environment
• Monitoring retention levels for any “hot spots” and provide the training and support necessary to dampen any of these fires
• Developing new career pathways for existing employees to support career growth and alleviate burnout
• Allowing flexible scheduling, hybrid work models or even remote work whenever possible

 Mercer’s recommendations include a more generational and targeted approach toward creating value to attract and retain candidates. For example, they suggest that Gen Xers are drawn to higher 401K matches while Gen Z appreciates more workplace scheduling flexibility. Targeting your approaches to these populations will maximize the value your healthcare organization offers.

 Healthcare organizations should also reassess traditional work environments to make them more appealing. Consider your overall employee value proposition from the perspective of the candidates you’re trying to attract. What workplace strategies can improve the lives of your existing teams? How can those efforts sustain themselves through the next crisis? As the pandemic crisis wanes, it’s time for healthcare organizations to reassess outdated workflows and communication models. How can digitally enabled technologies improve not just the patient experience but the daily experiences of your workforce?

What’s Next After the Great Resignation?

We don’t yet know if the Great Resignation signals a fundamental shift in the attitudes of our nation’s workforce. We also don’t know if an economic shift will cause the job market to tighten. However, the past two years have provided healthcare organizations with unprecedented challenges that we know will continue in the form of labor shortages and increasing costs. 

Healthcare leaders should carve out time to reassess employment and retention strategies to help mitigate an uncertain future for their labor pool. It is the only way to mitigate staffing shortages while providing better quality of care to the communities they serve.