Health Care Labor Pressures Continue
In our “What to Watch in Health Care in 2022” blog we highlighted health care’s labor pressures. Some systemic issues related to health care workforce include lack of sufficient training sites (ex: physician residencies, clinical nursing sites), maldistribution of positions (primary care vs specialty; urban versus rural concentration), an aging workforce, lack of educators, (particularly acute in nursing), and compensation for certain positions. Add a pandemic and pre-existing issues can become very problematic.
Health care workforce wages, employees
According to data from January 2020 to February 2022 from the U.S. Bureau of Labor Statistics (BLS), the industry has been hard hit by job loss, turnover, and early retirements. However, the pandemic’s impact has not been uniform across the industry. While all segments saw job losses in the beginning of the pandemic (spring 2020), the ambulatory setting has recovered well, gaining almost 242,000 employees since then. At the same time, the hospital sector lost 33,000 employees and nursing homes/residential care facilities lost 145,000 employees. Put another way, the total changes during this time period were:
- All Ambulatory: Increase of 2.8%
- Hospitals: Decrease of 1.9%
- Nursing & Residential Care Facilities: Decrease of 11.8%
Register for CLA’s June 1 webinar:
Economic/Industry Market Outlook (Health Care Focus)
Compounding the challenges associated with available labor is the cost for the labor that is available. By segment, health care employers saw significant wage increases as follows:
- All Ambulatory: 9.9%
- Hospitals: 13.8%
- Nursing & Residential Care: 18.3%
Take agency costs as one example. The demands on health care providers during COVID were difficult and relentless. To address patient care needs, many in the hospital and post-acute settings had to increase their use of agency staff, and in turn, agency rates began to skyrocket. At the same time, agency work itself became an attractive option for existing staff who were struggling with burnout, their mental health, lack of work/life balance, pay, or other considerations.
Turnover was also a large issue. Data from the CDC’s National Center for Health Statistics reported on by the Department of Health & Human Services shows certified nursing assistants (CNAs) make up the bulk of the nursing home workforce (64%) with licensed practical nurses at 22% and registered nurses at 12%. When you combine the potential of getting COVID from or giving COVID to a vulnerable population with demanding physical (and emotional), and potentially lower wages in key positions, it is understandable some employees switched settings or exited health care altogether.
Impact on revenue, margin
Double digit increases in hourly wage rates and lack of available labor places downward pressure on operating margins. At the same time, increased wages and staffing levels also impact topline revenues. For example, one of the leading financial indicators for nursing homes is occupancy levels. According to CLA’s 36th SNF Cost Comparison & Industry Trends report, throughout 2020, occupancy continued to fall, bringing the average below 80% for the first time. In some cases, limited occupancy was due to a lack of sufficient staff. This then placed added pressure on hospitals and their staffs because they were unable to discharge patients to these skilled beds. And the cycle continued.
For the health care industry as a whole, sufficient staffing, increased labor costs and inflation all impact ongoing financial recovery.
Save The Date: August 2: Health Care Workforce Webinar
Watch your inboxes or CLAconnect.com for details. If you are not a subscriber to CLA publications, you can subscribe at CLA Communications.
Tackling labor shortages
Even in the midst of this, we know many organizations have employed short-term labor solutions, including pay adjustments, compensation studies, flexible work schedules, and other wage/benefit considerations (childcare, transportation assistance). Others have outsourced certain functions or projects (think IT or finance) to lift workload burdens. Still others, like hospitals, have created new approaches, such as internal “traveler” nurse programs as a direct result of the escalating cost of agency staff. Many are working to address burnout and mental health of their employees—a must-have going forward.
Along with those adjustments, longer term considerations will be needed, such as:
- Strategic planning
- Financial modeling and operational assessments
- Evaluating your recruitment infrastructure
- Developing or expanding in-house training programs to grow your own talent pipeline
- Cross-training employees wherever possible
- Utilizing technology for training, care delivery and efficiencies
- Building a strong organizational culture. Don’t underestimate the power of culture. It often wins out over pay if employees feel they have a voice and are cared for.
How we can help
Whether it’s strategic planning, operational assessments, financial modeling and more, CLA can assist. Don’t miss our upcoming complimentary webinars on these issues. As always, we’re here to help you turn challenges into opportunities.
- Register for CLA’s June 1 webinar on the economic and market outlook for health care
- Save the Date for CLA’s August 2 webinar on the health care workforce
- Subscribe to CLA publications and watch for upcoming webinars that will dive deeper in the state of skilled nursing facilities and their financial viability utilizing tools like CLA Clarity
Resources/Sources
- HHS COVID Workforce: aspe-covid-workforce-report.pdf (hhs.gov)
- HHS Nursing Homes Workforce: COVID-19 Intensifies Nursing Home Workforce Challenges (hhs.gov)
- HHS Home Care Workforce: COVID-19 Intensifies Home Care Workforce Challenges (hhs.gov)
- Bureau of Labor Statistics: https://www.bls.gov/news.release/pdf/empsit.pdf
Jennifer Boese is the Director of Health Care Policy at CLA. She is a highly successful public policy, legislative, advocacy and political affairs leader, including working in both the state and federal government as well as the private sector. She brings over 20 years of government relations and public policy knowledge with her to CLA. Well over half of her career has been spent dedicated to health care policy and the health care industry, affording her a deep understanding of the health care market and environment, health care organizations and health care stakeholders. Her role at CLA is to provide thought leadership, policy analysis and strategic insights to health care providers across the continuum related to the industry's ongoing transformation towards value. A key focus of that work is on market innovations and emerging payment models. Her goal is to help CLA clients navigate and thrive in an increasingly dynamic health care environment.
Comments are closed.