The Healthcare Workforce Crisis Should Be a Priority
The author, Howard Risher, is developing a book on the healthcare staffing shortage. If your agency employs healthcare specialists of any type and is experiencing staffing problems, please send a note to h.risher@verizon.net explaining the problem and any innovative practices adopted to address the problem. You may be quoted in the book.
In 2022 the consulting firm, McKinsey, collaborated with the National Association of State Chief Administrators (NASCA) to conduct a study of post-pandemic employment problems in state government. The results were summarized in a recently released report, “Bridging talent gaps in state government: A postpandemic priority for CAOs”.
The study was triggered by the “acute talent gap . . . affecting all functions”. The authors cite BLS data showing “State and local government job openings rose by more than 150,000 between June 2021 and June 2022, while hiring rates remained stagnant.” [State job data are not reported separately.]
But that actually understates the vacancy problem. Job openings in state and local government have been increasing steadily since the 2008/09 recession. At the end of 2010 the BLS reported the job vacancy total was 223,000; immediately before the COVID crisis, January 2020, the total was 629,000. In the most recent report for February 2023, the total was 857,000.
Vacancies are affecting agencies at all levels of government, but the problem, from the report, is “particularly acute in healthcare, law enforcement, corrections, IT, and engineering. These talent challenges resulted in critical resource shortages that have restricted various government services.”
There can be no disagreement on the importance of those occupational groups. However, they represent very different staffing challenges. IT and engineering specialists are in high demand, with rising salaries. Public agencies are in direct competition with private employers for these specialists. Corrections is somewhat unique since many state prisons were purposedly constructed away from highly populated areas where the local residents are aging and young people moving away to find better career opportunities. Law enforcement is confronted by a different problem, a report from the Justice Department states, “young people and their families are often conflicted about the value of law enforcement careers”.
The Shortage of Healthcare Workers is a True Crisis
The labor market for health care specialists combines those problems and adds two important considerations – the growing medical needs of an ageing population and those providing care are required to have special education and training. Private and public employers are all competing for qualfied applicants from the same talent pool. The heightened daily demands of the COVID crisis made all health-related workers more important, but the physical and emotional toll triggered heavy resignations – “Survey Shows 47% Of U.S. Healthcare Workers Plan To Leave Their Positions By 2025 — of badly needed workers.
COVID-related health problems may be ending but the future of the healthcare workforce is expected to get increasingly more critical. That was captured in a headline on a healthcare website as this was drafted, “’Crisis’ looms as 800,000 more nurses plan to exit workforce by 2027.”
The article starts with, “The critical nursing shortage in the United States is going to get worse — much worse . . . [In addition to the] approximately 100,000 nurses left the workforce during the pandemic . . . Combined, the total equates to one-fifth of the 4.5 million nurses in the workforce today.”
A 2019 study found the median age of Registered Nurses was 52; nurses aged 65 years or older account for 19 percent of the RN workforce. In a 2020 survey, more than one-fifth of all nurse respondents replied positively when asked if they plan to retire in the next 5 years.
A healthcare executive was quoted in another recent column, “”We’ve had a healthcare workforce crisis in this country for a long time. It pre-dated COVID.”
The BLS reports employment data for roughly 60 “health care and social assistance” occupations. The reports include 47 job titles that focus on physical health, ranging from Athletic Trainers to Veterinary Technologists and Technicians. The many physician specialties are a single grouping, Physicians and Surgeons. Additionally, there are mental health occupations, including Psychologists and Mental Health Counselors, along with several occupations similar to Social Workers.
BLS started reporting vacancy data separately for this group of occupations in 2011 when the total stood at 552,000 unfilled jobs. In January 2020 the total was 1.17 million. The pandemic has since taken its toll. In February 2022 the vacancy total was 1.98 million – almost 4 times the total in 2011. As a percentage of the total employed in these jobs, that was roughly 9 percent. The latest data show vacancies declined slightly to 1.68 million and 7.4 percent — but that is “very high” compared to the average of 4.2 percent in the nine-year period before the pandemic.
But more importantly, for anyone concerned with the future of health care, is that analyses show the growth in employment for these occupations will be above average. That’s attributable to the ageing population. Home health and personal care aide jobs, as an example, will increase 25 percent by 2031. That will require over 900,000 additional workers. Social workers are projected to increase by 64,000.
This is at a time when the U.S. scores significantly below other comparable countries on measures of health (e.g., increased longevity). But we spend far more money per person on healthcare than those countries. An OECD study of member countries found spending was more than twice as much per person.
The national data are eye-opening but fail to show the impact of the vacancies on health care in local communities. Community-level analyses are important because the need for care along with the quality of care is related to the income, age and racial mix of the local population. Wealthy, suburban areas typically have highly regarded medical centers. There are also large areas that “don’t have enough doctors or nurses to provide [residents] with emergency care, treat their chronic illnesses or deliver their babies” – and that was before the COVID crisis.
The lack of qualfied workers is especially acute in rural areas. More than 60 percent of the health professional shortage areas are located in rural or partially rural areas. A count in April 2020 found 218 counties with no resident physician.
The vacancies in healthcare differ from virtually all but a handful of government jobs (e.g., police) in that medical problems need to be diagnosed and care provided as soon as possible. Now, the growing staffing crisis is lengthening the time for diagnosis and treatment of health problems. That adds to the cost of treatment as well as the severity of the problems. Data on individuals unable to secure timely treatment is not readily available.
In the absence of a national health system, state and local leaders can create coordinated but independent care providers that better suit today’s health needs.
Employers Competing for Talent in Local Labor Pools
The U.S. is the only developed country that has not created a national health care system. Instead, each state has a somewhat different mix of inter-linked agencies, including county and city/town health services. Additionally, there are thousands of local for-profit and public medical and care facilities.
A common thread is that the purpose – promoting and protecting the health of residents — and the services provided are essentially the same across the country – although that depends on specialists in the area. Another common thread is that the occupations represented in each state’s health care workforce are the same, regardless of the infrastructure.
A key issue relevant to several of the highest head count occupations is that public agencies are competing directly for talent with private hospitals and a growing mix of private medical care facilities (e.g., urgent care clinics, nursing homes, rehab centers, hospice homes, etc.). Private employers have far more flexibility to respond to competitive practices, including pay increases.
Civil service systems place public employers at a disadvantage. When they were created decades ago, the goal was to insure equity and rely on non-political, standardized personnel practices. That ‘works’ for occupations unique to government but agencies are at a decided disadvantage in hiring high demand talent. Technology jobs illustrate the obvious problem.
The federal government addressed the problem in the 1990s. Previously, the federal government relied on a uniform salary schedule across the country – the General Schedule – to pay white collar employees. Passage of the Federal Employee Pay Comparability Act of 1990 (FEPCA) introduced locality pay, which raised salaries in larger urban areas.
The report to OPM supporting the legislation also included a recommendation to create a separate pay system for healthcare workers. It took a few years but later in the decade Congress acted to allow the Department of Veterans Affairs to create separate, local pay schedules for workers in a number of direct care occupations (nurses, physical therapists, etc) working in VA hospitals. FEPCA also permits “special rates” for high demand, specialized jobs (i.e., technology). [Note: I managed the study and worked with OPM to support passage of FEPCA.]
The change is based on recognition that the labor markets for nurses as well as workers in support healthcare occupations are local. Job applicants tend to live within a reasonable commuting distance of hiring facilities. Local health care facilities, private and public, are competing for talent from limited, local talent pools. That explains why pay surveys are conducted in over 100 city and regional labor markets.
In other industry groups, worker shortages and high demand normally drive-up competing salaries. The markets for hourly and lower-level white collar jobs are locally defined. Companies can respond quickly to competitor pay increases, raising prices to cover the added costs. Today, although there were large increases in 2022 – averaging roughly 6% for those who stayed in their jobs — recent layoffs and a possible recession have slowed pay increases.
In health care, with revenues limited by government funding and insurance payments, increased payroll costs have created financial problems. Pay increases have continued – it’s a virtually universal response to staffing problems – but the cost increases are triggering financial problems and forcing hospital closures and cutbacks in services.
(Note: The costs of turnover include the nonproductive time of workers who get involved in hiring and onboarding along with new hire training time. There is an added cost when vacancies impede operations.).
Leadership is Needed
The staffing problem is projected to get worse going forward. Its demographics – Baby Boomers reaching retirement age and a smaller group of young workers starting their careers – combined with the continuing resignations triggered initially by the COVID crisis. In that reality, employers trying to hire are doing little more than trading workers.
Government has to assume a leadership role. Federal, state and local agencies are major employers of healthcare workers, provide significant funding to both public and private employers, and have the lead in sponsoring research. COVID triggered billions in federal funding, including an additional $100 million in late 2021 to address the vacancy problem. “Our health care workers have worked tirelessly to save lives throughout this pandemic and now it’s our turn to invest in them,” HHS Secretary Xavier Becerra said in a statement. But despite the ‘investment’ vacancies continue to increase.
The Secretary is right of course, but to increase the workforce the investment has to be more than money. The solution to this crisis is not simple but it is straightforward – (1) attracting greater numbers of young people to careers in healthcare, (2) improving the work experience to retain talent, and (3) enticing those who left healthcare to return to jobs in their fields.
There are proven practices. Amazon offers 2,000 books on “improving work experience.” The employers identified as ‘The Great Places to Work in Health Care’ are places to look for answers. But the core problem – building the workforce needed to fill vacancies and address the nation’s healthcare needs – requires new strategies, beyond what’s dictated by civil service systems. Ideally the changes should be consistent across states to minimize unproductive competition. Teachers and police have had separate personnel systems for decades. It’s the only practical answer for healthcare.
Recommended Actions
- The competitive markets for health specialists call for separate workforce management policies and practices, and new pay systems – the same solution that helped VA medical centers. Salary increases are not going to solve the staffing problems but public employers need the flexibility in separate HR systems to compete in local markets. It’s a textbook solution but the resistance is likely to be strong.
- Increased pay is needed to attract and retain faculty for nurse training. Nursing colleges “turned away 80,407 applicants in 2019-2020 due to lack of capacity”, according to the American Association of Colleges of Nursing. This is an “easy fix” and should be a priority. It’s best addressed at the state level. Adequate funding is important to attract instructors for other healthcare specialists as well.
- States could also reduce the importance of pay by reporting market pay levels by location across the state. Transparent or open pay policies have gained attention recently and would minimize competition and emphasize ‘fair pay’. That effectively creates ‘level playing fields.’
- Surveys show flexible scheduling is possibly more important than pay. That could be part time, shorter hours, paid leave or vacation time. Schedules could change from week to week. It’s especially important to help employees affected by burnout. Local managers will need the authority to change schedules to meet employee needs as well as software to facilitate scheduling.
- Surveys also show career development opportunities will help with retaining and attracting experienced applicants. Defining clear career pathways along with credentialing requirements will help employees plan for their future. Colleges will benefit from funding for required programs.
- Relying on regular employee meetings – Employee Resource Groups (ERGs) – to discuss work management problems and develop solutions to build commitment. Years ago, nurses started recognizing Magnet hospitals where management “values nursing talent . . . These hospitals attract the best and brightest nurses.” The idea could become a state sponsored practice.
- States (as well as cities and counties) could build internal consulting teams to work with local health employers to improve work management practices and create better places to work. It would be useful to develop analytically backed systems to assess needs and new practices.
- States could develop local reserves, much like the military reserves, of experienced care providers who could be called upon to fill in on short notice, with pay of course, when local hospitals experience unusually high patient demands.
- The pandemic has increased the importance of home-based diagnosis and care. Employees working away from their ‘home’ facility require different supervision. Managers and supervisors need to be supportive and ready to coach workers in addressing individual health needs.
- History imposed the separate administrative structure of counties, townships, cities and towns. Costs could be reduced by creating cross-jurisdiction administrative offices, making it possible to eliminate or combine functions while shifting budget money to add care providers.
- Analytical systems are needed to help to inform health priorities, satisfy reporting requirements, and support practitioners in diagnosing and developing treatment plans. Supportive technology has a heightened importance in home care. Relying on technology is a major change in practice.
- State and local leaders can also play a role in drawing public attention to how vacancy problems are impacting health services in their areas. Drawing attention to the problems and building support for change is an essential early step. Regular publication of progress is likely to be a key.
- A goal in adopting new practices is to make it attractive for workers who left healthcare to return. They are often a forgotten resource. Its less costly and they can be productive far sooner.
In the absence of a national health system, state and local leaders can create coordinated but independent care providers that better suit today’s health needs. Tackling the workforce crisis is an essential step.
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