The Unsteady Future of the Healthcare Workforce
The COVID-19 pandemic increased the need for hospitalizations, while worker infections simultaneously limited the labor supply. The resulting long hours and stress of the pandemic has also led to mental health issues and provider burnout.
The healthcare staffing shortage can also have a snowball effect, as the remaining workforce must continue to care for patients with fewer staff. Hospital administrators report that nursing shortages leave them unable to properly support and mentor new nurses, leading to lower job satisfaction and faster burnout, further exacerbating the problem.
These issues in the healthcare labor market are expected to continue over the next 5–10 years. Some of the largest segments affected will include nurses, primary care physicians, and lower-wage healthcare positions, such as hospital support staff and home health workers.
The Effect of Inflation on Healthcare Wages and Reimbursem*nt
The constrained labor supply is adding financial pressures to these concerns. Hospitals and other healthcare employers are making investments to attract and retain staff, but reimbursem*nt rates are not keeping pace. Inflation—especially medical inflation—is increasing much faster than reimbursem*nt rates. Avalere examined inflationary adjustments to provider payments in Medicare Fee-for-Service, Medicare Advantage, and the commercial market, finding that the speed, measurement, and magnitude of these changes are highly variable by payer type, but the issues resulting from inflationary pressures have impacted providers across all payer types. Additionally, while inflation is an immediate issue for provider organizations while they try to relieve staffing and supply pressures, reimbursem*nt rates for many sites of care are based upon historic cost reports and typically lag by 2–3 years.
Mitigating Current Personnel Shortages
Healthcare systems and facilities are responding to the near-term labor supply issues by limiting non-essential procedures or contracting with nurse staffing companies and travel nurse agencies.
Policymakers are also considering interventions. The Biden administration, for example, announced that the military has deployed doctors, nurses, paramedics, and other medical personnel to fill critical staff shortages. The Centers for Disease Control have also released guidance to facilities and health systems on contingency strategies to maintain hospital capacity, which may include allowing certain COVID-19 infected healthcare workers to return to work sooner than is typically allowed.
While federal legislation is unlikely, individual legislators are probing the issue, especially as it relates to staff pay. Almost 200 members of Congress co-signed a letter asking the White House COVID-19 Response Coordinator to investigate the rates contract nurse staffing firms charge to hospitals, to ensure those increases are reflected in staff wages. Some state legislators, however, have proposed pay caps, especially for staffing agencies and travel nurses, both of whose rates have increased significantly during the pandemic. State policymakers are considering other approaches as well, such as removing barriers to using telemedicine and allowing more flexibility for providers to practice “at the top of their license” (i.e., maximizing their highest level of training or certification).
Addressing Long-Term Staffing Levels
Given estimates that the labor supply issues may continue into the next decade, employers need to develop long-term strategies to improve both recruitment and retention. Offering benefits like student loan repayment, referral bonuses, and subsidized housing are some options for attracting new applicants and building a strong pipeline of new staff.
Retaining employees may require investments in staff coaching and mentoring programs or identifying approaches that give staff more control over their schedules. The increasing adoption of telemedicine has created new opportunities for some healthcare workers to choose part-time schedules or more flexible hours or giving individuals the ability to work from anywhere. While a significant number of international physicians serve US patients in this virtual format, telemedicine also allows US-based providers the flexibility to continue serving patients from locations as far-flung as Australia.
New technologies are also enabling a more flexible staffing approach. For example, several mobile applications take an Uber-like approach to staffing, vetting eligible healthcare workers and connecting them to healthcare employers with vacancies.
What’s Next
As the healthcare staffing shortage continues, many industry stakeholders will be seeking solutions. Avalere Health’s 360-degree perspective on the healthcare system—with experts in healthcare policy, economics, insurance markets, and clinical operations—gives us unique insights on our clients’ biggest challenges. Our experts can help you identify strategies to address this complex problem and help position your organization for long-term success.
To find out how we can help, connect with us.
