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Berman added. “You see it across every industry. There are fewer people overall than were previously in the workforce.”
The growing labor shortage in healthcare is starting to have seri- ous bottom-line effects, as organizations boost wages to compete for scarce talent and swallow skyrocketing rates being demanded by travel-nurse agencies.
A recent study conducted by Premier, a national healthcare- improvement company, found that U.S. hospitals and health sys- tems are paying $24 billion more per year for qualified clinical labor than they did pre-pandemic, and approximately two-thirds of hos- pitals’ current costs are from wages and salary.
As reported by the Massachusetts Hospital Assoc., Premier found that “overtime hours are up 52% as of September of 2021 when compared to a pre-pandemic baseline. At the same time, use of agency and temporary labor is up 132% for full-time and 131% for part-time workers. Use of contingency labor (or positions created to complete a temporary project or work function) is up nearly 126%.”
The Premier study follows a September study from Kaufman Hall projecting that hospitals nationwide will lose an estimated $54 billion in net income over the course of 2021, even taking into account the funding they received from the federal CARES Act.
“When COVID came, many individuals who may have been considering careers in healthcare went for it, but for others, COVID
gave them pause. And some people elected to retire earlier than they
were otherwise going to.”
Meanwhile, Moody’s Investor Services also predicted hospital margins will continue to fall. “Over the next year, we expect margins to decline given wage inflation, use of expensive nursing agencies, increased recruitment and retention efforts, and expanded benefit packages that include more behavioral-health services and offer- ings such as childcare. Even after the pandemic, competition for labor is likely to continue as the population ages — a key social risk — and demand for services increases.”
All of this results in what healthcare leaders are increasingly call- ing an unsustainable situation — one that’s necessitating a great deal of flexibility, creativity, and, yes, anxiety.
Heightened Competition
In the world of home care, COVID posed some very specific issues, said Mary Flahive-Dickson, chief development officer and chief medical officer at Golden Years Homecare Services and Gold- en Years Staffing Agency.
“We already had an ongoing issue with a shortage of healthcare providers, but with COVID, people were moving loved ones out of facilities and into their homes — getting them out of skilled nurs- ing and assisted living, keeping them out of hospitals. But now they needed home care, and a lot of it — not just an hour here and an hour there. These were people with 24-hour needs.”
The government’s generous unemployment policies didn’t help, she added.
“When the government pays you to stay home, why the hell would you go to work? If you’re getting paid $15 or $16 an hour to potentially expose yourself to COVID by entering someone’s home, why not stay home and get paid $25 an hour to stay home? We had the same issues every other industry had: the government simply made it way too easy to stay home.”
All that became what Flahive-Dickson called a “perfect storm”
of increased home-care needs when the worker pool was dramati- cally shrinking — a simple matter of supply and demand, really. She understands the reluctance to work last year — not just because of the unemployment benefits, but because it was unclear, especially early on, how COVID spread and how serious the risk was. But almost two years after the pandemic began, the workforce disrup-
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