Unprecedented Growth in Healthcare Workforce Demand in the 2020s: US Bureau of Labor Statistics

https://www.amnhealthcare.com/unprecented-growth-in-healthcare-workforce-demand-in-the-2020s/?utm_source=pardot&utm_medium=email&utm_campaign=hb-09-2019

The latest data from the US Bureau of Labor Statistics portray a very challenging decade ahead for healthcare organizations trying to find the nurses, physicians, and other healthcare professionals they need.

While healthcare shows the fastest and largest new job growth compared to any other industry, the most alarming data may be the projected annual job openings in key professions, which are many times greater than the numbers of new jobs.

The Bureau of Labor Statistics (BLS) Employment Projections states that the aging population of the United States is the reason behind the growth in healthcare employment and job openings: “Increased demand for healthcare services from an aging population and people with chronic conditions will drive much of the expected employment growth.”

Employment in healthcare occupations is projected to grow 14% from 2018 to 2028, much faster than the average for all occupations, adding about 1.9 million new jobs — more than any other industry. Registered nurses, the occupation with the third highest job growth from 2018-2028, are projected to grow from 3,059,800 to 3,431,300, an increase of 371,500 new jobs.

The aging population also is driving retirements in the healthcare industry, which, along with other job separations, is fueling intense growth in job openings in healthcare. The latest projections show an average of 650,300 job openings per year for all healthcare practitioners and technical occupations from 2018-2028. There will be 210,400 nurse job openings each year, which represents an increase of about 6,000 annual nurse job openings a year from the 2016-2026 employment projections.

The tsunami of retirements among Baby Boomer nurses and other practitioners is coupled with immense opportunities to seek new and better jobs in the superheated healthcare jobs marketplace. The result is a huge and growing number of job openings, many of which cannot be filled.

Data from another BLS survey, Job Openings and Labor Turnover Survey, show that job openings outnumber job hires in healthcare by 2:1. There are approximately a half million unfilled healthcare jobs.

The upcoming decade is expected to see a worsening of this problem. By 2030, all Baby Boomers will have reached 65; the generation will be nearing full retirement. By 2035, the number of people over 65 in the United States will be greater than the number under 18 – for the first time in the nation’s history. The result of growth in retirement-age people and relative stasis in the number of young people will be that there will not be enough people to fill the work shoes of retirees – in healthcare and all professions.

 

Healthcare jobs grow at rapid clip, but wages lag amid consolidation boom

https://www.healthcaredive.com/trendline/labor/28/#story-4

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Healthcare employment is growing at a record pace, but wages remain stagnant, which some experts say likely results in part from the trend of consolidating health systems.

The latest Bureau of Labor Statistics numbers show the industry gained 49,000 jobs in March and 398,000 over the past 12 months. Analysts at Jefferies say the month-to-month growth is the second largest increase on record for the sector. Healthcare job growth has surpassed non-healthcare job growth and nudging the share of total jobs to an all time high, according to consulting firm Altarum.

Hospital employment grew by 14,000 jobs in March, adding up to a total of 120,000 for the combined first quarter of 2019. BLS tallied ambulatory jobs at 27,000 and home health and skilled nursing jobs at 9,000.

At the same time, real average weekly earnings for production and non-supervisory employees across sectors grew 0.1% over the month according to BLS. That growth in earnings is due to an increase in average weekly hours.

For nurses and pharmacists working in hospitals in heavily concentrated markets, annual wage growth has been lagging behind national rates by as much as 1.7 times. That’s according to researchers Elana Prager and Matt Schmitt, of Kellogg and UCLA, respectively, whose working paper compares wage growth rates in markets where mergers have occurred.

The paper drew the ire of the American Hospital Association.

“Among the many serious concerns about the study are its lack of rigor in the definitions and assumptions it used, and absence of data on total compensation and the recognition of other obvious factors that could affect wage growth,” an AHA spokesperson said in a statement criticizing media coverage of the research.

Academics researching the impacts of consolidation have asked the Federal Trade Commission to look at the impact horizontal mergers have on labor and consumers before they become difficult to challenge. FTC green-lit hundreds of horizontal hospital mergers over the past decade, maxing out at 115 in 2017, according to the National Institute for Health Care Management. In 2009, there were 50 such deals.

A Penn Law paper on mergers and labor markets published last year found employer consolidation has had a direct impact on wages and productivity in concentrated labor markets in the past. Wages, the authors write, tend to dilute when competition is scarce and labor concentration is “very high, as high or higher overall than product market concentration.”

Jason Plagman, a healthcare analyst at Jefferies, agreed, telling Healthcare Dive it becomes an “oligopsony situation where there are only a handful of buyers of a product” — in this case, labor — “you tend to see [employers] exert more control.”

As AHA noted, hospital and health systems tend to offer non-wage benefits, “such as employer-sponsored insurance, time off and education benefits” rather than increase wages. That’s an important caveat, said Dennis Shea, a health policy professor at Penn State.

 

Labor push

The debate comes as nurses unions have been pushing hard for additional staff and higher wages for hospital workers in consolidated states like California, New York, Massachusetts and Pennsylvania. Hospital consolidation has raised prices as much as 20% to 40% when they occur in the same market, according to National Institute for Health Care Management, with some prices reaching as much as 55%.

Unions argue hospitals can afford to pay extra to hire more nurses. Jefferies analyst Plagman said it’s not that easy. About 50% of hospital revenue goes to salary, wages and benefits, he said, and half of that chunk of revenue goes to nurses. “If they give a 3% raise to all nurses, that’s a big impact on their overall expense line,” Plagman said.

The lack of competition bars labor from seeking work elsewhere. A nurse in a concentrated labor market can’t quit their job to work for the hospital down the street, because it’s probably owned by the same health system, Shea said.

Shea and Plagman agreed that movement of labor away from concentrated markets is one way to break the wage slump. But lack of mobility was one of the consequences of concentration found in a National Bureau of Economic Research published in February 2018. The paper suggests a negative relationship between consolidated markets and wages that becomes more pronounced with higher levels of concentration and only increases over time.

Pay raises have historically been pushed by labor unions, and though some hospitals have already raised wages, few have been inclined to raise staffing levels as well.

“Strikes are picking up,” Shea said. “That’s always an indicator that wage and salary growth will pick up a little bit.”

While labor disruption has been on the rise over the past year, Plagman ​said he expects employment and wage growth to continue at the current pace. At some point, he said the market will have to resolve itself.

“What we’re seeing is hospitals and healthcare providers are hiring, but they’ve been very disciplined over the past few years giving raises to nurses and therapists,” Plagman said.

In testimony to the FTC in October, economist Alan Kreuger alleged employers in concentrated markets “collude to hold wages to a fixed, below-market rate,” even when the economy is booming. Union membership has plummeted 25% since 1980, and without a counterweight to balance the power of a monopsony, he argued, employers are free to set wages at will — even if they lag behind inflation rates.

Pressures to contain costs and move from volume to value is forcing health system executives to be extra delicate with their labor expenses. When nurses strike, hospitals have temps at the ready. That’s a boon for staffing agencies like AMN Healthcare Services and Cross Country Healthcare.

Cost control in healthcare is a bit like “pushing on a balloon,” Shea said.

Slow growth or declines in one sector means business is booming for another. In this case, ambulatory added 27,000 jobs month-to-month in March, up from 22,000 in February, and Jefferies analysts are looking favorably at temporary staffing agencies.

While “all indicators” say healthcare wages should be pushed up, Shea said, he wouldn’t be surprised if the growth rate continued to limp along for a little while longer.