Clinical labor costs are up by an average of 8% per patient day, translating to $17 million in additional annual labor expenses.
As the delta variant pushes COVID-19 caseloads to all-time highs, hospitals and health systems across the country are paying $24 billion more per year for qualified clinical labor than they did pre-pandemic, according to a new PINC AI analysis from Premier.
Clinical labor costs are up by an average of 8% per patient day when compared to a pre-pandemic baseline period in 2019. For the average 500-bed facility, this translates to $17 million in additional annual labor expenses since the beginning of the public health emergency.
The data also shows that overtime hours are up 52% as of September. At the same time, the use of agency and temporary labor is up 132% for full-time and 131% for part-time workers. The use of contingency labor – positions created to complete a temporary project or work function – is up nearly 126%.
Overtime and the use of agency staff are the most expensive labor choices for hospitals – usually adding 50% or more to a typical employee’s hourly rate, Premier found.
And hospital workers aren’t just putting in more hours – they’re also working harder. The analysis shows that productivity, measured in worked hours per unit of departmental volume, increased by an average of 7% to 14% year-over-year across the intensive care, nursing and emergency department units, highlighting the significance of the increases in cost-per-hour.
Another complicating factor is that hospital employees are more exposed to COVID-19 than many other workers, with quarantines and recoveries requiring the use of sick time. The data shows that use of sick time, particularly among full-time employees (FTEs) in the intensive care unit, is up 50% for full-time clinical staff and more than 60% for part-time employees when compared with the pre-pandemic baseline.
WHAT’S THE IMPACT
The combined stressors of working more hours while under the constant threat of coronavirus exposure are pushing many hospital workers to the breaking point. In fact, the data shows clinical staff turnover is reaching record highs in key departments like emergency, ICU and nursing.
Since the start of the pandemic, the annual rate of turnover across these departments has increased from 18% to 30%. This means nearly one-third of all employees in these departments are now turning over each year, which is almost double the rate from two years ago.
This is a number that could increase as new vaccination mandates take effect. Already, one Midwestern system reported a loss of 125 employees who chose not to be vaccinated, while a New York facility reported another 90 resignations. Overall, staffing agencies are predicting up to a 5% resignation rate once vaccine mandates kick in.
While a minority of the overall workforce, losses of even a few employees during times of extreme stress can have a ripple effect on hospital operations and costs.
As a result, some are now predicting that more than half of all hospitals will have negative margins by the end of 2021 – a trend that could be dire for some community hospitals.
Prior to the pandemic, about one quarter of hospitals had negative margins, the Kaufman Hall data showed. At the beginning of 2021, after almost a year of COVID-19, half of hospitals had negative margins.
Meanwhile, the most potentially disruptive forces facing hospitals and health systems in the next three years are provider burnout, disengagement and the resulting shortages among healthcare professionals, according to a March survey of 551 healthcare executives.
Hospitals across the country have spent more than $3 billion on personal protective equipment since the start of the COVID-19 pandemic, though costs have steadily declined since the worst shortages experienced during the second quarter of 2020, according to an analysis from Premier, a group purchasing organization.
Before the pandemic, hospitals normally spent about $7 on PPE costs per patient per day. That figure shot to $20.40 during the second quarter of last year, and during the first quarter of this year was around $12.45 per patient per day, according to Premier.
Hospitals are also still paying more for qualified clinical labor — roughly $24 billion more in total per year compared to before the pandemic, according to another Premier analysis out last week.
PPE was in short supply early in the pandemic, spurring bidding wars and financially straining hospitals as they suffered from the budgetary fallout of canceled elective surgeries and other lucrative services.
While supply chain challenges have since eased and costs are down since their peak, hospitals are still spending more on PPE than before the pandemic, and consumption and demand remains strong in light of the delta variant, according to the report.
Premier used a database representing 30% of U.S. hospitals across all regions from September 2019 through last month to track spending trends, looking at costs for eye protection, surgical gowns, N95 respirators, face masks, exam gloves and swabs. It then calculated total costs measuring quantities used per patient, per day, multiplied by the percent change in pricing for the quarter.
Ultimately, hospitals are still using far more N95 respirators than they were prior to the pandemic.
Demand is still up for eye protection, surgical gowns and face masks, though pricing is close to pre-pandemic levels for those items. Costs for surgical gloves and N95 respirators are still above pre-pandemic levels, according to the analysis.
While most PPE costs have steadily declined for hospitals, other expenses have not, namely labor costs.
Contract labor costs have fluctuated, though they reached record highs amid COVID-19 surges, commanding record rates from providers. And nursing shortages, especially, have been so dire that hospitals are spending more on recruiting and retaining for the positions, boosting benefits and offering steep sign on bonuses.
Clinical labor costs are up 8% on average per patient, per day compared to before the pandemic, according to the earlier Premier analysis. That translates to about $17 million in additional annual labor expenses for the average 500-bed facility.
As of last month, overtime hours are up 52% since before the pandemic. The use of agency and temporary labor is up 132% for full-time employees and 131% for part-time employees.
The most expensive labor choices for hospitals are contract labor and overtime, typically adding 50% or more to an employee’s hourly rate, according to Premier.
For that report, Premier used a database with daily data from about 250 hospitals, bi-weekly data from 650 hospitals and quarterly data for 500 hospitals from October 2019 through August to analyze workforce trends among employees in emergency departments, intensive care units or nursing areas.
The US now has more job openings than any time in history—and the mismatch in workforce supply and demand in the broader economy is even more acute in the healthcare sector. While the industry saw significant job losses in April 2020, employment in many healthcare subsectors quickly rebounded to slightly below pre-pandemic levels, according to data from the Bureau of Labor Statistics.
While ambulatory and hospital employment has mostly recovered, employment in nursing and residential care facilities has continued to decline.
Healthcare’s sluggish return to pre-pandemic employment levels is not for lack of demand. The number of job listings has grown nearly 30 percent since the second quarter of 2020, to nearly 4.5M openings, while new hires have flatlined, resulting in over half of healthcare job listings remaining unfilled as of Q2 2021.
In a recent McKinsey & Company survey of over 100 large US hospitals, health system executives ranked workforce shortages among nurses and clinical staff as their greatest barrier to increasing capacity.
Amid the current COVID surge, many systems are offering sizeable bonuses to attract new employees. These strategies will be critical across the next year, as systems look to reduce spending on costly travel nurses, manage COVID surges while continuing to offer elective care, and forestall further burnout.
But longer term, rethinking job functions, integrating new technology and finding ways to educate and upskill critical clinical talent will be key to winning the war for talent.
Scripps Health is temporarily postponing some medical procedures because of significant staffing shortages and a jump in COVID-19 cases, the San Diego, Calif.-based system said Aug. 20, according to CBS News 8.
Medical staff is deciding which procedures to delay based on clinical factors and emergency status, with time-sensitive care still being delivered, Scripps leaders said.
The health system said it is also considering temporarily consolidating some ambulatory care sites due to workforce shortages.
At present, Scripps said it is looking to fill 1,309 open positions. In August 2019, the system had just 832 openings. About 430 of the openings are for nursing positions, up from 220 open positions in 2019, according to the report.
At the same time, the health system is seeing its COVID-19 patient volume grow. Scripps has 173 patients admitted at its five hospitals, up from 13 patients on June 13.
“The COVID pandemic has taken a serious toll on healthcare workers across the nation, and many have decided to leave the field entirely for reasons such as fatigue and burnout,” said Scripps’ President and CEO Chris Van Gorder, according to CBS News 8. “We’re doing all we can to fill open positions and shifts, but options are currently limited across the board in healthcare, so we’re doing what’s necessary to ensure we have staff available for our most urgent cases.”
Estimations show that between now and March 20, 7% of U.S. counties will experience “significant strains” on their hospital workforces.
Despite recent declines in coronavirus cases nationwide, many hospitals may still have workforce shortages over the next 30 days due to COVID-19 hospitalizations, according to estimates from George Washington University.
The university’s Fitzhugh Mullan Institute for Health Workforce Equity recently launched its COVID-19 County Workforce Estimator, which predicts that between now and March 20, 7% of U.S. counties will experience “significant strains” on their hospital workforces. It attributes the strain to long-standing staffing problems with the added pressure of the pandemic.
It also predicts that 209 counties will need to implement crisis workforce strategies due to its analysis that ICU doctors in those counties will be forced to take care of 24 or more patients at a time. Hospitals in those locations will likely need to use non-ICU-trained staff to help care for patients, the analysis said.
Further, the tool suggests that 12 counties will need to use contingency workforce strategies that include adding more patients per team, float pools and overtime due to COVID-19 hospitalization rates of 25% or more.
While it estimates a portion of counties will face staffing strains over the next month, the estimator calculated that 2,189 counties will be able to maintain normal workforce strategies due to COVID-19 hospitalization rates of 25% or less.
An additional 736 counties either did not have a hospital or didn’t have enough data to assess potential COVID-19 workforce strains.
The estimator tool was built in collaboration with Premier, a healthcare improvement company, the National Association of County and City Health Officials, and IQVIA, a healthcare data and analytics organization.
WHY THIS MATTERS
Healthcare staffing shortages have been a worry for some time now due to the nation’s increasingly aging population, but COVID-19 has only added to the concern.
Even before the pandemic, studies predicted physician staffing shortages by upwards of 140,000 by 2030, as well as shortages in-home health aides, nursing assistants, nurse practitioners and medical lab technicians by 2025.
Labor experts suggest hospitals develop a proactive response to staff shortages, and the George Washington estimator was designed to do exactly that, according to Clese Erikson, the principal investigator on the project and deputy director of the Health Equity Workforce Research Center.
Local leaders and hospital administrators can use the tool to gauge their county’s ability to care for COVID-19 hospitalized patients and others who need critical care services.
THE LARGER TREND
Outside of the ICU, many hospitals are also experiencing nursing shortages for several reasons, including the possibility that nurses could get $150 an hour to be a traveling nurse versus the $48 an hour they are paid as hospital staff.
In other cases, nurses had to choose between work and having children at home while schools were not holding in-person sessions. Some nurses who were close to retirement chose to leave while others left for work outside of acute care settings.
On top of workforce shortages, the ongoing COVID-19 pandemic has led many healthcare workers to experience strains on their mental health, including anxiety, stress, depression and loneliness.
ON THE RECORD
“The shortages could occur just as public health officials warn that variants of the coronavirus are spreading in the United States and could trigger a sharp rise in the number of Americans infected,” Erikson said.
“Our new online estimator will help county and local public health officials project shortages in the near future and take steps to help keep staffing at safe levels.”
Over the past week, as coronavirus cases have spiked and COVID hospitalizations have grown to alarming levels, we’ve been keeping a close pulse on the situation at our member health systems in markets across the country.
Here’s what we can report: admissions are rising on a curve that looks increasingly vertical.
The ICU is less of a problem than inpatient beds, and while no one wants to cancel non-emergent procedures again, having just worked through the backlog of cases that were postponed in late spring and early summer, discussions about reallocating capacityare starting again. Some are considering shifting more surgeries to ambulatory centers, others are planning to dedicate more space to COVID-positive cases in an attempt to segregate the “hot zone”, and still others are exploring home-based care for certain medical admissions. Fortunately, the supply of PPE feels sufficient for the time being, as does testing capacity.
The number one concern among everyone we’ve talked to: staffing. Because of the high level of community spread, many are now losing nurses and other key staff to COVID isolation, with one system reporting that 35 percent of its critical care nurses at a key hospital had tested positive or were in quarantine after exposure. Staff are burned out, exhausted from the past eight months, and turnover rates are spiking. Because the third wave is so widespread, it’s become harder to find nurses from other markets who can temporarily relocate to help with a surge of cases. And the rates being charged for “agency” nurses—stopgap staff hired on a temporary basis—are going through the roof.
The staffing issue may prove to be the biggest crisis of the third wave of COVID, given how difficult it is to solve; there’s no Defense Production Act or National Guard supply chain for nurses. At best, hospitals will find themselves cobbling together a solution by cross-training staff, paying extra for temporary workers, and asking their already-overtaxed workforce to weather yet another storm. We’re eager to hear any creative approaches to solving the staffing challenge as winter approaches, and we’ve dedicated a senior member of our team to tracking the workforce crisis. Let us know what you’re seeing.
The pandemic put nurses on the front lines of the battle against COVID-19 and caused shifts in the way they provide care.
During this year, nurses have adapted to increased adoption of telehealth and virtual patient monitoring, as well as constantly evolving staffing needs.
These factors — and others, such as the physical and emotional conditions nurses have faced due to the public health crisis — are sure to affect nursing in the years to come. Here, 10 healthcare executives and leaders share their predictions for nursing in the next five years.
Editor’s note: Responses were edited lightly for length and clarity.
Beverly Bokovitz, DNP, RN. Vice President and Chief Nurse Executive of UC Health (Cincinnati): In the next five years, as we continue to encounter a national nursing shortage, I expect to see additional innovative strategies to complement the care provided at the bedside.
One of these strategies will be some type of robot-assisted care. From delivery of medications to answering call lights — and completing simple tasks like needing a blanket or requesting that the heat be adjusted — we will see more electronic solutions. These solutions will allow for a better patient experience and help to exceed the expectations of our patients as customers.
Of course, nothing can take the place of skilled and compassionate bedside care, but many tasks could be automated — and will be — to supplement the professional nursing shortage.
Natalia Cineas, DNP, RN. Senior Vice President and Chief Nurse Executive of NYC Health + Hospitals (New York City): Nurses will continue to play a vital role in addressing the health inequities and social determinants of health among vulnerable populations as the nursing workforce itself becomes more diverse and inclusive. As the largest segment of the healthcare workforce — with some 4 million nurses active in the U.S. — nurses represent the faces of the communities in which they serve. As America becomes a more diverse and inclusive society, so too will the nursing profession become more diverse and inclusive. Currently, industry estimates indicate that between one quarter to one-third of all U.S. nurses identify as a member of a minority group, with between 19 percent and 24 percent of U.S. nurses identifying themselves as Black/African-American; 5 percent to 9 percent identifying themselves as Hispanic; and about 3 percent identifying themselves as Asian. The percentage of minority nurses has been rising steadily for the past two decades and is expected to continue to climb in the coming years.
Blacks and underserved minority populations face numerous genetic, environmental, cultural and socioeconomic factors that account for health disparities, and the impact is particularly visible in the areas of cardiovascular disease, diabetes, pregnancy and childbirth mortality, and cancer outcomes, as well as the enormous toll of the current novel coronavirus global pandemic, where communities of color have been among the hardest hit populations.
In New York City alone, statistics compiled by the city’s health department show Blacks and Hispanics together account for 65 percent of all COVID-19 cases; represented 70 percent of all hospitalizations due to COVID-19; and, sadly, 68 percent of all deaths caused by COVID-19. As demonstrated during this pandemic, in the future, technology such as telehealth and virtual patient monitoring will play a major role in the care of patients. There will be a vast need to address social determinants of health by educating and providing resources to allow utilization of this technology such as using “wearable tech” to monitor ongoing health issues, such as high blood pressure, diabetes, heart conditions and other chronic illnesses.
Ryannon Frederick, MSN, RN. Chief Nursing Officer of Mayo Clinic (Rochester, Minn.):Nursing research will experience extraordinary demand and growth driven by a realization that both complex and unmet patient needs can often be best served by the role of a professional registered nurse. Nurses are uniquely positioned to implement symptom and self-management interventions for patients and their caregivers. Significant disruption in healthcare, including increasing use of technology, will lead to a dramatic shift to understand the role of the RN in improving patient outcomes and implementing interventions using novel approaches. Nursing researchers will provide a scientific body of evidence proving equivalent, if not better, patient care outcomes that can be obtained at a lower cost than traditional models, leading to an even greater demand for the role of the professional nurse in patient care.
Karen Higdon, DNP, RN, Vice President and Chief Nursing Officer of Baptist Health Louisville (Ky.):The value of nursing has never been more apparent. Nurses have led the front line during this pandemic. In the next five years, we must be flexible and creative in establishing new models of care, specifically around roles that support nursing, such as assistant and tech roles. Creating roles with clear role definition, that are attractive and meaningful for nursing support will help build consistent, high-quality models for nursing to lead. This consistency, along with IT capabilities that enhance workflow, will better allow nurses to work at the top of their scope.
Karen Hill, DNP, RN. COO and Chief Nursing Officer of Baptist Health Lexington (Ky.): 2020 was declared the “Year of the Nurse” and this reality has never been more true than realizing the personal and professional sacrifices of nurses in dealing with issues surrounding the pandemic. The next five years will require nursing professionals to be flexible to address new, unknown emerging issues in all settings, to be open to new opportunities for leadership in hospitals, schools and communities and to use technology and telehealth to provide safer care to patients. Nurses need to evaluate our practices and traditions that are value-added and leave behind the task orientation of the past. We need to honor our legacy and create our path.
Therese Hudson-Jinks, MSN, RN. Chief Nursing Officer and Chief Patient Experience Officer at Tufts Medical Center and Tufts Children’s Hospital (Boston):Over the next five years, I expect that the support and retention of clinical nurses will become the top priority of every CNO and executive team, given nurses’ direct impact on supporting the business of healthcare. This will be particularly critical because there will be a concerning shortage of experienced clinical nurses as a result of advancing technologies increasing complexity in care, additional nurse roles created outside traditional areas, fierce competition for talent between large healthcare systems, aging baby boom workforce retiring at higher rates year over year, and a lack of sufficient numbers of PhD-prepared nurses working in academia and supporting higher enrollments.
I also believe that CNOs will be laser-focused on creating the practice environment that enhances retention of top, talented clinical nurses, and we will put a greater emphasis on the influence of effective nursing leadership in reaching that goal. In addition, I fully expect that nurses will be seen more as individuals with talents and experience than ever before — not just a number on a team, but rather a professional with specific, unique, talents that are highly sought after in competitive markets.
Finally, I anticipate that nursing innovation will blossom, given the exposure of the “innovation/solutionist superpower” within nurses during the pandemic. Philanthropy will grow exponentially in support of nursing innovation as a result.
Carol Koeppel-Olsen, MSN, RN. Vice President of Patient Care Services at Abbott Northwestern Hospital (Minneapolis): During the COVID-19 pandemic nurses have been working in difficult physical and emotional conditions, which may lead to significant turnover after the pandemic resolves. Nurses have a commitment to serving others and will persevere until the crisis is past; however, when conditions improve, many nurses may decide to pursue careers outside acute care settings. A possible turnover, coupled with a service economy that has been devastated, may result in large numbers of former service workers seeking stable jobs in nursing. Hospitals will have to be nimble and creative to onboard an influx of new nurses that are not only new to the profession but new to healthcare. Tactics to onboard these new nurses may include the use of retired RNs as mentors, instructor-model clinical groups in the work setting, job shadowing and aptitude testing to determine the best clinical fit.
Jacalyn Liebowitz, DNP, RN. Senior Vice President and System Chief Nurse Officer of Adventist Health (Roseville, Calif.): Over the next five years, I see nurses providing more hospital-based care in the home using remote technology. Based on that shift, we will see lower-acuity patients move into home-based care, and higher-acuity care in hospitals will increase. With that, hospital beds will be used at a different level. My bold prediction is that we will not need as many beds, but we will need higher acute care in the hospitals.
Nurses will learn differently. As we are seeing now, nurses have not been able to train in the traditional way. They are already using more remote technology to educate, onboard and orient to their roles. It looks and feels vastly different, and nurses need to be comfortable with that.
As for patient care, I think data that can be gleaned from wearable biometrics, and the use of artificial intelligence will help predict patient care on a patient-by-patient basis. Nurses will work with AI as part of their thought process, instead of completely focusing on their own judgment and assessment.
I also believe we are going to face a nursing shortage post-COVID for a few reasons. Due to the emotional and physical toll of responding to a pandemic, some nurses will decide to retire, and another group will leave based on the risks that go hand-in-hand with the profession.
As for patient care, we are going to collaborate differently. There will be more video conferencing regarding collaboration around the patient. And I think in the future we will see that the full continuum of care will include a wellness plan.
Debi Pasley, MSN, RN. Senior Vice President Chief Nursing Officer of Christus Health (Irving, Texas):I believe the demand for nurses will become increasingly visible and newsworthy throughout the pandemic. This could drive increases in salaries and numbers of qualified candidates seeking nursing as a profession in the medium and long term. The shortage will, however, continue to be a factor, leading to more remote work options to both supplement nursing at the bedside and substitute for in-person care.
Denise Ray, RN.Chief Nursing Executive of Piedmont Healthcare (Atlanta): Nursing schools will need to focus on emergency management and critical care training utilizing a team nursing model. While nursing has become very specialty-driven, the pandemic has demonstrated gaps in our ability to adapt as quickly utilizing a team model where nurses lead and direct care teams. By implementing a team model and enhancing education in the areas of emergency management and critical care, nursing can adapt quickly to the ever-changing environment.
Also, communication with patients and families will take on different dimensions with wider use of tele-therapeutic communication. Nurses will be leaders and liaisons in the process, connecting physicians, patients and patient families virtually.Nurses will play a key role in integrating patient family members as true patient care partners— making sure they have the information they need to serve an active caregiving role for their family members during and after hospitalization. We’ll also see more nurses becoming advanced nurse practitioners, playing an expanded role in all healthcare settings.