Antipating the Impact of the Baby Boom on Medicare

 

 
In perusing the excellent work of the Peterson-Kaiser Health System Tracker project, we recently came across an analysis (depicted on the left, below) of Medicare spending patterns broken down by age of beneficiary. Based on 2014 data, the analysis shows how much was spent per capita in traditional Medicare fee-for-service on beneficiaries of each age. (The analysis excludes Medicare Advantage data, and also doesn’t include beneficiaries aged 65, for whom a full year of spending data wasn’t available.)

What’s interesting is how spending patterns differ across age cohorts—inpatient spending peaks at age 92 and then declines, spending on physician services peaks at age 85, skilled nursing and hospice spending ramp up quickly for much older beneficiaries. To see how these patterns might play out if applied to the Baby Boom generation, we combined the Peterson-Kaiser analysis with our earlier look at generational aging. The result is the chart on the right, below, which shows how each bucket of spending will increase over the coming 25 years given aging of the population.
 
A couple of interesting observations from this (admittedly imperfect) analysis.

First, the sheer size of the baby boom generation will drive a huge increase in Medicare spending over the next 25 years. And a full third or more of the total Medicare spend on Baby Boomers isn’t even captured here—that will come via payments to Medicare Advantage plans.

Second, inpatient care drives a huge amount of the total spend. It’s clear that an urgent priority is finding ways to shift spending from the light grey bars (inpatient) to the other segments—we need to pull forward the shift from inpatient to other settings from where it was in 2014’s population. Recall that this is traditional Medicare—strategies like accountable care organizations (ACOs) and other care management/population health reforms will be critical here.

Finally, in addition to changing the trend with innovations in care delivery models, we should expect technology and pharmaceuticals to play a role in inflecting the shape of this graph. Whether that impact will produce a net savings or a net increase in spending remains to be seen.

Here come the Millennials!

We spend an awful lot of time in healthcare talking about the Baby Boomers. No surprise, America has spent decades—six-and-a-half of them, to be exact—contending with the impact of this historically large generation on nearly every aspect of our national life. From politics to economics to culture, the Baby Boom reshaped almost every facet of our society, and healthcare has been no exception. The fact that over 10,000 Boomers join the Medicare ranks every day means they’ll have a transformative effect on how healthcare is delivered and paid for—up to and including the sustainability of the Medicare program itself. So it may come as a shock to Boomers to learn that, starting in 2019, it’s no longer All About Them. This year America passes a new milestone: Baby Boomers are now outnumbered by Millennials. As the chart below shows, Boomers (whose average age is now 63), will be surpassed this year by America’s new Largest Generation. Born between 1981 and 1996, the Millennials are now 30 years old on average, and there are 72.5M of them, compared to 72.0M Boomers—a gap that will continue to widen. (Thanks to immigration, we have another 14 years until we hit “peak” Millennial, according to Census Bureau projections.)

This demographic achievement alone ought to earn Millennials a participation trophy—obviously, not their first. (Forgive the sarcasm…we’re Gen X-ers, it’s what we do.) But this changing demographic landscape brings big implications for healthcare. Boomers are just entering their peak “senior care” consumption years now, and we’ll have a quarter-century or more of very expensive care to fund for a generation that is by all indications more riven with chronic disease but more likely to live into very old age than previous cohorts. That creates the imperative for population health approaches that allow care for seniors to be delivered in lower-acuity settings. At the same time, however, Millennials are really just entering the healthcare system. For the next several years, most of their care needs will be driven by having babies and caring for growing families. But just as the last of the Boomers get their Medicare cards in 2029, the Millennials will begin to enter their “upkeep” years—demanding a variety of diagnostics, surgeries, and procedures to keep them thriving. Who will pay for all of that specialty care, and where will it be delivered? Today’s health system planners would do well to begin to look ahead to future capacity needs, and economic models.

The Millennials bring dramatically different service expectations as well. This is a generation raised in the era of Amazon. One-click purchases, same-day delivery, frictionless transactions, personalized offerings, low institutional loyalty—all of that will shape the way this generation thinks about consuming healthcare, with huge implications for providers. This is a high-information generation, whose adult years have seen a pervasive shift from physical to digital commerce, and they’ll expect healthcare to follow that trend. Ask today’s pediatric providers how different the Millennials are as parent-consumers—you’ll quickly get the picture. Even as physicians, hospitals and others scramble to retool care delivery to more efficiently manage the swelling ranks of seniors, they’ll need to keep a close eye on the preferences of Millennials, upon whom their future fortunes will rely, and who won’t tolerate the hurry-up-and-wait ethos that still pervades American medicine.

(Spoiler alert: waiting in the wings is Gen Z, digital natives born in 1997 and after. Guess what? There’s even more of them!)

 

The financial impact of the nationwide nursing shortage: Hospitals pay billions to recruit and retain nurses

http://www.fiercehealthcare.com/finance/financial-impact-nationwide-nursing-shortage-hospitals-pay-billions-to-recruit-and-retain

money

A new Reuters analysis finds that collectively, hospitals have been paying billions to recruit and retain nurses—offering higher salaries, signing bonuses and even repaying student loans—to address the nationwide nurse shortage.

The problem is only going to get worse. With many Baby Boomer nurses set to retire, and an aging population that will need healthcare services, the Bureau of Labor Statistics projects that there will be more than a million openings for registered nurses by 2024.

Although the industry has faced shortages before, the current shortfall is more difficult to address, according to the Reuters report.

“I’ve been a nurse 40 years, and the shortage is the worst I’ve ever seen it,” Ron Moore, who recently retired as vice president and chief nursing officer for West Virginia’s Charleston Area Medical Center, told the news service. To help attract nurses—and get them to stay—the organization will reimburse their tuition if they agree to work at the hospital for two years.

While some hospitals try to meet staffing needs by employing foreign nurses, the current political climate has caused delays in issuing visas. Healthcare advocates are pushing Congress to pass proposed legislation to open the door for 8,000 international nurses to get the necessary visas to help alleviate the nursing shortage.

In the meantime, Reuters notes that some hospitals have turned to travel nurses to fill the gaps. Staffing Industry Analysts told Reuters that so far healthcare organizations have paid $4.8 billion for travel nurses in 2017.

But the costs are hitting rural hospitals hard. Reuters reports that J.W. Ruby Memorial Hospital in Morganstown, West Virginia, has paid more than $10 million this year to hire and retain nurses. That money is used in part to give $10,000 signing bonuses and free housing for nurses who live more than 60 miles away from the hospital.

And that’s just the beginning. To entice longtime nurses to continue to stay in West Virginia and work at the hospital, next year J.W. Ruby Memorial may begin to pay college tuition for their family members.

Healthcare experts say other hospitals may want to follow J.W. Ruby Memorial Hospital’s lead and prepare in advance for potential shortages.  Among their suggestions: develop a succession plan now, and see if experienced nurses will consider delaying retirement if they can take on new roles in patient navigation or education or decrease their hours.

 

 

Analysis: Nurse force to grow 36% by 2030, thanks to millennials

http://www.healthcaredive.com/news/analysis-nurse-force-to-grow-36-by-2030-thanks-to-millennials/506539/

Dive Brief:

  • Millennials are becoming registered nurses at nearly twice the rate of baby boomers, but that still won’t necessarily prevent a nursing shortage as boomers retire, a new analysis in Health Affairs concludes.
  • The number of younger RNs nearly doubled to 834,000 in 2015, after dropping to 440,000 in 2000 when Generation Xers were joining the workforce.
  • The number of millennials entering the space has leveled off recently, however, suggesting only modest growth over the next decade. Still, millennials will dominate the nurse workforce in the 2020s, the article says.

Dive Insight:

The average age of the nursing workforce in 2005 was 44, spurring widespread predictions of a nursing shortage as baby boomers retired from the field, according to the authors.

They attribute millennials’ embrace of nursing to several factors. The profession offers stable lifetime earnings and low unemployment as well as opportunities for advancement and relocation. And it can be parlayed in myriad ways across the healthcare industry.

“Considering the acceleration in retirement of the baby boomers and the stabilization of the entering cohort sizes among millennials, we expect the nurse workforce to grow 36%, to just over four million RNs, between 2015 and 2030, a rate of 1.3% annual per capita growth,” the authors write. “This is a rate of per capita growth similar to that observed from 1979 to 2000, but half the rate observed in the rapid-growth years of 2000-15.”

Whether that growth rate is enough to meet demand as baby boomer nurses retire is hard to gauge.

While nursing may be enjoying a surge in popularity, as professions go, retention is a growing problem. In a recent Medscape poll, about one in five nurses said they would not make the same career choice again. Nurses with more than 21 years in the profession were more likely to be dissatisfied than those who were new to the practice.

To retain nurses, hospitals need to provide opportunities for upward mobility and changing roles. They also need to address clinician burnout associated with increasing regulatory and administrative tasks. Allowing nurses to practice at the top of their licenses can also increase workplace satisfaction — not to mention helping address the problem of physician burnout.

Healthcare Staffing Outlook: Strong Worker Demand Eyed for 2017

http://www.healthleadersmedia.com/hr/healthcare-staffing-outlook-strong-worker-demand-eyed-2017?spMailingID=10269321&spUserID=MTY3ODg4NTg1MzQ4S0&spJobID=1081665555&spReportId=MTA4MTY2NTU1NQS2

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The news is good for job seekers, but ongoing high demand for clinicians and leaders means hiring managers might benefit from thinking creatively about retention strategies.