The upheaval in today’s global job market is record-breaking. Whether this phenomenon will be known as the Great Resignation or the Great Upgrade, the second largest affected US sector is healthcare. Employers of physicians and midlevel providers are contending with an uphill battle to secure and retain qualified personnel. Ongoing shifts in healthcare system methodologies, reimbursement, and regulations add to the complexities already facing industry decision-makers.
Recently, the US Bureau of Labor Statistics reported that the overall quits rate for February 2022 had increased to 4.35 million resignations (or 2.9% of total employment), up from 3.44 million resignations in 2021. For healthcare specifically, the February quits rate increased from 2.1% in 2021 to 2.8% in 2022. Largely attributed to pandemic-induced burnout, this extraordinary level of attrition among providers such as nurses, nurse practitioners, physician assistants, and physicians across all specialties and practice models— including job changes within the healthcare field, and permanent departures or retirements from it — results in greater burdens placed on the personnel left behind, further propelling the turnover cycle.
As shown in the graph below, healthcare jobs steadily increased in number from 1990 to 2020 (when COVID abruptly froze growth for most industries). Since then, the healthcare employment market has recovered its climb, although demand for qualified workers has, by all counts, outstripped supply.
A recent American Hospital Association analysis projects a nationwide shortage of up to 3.2 million healthcare workers by 2026, and an American College of Healthcare Executives survey found that staffing shortages had replaced financial challenges as the top concern among CEOs in nearly 20 years. Of course, the compounded effects of these shortages — combined with an aging population, a rise in chronic diseases, and the realized state of pandemic potential — stirs a legitimate sense of urgency among industry executives and employers who compete to secure quality providers through retention and recruitment strategies, which effectually raise employment costs.
At the same time nationally, healthcare operating expenses are steadily rising and revenue margins are shrinking. A December 2021 National Hospital Flash Report by Kaufman Hall surveyed 900 hospitals and found year-over-year increases in budgeted total expenses and labor expenses per adjusted discharge in all bed sizes (see image below). The trends are similar for supplies, drugs, and purchased service expenses. Kaufman Hall senior vice president of data and analytics, Erik Swanson, said in the release,
"As we enter the third year of the pandemic, hospital and health system leaders face worsening labor shortages that are driving up costs across healthcare. Organizations are having to pay high salaries to attract the workforce they need, while also paying more for drugs and other supplies. Managing through these challenges will require organizations to build new levels of agility and efficiencies.”
In the midst of shifting revenues and increased expenses, structuring competitive and appealing compensation packages for advanced practice providers and physicians can be a moving target. BFMV provides consultations and fair market value opinions to health system and medical practice leaders solving these puzzles across the country. Contact us for help with reviewing existing provider and physician compensation structures or with developing innovative, cost-effective, and compliant financial arrangements.