State of the Healthcare Industry: How the Pandemic Affected the Workforce

When the pandemic took over the world in 2019, many industries were tremendously affected. However, healthcare found itself battling on two grounds. One, to respond to the unprecedented demand for healthcare caused by the COVID-19 virus, and two, to ensure the industry stood its ground amid the staff shortage.

As per the US Bureau of Labor Statistics, employment in healthcare occupations is expected to grow 13% and create about 2 million jobs by 2030. Among all occupational groups, healthcare practitioners and support occupations are driving demand at a faster rate than any other. Despite the industry's resilience, the pandemic has further exacerbated labor shortages and amplified labor market stress. (BLS, 2022)

Turnover in Healthcare Industry

A report by the Work Institute estimated that almost 6 million healthcare workers quit their jobs in 2021. This was a 25% increase over last year. As per a report by Morning Consult, the top reasons for healthcare workers to leave their jobs amid the pandemic were: 54% had a fear of contracting the COVID-19 virus while performing their job duties, 50% expected better pay and benefits, 50% found a better work opportunity than their current employer, 49% were left overworked and burned out due to the increased demand and 44% wanted better career growth. (Galvin, 2021)

Hospital Turnover

According to the NSI National Healthcare Retention & RN Staffing Report for 2022, the average hospital turnover rate in 2021 was 25.9%, an increase of 6.4% over 2021. Hospitals failed to meet their 2021 turnover reduction goal, and in recent years, 100.5% of their staff have turned over. A further analysis of the data shows that 95.5% of hospital separations were voluntary. (NSI Solutions, 2022)

In 2021, turnover increased in all regions between 2.9% and 10.0%. North-East turnover was the greatest and closely matched the national average. The South-East hospitals had a lower change, but the trend was still higher than the national average. Hospitals in the South Central or western regions with fewer than 200 beds have the greatest retention capacity and lowest turnover. In contrast, hospitals with 300-500 beds in the North-Central region have the highest turnover. (NSI Solutions, 2022)

Some of the main reasons highlighted by hospital staff for turnover include: personal reasons, lack of career advancement, retirement, relocation, salary and benefits, education, scheduling, commute and workload/staffing ratios.

Nursing Homes and Elderly Care

It is predicted that the home health and personal aide industry will grow 41% between 2016 and 2026, according to the Bureau of Labor Statistics. This is a very high estimate considering 7% growth rate is an average for all industries in the US. Due to the aging baby-boomer population and the growing elderly population, home health aides and personal care aides will continue to be in demand. Additionally, the turnover rate at many facilities in the industry is higher than the industry average, which is likely to cause more job openings in the future. (BLS, 2022)

There has been a significant decline in the number of nursing care workers since the pandemic began. 976,100 employees were working in community elder care facilities nationwide in February 2020, but only 892,200 in July 2022 – a decrease of 8.6%.

The Journal of the American Geriatrics Society found a growing link between turnover and nursing home quality and star ratings. According to their findings, registered nurses and total nursing staff turnover rates were about 44% and 46% respectively. Nursing homes with higher star ratings had lower turnover rates for both groups. (Zheng et al., 2022)

Registered Nurses

During the pandemic, a rise in patient ratios, increased occupancy rates, and high acuity led to burnout, fatigue, and emotional exhaustion among medical personnel. This was especially true for registered nurses (RN) who exited the bedside at shocking rates.

Previously, RNs turnover would usually stay below the national average. However, NSI reported a staggering 27.1% turnover rate in 2021, an 8% increase from the previous year. In the last 5 years, hospitals have shed around 95.7% of their registered nurses. (Strout, et al., 2022)

In 2021, all regions experienced an increase in RN turnover. The North East reported the greatest increase, despite being below the national average. More than 500-bed hospitals reported the largest increases and turnover rates. (Peng & Rewers, 2021)

In 2021, McKinsey surveyed a group of RNs to discover their reasons for leaving or staying in their jobs. In that survey of nurses who were more likely to leave the profession, manageable workloads were of utmost importance, while nurses who stayed placed great importance on meaningful work, having caring teammates, feeling connected to the profession, and being engaged with it. Both groups ranked safety, flexibility, work-life balance, compensation, and feeling valued as equally important factors. (McKinsey, 2021)

The Cost of Turnover in Healthcare

The cost of turnover can make a huge difference in the decrease in hospital margins. In the United States, the average turnover cost for staff registered nurses ranges from $33,900 to $58,300. In 2021, the average hospital lost $7.1M due to an elevated turnover rate. To further break this data down, every percent change in staff turnover will cost/save the average hospital around $262,300. In comparison, this is higher than the average turnover cost for RNs in 2020, which was $40,038. (Gamble, 2022)

According to some estimates, turnover costs in healthcare are 33% of an employee's income, while others claim the cost is 1.5 to 2 times the employee's compensation, including recruiting, onboarding, training, etc. A faculty member at the American College of Healthcare Executives, Deao, determined that if a company loses 20 percent of its 3,000 employees at an average salary of $45,000 and the average cost of an employee is $60,000, turnover costs a whopping $27 million. (Sanborn, 2017)

Similarly, the cost of replacing a physician can be 2-3 times that of the physician's annual salary. According to the American Medical Association (AMA), approximately 60 physicians would leave Stanford Medicine within two years of experiencing burnout if nothing is done about it. In terms of recruitment costs, each physician would cost between $250,000 and almost $1 million, depending on their specialty and faculty rank. For all the physicians lost, the economic loss for Stanford could range from $15.5 million to $55.5 million over two years. (Berg, 2018)

How Healthcare Can Combat Turnover

Despite the alarming turnover rate, healthcare demand is expected to grow at an exponential rate. As the aftershocks of the pandemic settle in, healthcare is expected to regain momentum and get prepared for the future.

Approximately 75,000 new jobs are expected to be created in hospitals between 2019 and 2029, followed by 43,800 new jobs in nursing homes, and 33,200 new jobs for registered nurses outside the healthcare sector during the same time period. A total of almost 222,000 new RN jobs are expected to be added in the same period. (Stiegler, et al., 2021)

That said, healthcare providers would be seeking ways to hire and retain employees to meet the demand. Hence, it is imperative that providers innovate their retention strategies to stay afloat. Here are some of the key strategies that healthcare providers can use to their advantage.

Reduce Employee Burnout

A 2021 study by the Mayo Clinic found that one in five healthcare workers said they intended to reduce work hours or quit the profession in two years, due to burnout, fear of infection, anxiety, or a high workload. There are plenty of ways to reduce employee burnout. (Henry, 2022).

• Hire more staff. Burnout is frequently caused by overwork. An effective way to alleviate overwork is by hiring permanent and temporary staff and scheduling them appropriately.
• Educate your workforce. A worker's burnout can be prevented when they are informed about the signs and symptoms of burnout, even when they are still students or newcomers to their profession.
• Cut down tedious work. Reduce administrative tasks for your clinicians, so they focus more on providing care.
• Care for your caregivers. Offer them treatment and support from time to time to deal with burnout.

Offer Greater Flexibility in Scheduling

In healthcare, proper scheduling and adequate staffing are critical to retention. Staff scheduling can be accomplished through a variety of methods by healthcare providers.

• Offer flexible scheduling. It may be possible to start at different times, overlap shifts, and share jobs. Flexible options would allow nurses and other health professionals to balance work and family responsibilities.
• Provide self-scheduling. If possible, provide workers with autonomy when it comes to scheduling their shifts as it may lead to greater job satisfaction.
• Automate scheduling. Use technology and AI tools to predict a surge in demand in advance. This will allow for better scheduling among the workforce ahead of time.

Increase Employee Engagement

A highly engaged workforce has a greater chance of participating in decision-making, feeling valued, and believing that their involvement is important. According to Forbes, employees engaged in their work are more likely to be motivated and remain committed to their employer. There are a number of ways to increase engagement across your organization. (Beheshti, 2019).

• Listen to your employees. It's easy for employees to feel disengaged and dissatisfied at work when their feedback isn't heard by leadership. The result is higher turnover and a poorer patient experience. It can be invaluable to leaders to conduct an internal survey to find out how their employees are feeling and what may be standing in the way of their success.
• Provide professional development. A healthcare organization that prioritizes the development of its staff often sees a decrease in turnover rates and a rise in the quality of its care. Providing ongoing professional development for your team members and also offering leadership training for your managers and supervisors can have a measurable impact on the retention of your team members.
• Reaffirm your core values and mission. Leadership in healthcare can drive higher employee engagement by emphasizing the organization's core values and mission to ensure that employees are engaged. Your healthcare staff will be more connected to your organization's purpose if you provide them with examples of the difference your organization is making.
• Offer on-demand pay. As per the Workforce Institute at Kronos survey, approximately 61% of healthcare workers think that they should not have to wait until payday to get their earnings. Less financially stressed employees are productive, more engaged at work, and less likely to leave their organization. (Gouthro 2019, PwC 2022)