The U.S. Bureau of Labor Statistics recently published its latest employment report, and the health care sector topped 16 million jobs for the first time since March 2020. From a bird's eye view, the below chart shows employment trends seemingly headed back to pre-pandemic levels. Good news, right?

There is more to the story—not all health care jobs are growing back, or at least certainly not at the same pace. Take a look at this next chart. Notice how ambulatory settings have majorly risen back to their pre-pandemic employment levels, while hospitals have staggered, and nursing home settings have even continually declined in recent months.

It's clear how discrepant the trends are in relation to one another. A few questions linger in my mind, one of which being this: Much of the industry is bouncing back, so why is hospital employment still lagging? After speaking with some Advisory Board experts, here are four leading hypotheses.

(One side note: As the chart above reveals, nursing homes are facing even more acute job losses than hospitals. We'll dig deeper into their struggles another day.)

1. Hypothesis: The hospital has become a less desirable workplace.

As my Advisory Board colleague Monica Westhead pointed out, the variation in trends we are observing revolves around worker preferences. She had the following to say: 

The staffing crisis: Inside the battle to attract workers at 2 health care organizations

Clinicians and clinical staff members are just like any other worker—they want to be in a job that provides them with the unique mix of values, benefits, and opportunities they value most. Different care settings, however, provide different work environments, and may be more or less desirable to the average nurse or aide as a result.

Ambulatory settings have one big advantage that hospitals and skilled nursing facilities don’t have—for the most part, they operate in relatively traditional business hours. Inpatient care is 24/7, while in most cases, outpatient services can offer evenings, weekends, and/or holidays off. Not all clinicians are seeking business-hours roles; many hospital nurses value working nights or weekends in order to have weekdays with their families. However, a less demanding and more consistent schedule is likely one driver of interest in working in ambulatory care.

Patient populations differ between settings, too. Unfortunately, nursing homes are often seen as an undesirable place to work by clinical staff, who may view the geriatric-only population or the focus on long-term care less prestigious than work in a hospital or ambulatory clinic. The Covid-19 pandemic’s disproportionate impact on nursing homes has also hurt the already-challenged reputation of these facilities, potentially making clinical staff feel as though the public looks down on them for working there, as opposed to in a hospital.

It’s hard to build up employment rates when employees just don’t want to work for you.

2. Hypothesis: The real problem is that hospitals can't hire enough nurses.

Hospitals employ a wide range of workers, from nurses and physicians to techs and general health care support operations. In the absence of drilled down data into the current makeup of hospital employment, it's possible the nursing shortage is a bottleneck for increasing aggregate hospital employment levels. We've written extensively about the nursing shortage and how it is affecting health systems around the country. 

6 hard truths about the nursing shortage the entire C-Suite needs to know

Back in May of 2019, registered nurses were by far the largest occupation in hospital settings, with nearly 1.8 million jobs making up 30% of total hospital employment. The next largest occupation in hospitals was nursing assistants at roughly 400,000 workers  in 2019. Given the current nursing shortage and their relatively large makeup of the hospital workforce, it's (maybe) no wonder hospitals can't rise back to pre-pandemic level employment. And since we've discussed why the headlines are wrong about physician shortages, it seems reasonable to assume nurses at the crux of today's employment numbers.

3. Hypothesis: Ambulatory volumes are coming back much stronger than hospital volumes.

People are just now starting to feel more comfortable circling back to the care they delayed over the past 18+ months, and much of this is happening in the ambulatory setting. On the other hand, hospital volumes may simply not be where they were pre-pandemic, and this is further exacerbated by resources still being directed to surging Covid-19 cases. It's possible hospitals can't afford to hire the same number of workers they once had.

Combined with the stress and intensity of hospital work, hospitals are in a double whammy situation—they can't hire enough staff and people (especially nurses) don't want to work for them.

4. Hypothesis: Fewer people are seeking care in hospitals.

It's not just Covid-19 that is shifting care. Various forces have been shifting care outside of the hospital before the pandemic struck, and we've been observing this for years. Consumer demands have changed. The focus is on improved access, cheaper medical care, and an overall more seamless experience—all of which are being found outside the hospital. Covid-19 has further reinforced underlying consumer preferences, especially considering patients' lower levels of comfort returning to hospitals or emergency rooms amid the pandemic.

Additionally, strong advances in clinical technology and safety have enabled hospital procedures to move into the ambulatory setting (e.g., knee replacements). With an acceleration of at-risk contracts and value-based care, providers and payers both have new incentive to secure the lowest-cost sites of care. In that vein, various regulatory changes, such as reimbursement policies, have shifted site of care preferences.

Parting thoughts—what if it's all the above?

These points are mainly speculative attempts to decipher the calculus of health care employment. The reality is that today's employment trends showcase a puzzle—one that these hypotheses serve merely as individual pieces for the visual of what is happening. Only time will tell if trends ever return to pre-pandemic levels. But one thing is for certain: the health care workforce, just like everything else, is subject to impermanence.