Healthcare employment is back to pre-pandemic levels

During the pandemic, exhaustion and burnout contributed to a large exodus of workers known as the "Great Resignation." The healthcare industry, including hospitals, physician offices, and nursing homes, saw significant declines in employment during this time.

For the analysis, Amitabh Chandra, director of health policy research at the Harvard Kennedy School of Government and a professor of business administration at Harvard Business School, and Louis-Jonas Heizlsperger, a doctoral student at the University of California, Berkeley, examined healthcare employment data from the Bureau of Labor Statistics. The data covered information between March 2006 and June 2023.

According to the researchers, physician offices and hospitals were largely able to recover to their pre-pandemic employment levels within a year. In comparison, the rest of the economy took around two years to return to pre-pandemic employment levels. Currently, nursing homes and residential facilities are still experiencing some decline, with 6% lower employment rates compared to pre-pandemic levels.

The researchers also found that real wage growth in the healthcare industry has largely surpassed inflation, in both the short- and long-term. Between January 2020 and June 2023, healthcare wages in nursing homes and residential facilities have grown 7% per year compared to an average annual inflation rate of 5%. Nominal wages in hospitals are also slightly higher than inflation at an average annual rate of 5.9%.

"Employment growth and real wage growth in health care — particularly in hospitals and physician offices — has been far more robust than in the rest of the economy, and far exceeds pre-pandemic levels," Chandra and Heizlsperger write.

Why are hospitals still focusing on the 'Great Resignation'?

Although both employment and wages in the healthcare industry have recovered since the pandemic, there are still ongoing concerns about high quit rates, labor shortages, and stagnant wages. According to Chandra and Heizlsperger, there are four potential reasons why the narrative of the Great Resignation continues to be prevalent in the healthcare industry:

1. Healthcare leaders are focusing more on quit rates than hiring rates

Losses in employment may be "felt more than equivalent gains (quitting hurts more than hiring helps)," the researchers write. However, "it is not reassuring for society if health care leaders are prone to ignoring highly relevant data."

2. Hiring has become more difficult

As employment grows, it may be harder for organizations to hire new workers. Employers also run the risk of new employees quitting and getting hired somewhere else even after all the work that initially went into hiring them, including negotiations and training.

3. Workers could be burned out and want to quit

According to the researchers, the healthcare workforce, including those who never quit and new hires, may be burned out and want to resign. "Well-being and labor shortages are different economic concepts but may manifest themselves in the same way to employees," Chandra and Heizlsperger write.

CDC data also supports this claim, with a new study finding that experiences of harassment, feelings of burnout, and intent to resign among healthcare workers have increased since the pandemic.

4. Healthcare workers believe the pandemic worsened pre-existing shortages

"[I]t is possible that there were labor shortages before the pandemic that have continued well after the pandemic, but that health care workers view all such shortages as pandemic-induced," Chandra and Heizlsperger write. However, since current employment levels are higher than pre-pandemic levels, it is difficult to say that pre-existing shortages have worsened.

Instead, burnout among employees may make it feel like there is a labor shortage even when there are technically enough workers.

Overall, "while that label [the Great Resignation] is clearly inaccurate, the challenges of hiring, increasing wages, and confronting falling margins, are not," Chandra and Heizlsperger write.

Advisory Board's workforce resources

The ongoing workforce crisis — both before and after the pandemic — is a top concern for many healthcare leaders. Advisory Board's resources can help leaders better understand these challenges and address them more effectively.

In this expert insight, the Radio Advisory podcast team curated five episodes that highlight workforce challenges, opportunities to address them, and pep talks for the future. The episodes detail both short-term strategies to alleviate shortages, as well as long-term solutions to address the root causes.

As the physician workforce shifts, the standard playbook for recruitment and retention will no longer suffice. This expert insight explains three trends driving changes in physician employment and two tips that organizations can use to win long-term loyalty.

This resource outlines how technology can be leveraged to address the root causes of the ongoing workforce crisis. Technology can help reduce burnout and turnover, optimize staffing, and enhance patient care, which can ultimately lead to sustainability. 

And with burnout being a major problem among healthcare workers, this case study explains how University of Michigan Health-West was able to improve clinician well-being by reducing documentation and cognitive burden. (Gamble, Becker's Hospital Review, 1/22; Chandra/Heizlsperger, NEJM Catalyst, 12/4/23)

Healthcare's workforce crisis is a top concern for executives, and it's not going away anytime soon. The Radio Advisory podcast team put together insights from five episodes that delve into the short- and long-term challenges the industry faces — and ways leaders can respond.