Healthcare job numbers grow

Shortly after the COVID-19 pandemic began, healthcare facilities saw a significant drop in employment as a result of temporary closures and decreases in elective services.

"A lot of healthcare work became nonessential and a lot of people were putting off going to the doctor for all sorts of reasons early in the pandemic," said Elise Gould, senior economist at the Economic Policy Institute.

The sector that saw the biggest initial hit was ambulatory healthcare services, which saw employment drop by 16% in April 2020. Hospitals also saw a smaller but longer drop that lasted through 2021 as many clinicians left the workforce.

"We still needed those hospital employees to help manage the pandemic and the additional inpatient care that was required as a result," said Corwin Rhyan, director of research at Altarum, a nonprofit healthcare consulting organization. "[But] there was a huge reduction in the amount of elective care being provided, and individuals were not getting care for optional needs, where they could delay or avoid it."

According to Rhyan, healthcare employment started to increase for hospitals in 2022 and 2023 as more patients started returning for elective care. Similarly, the ambulatory care sector has seen employment grow since 2021 largely due to an increase in outpatient services utilization.

"Ambulatory services and hospitals are where the most growth for job gains have been, because healthcare is moving to where patients want to be seen," said Danny Schmidt, healthcare senior analyst at RSM. "Organizations are building to meet patient and consumer demand."

Meanwhile, so far this year, the healthcare industry has continued to add jobs. According to an Altarum analysis of data from the Bureau of Labor Statistics (BLS), nursing and residential care facilities added 16,500 jobs last month while ambulatory care settings added 33,400 jobs and hospitals added 20,400 jobs.

In addition, Altarum found that healthcare wage growth in December 2023 was 2.9% year-over-year, with the highest growth seen in nursing and residential care at 4% year-over-year.

Demand continues to outpace job growth

Despite the continued employment growth, demand in the healthcare industry is continuing to grow even faster. Altarum's analysis found that job openings in healthcare and social assistance was 7.6% last year, the second-highest rate since data collection started in 2001.

And according to Schmidt, while healthcare employment has increased by around 4.6% since February 2020, the demand for services based on spending in the industry has increased by 20%.

"Organizations need to think about how they can collaborate or form new partnerships with value-based care and managed care organizations, and really lean into technology to best meet their demand for services," he said.

In addition, BLS data shows that employment in the nursing and residential care sector is still 4.6% below pre-pandemic levels, over 154,000 jobs short.

A large part of the hiring lag in the sector is due to patients seeking alternative sites of care like aging-in-place programs instead of nursing homes or residential settings, Rhyan said.

Given the large number of job openings still out there in the healthcare sector, 2024 may be a year of doing more with less for health systems. This could mean having more locations, service lines, and hours to access clinical services, but with fewer employees, according to David Mitchell, partner and senior human resources transformation consultant at Mercer.

"All indications are that the number of open positions and the demand for healthcare workers are only going to get more severe," he said. "Between the demands of legislation for minimum coverage, the shortage of labor and the high cost of labor, something's going to have to break at some point." (Deveraux, Modern Healthcare, 2/21; Gooch, Becker's Hospital Review, 2/20)

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.