Although 2013 was a year that showed a generally robust economic environment with improvements to the employment picture, the healthcare staffing industry did not have a particularly banner year. By some estimates, the market grew by four percent over the previous year, which was slower than the 11 percent growth rate in 2011. A single factor did not contribute to this slow pace.
Rather, it was a combination of constrained demand from the federal budget sequestration, reductions in Medicare reimbursement for therapy and lower hospital census that slowed the need for healthcare staffing services. So, what can the health care staffing industry expect for 2014?
As for demand, demographics in the U.S. population will continue to shift toward older Americans and those battling with obesity. According to the Census Bureau, there will be a 15 percent increase next year in Americans over 65 who are eligible for Medicare and utilize health services at high rates. By 2035, that number will spike to 21 percent.
The obesity rate for all 50 states was 20 percent higher in 2012, according to a Centers for Disease Control and Prevention report. This will lead to a growth in national health expenditures in 2014 and beyond. Notwithstanding the need to care for people who are obese, expenditures will also grow from the additional insured under Medicaid expansion and the federal exchange of the Affordable Care Act.
In the meantime, there is also data that suggests the country is not producing enough nurses and physicians to accommodate the projected growth. The latest information from the Association of American Medical Colleges forecasts an eight percent shortage of physicians for 2015, one year after full implementation of the new healthcare law. Ten years later, the shortage of physicians is expected to rise by 14 percent.
Nursing schools saw a sharp increase in enrollment numbers during the early 2000s. However, the unemployment rate for registered nurses was below two percent through the third quarter of 2013. This indicates that nurses remain in tight supply.
The healthcare industry anticipates an increased reliance on advanced practice disciplines, often referred to as physician extenders. This group includes physician assistants, certified registered nurse anesthetists, nurse practitioners and allied health professionals to fill the gap of the unmet need.
As a result, healthcare staffing experts anticipate a rebound in 2014 for the market. Current projections are a year-over-year growth of seven percent. The macro level of this optimistic outlook extends from long-term drivers of supply and demand. While the industry experienced a lull point in 2013, the diagnosis is a favorable environment for healthcare employment and staffing agencies.
Baby boomers are the center of attention for healthcare staffing over the next six or seven years. More job openings will be created because many are expected to retire; the remaining qualified pool of healthcare professionals might not be enough to fill the gap baby boomers will leave.
On the flip side, baby boomers will need more healthcare services as they age. The effect of this generational shift could increase the demand that is already straining the staffing industry. A limited pool will increase the pressure on healthcare staff payroll budgets. Medical facilities will have to become creative in doing more with less, while at the same time maintaining the nurse-to-patient ratio mandate.
The Health Information Technology for Economic and Clinical Health Act has spearheaded change and investments in IT solutions for the healthcare industry. Nearly all initiatives introduced as a result of the HITECH Act center on patient care and healthcare delivery processes. It is expected that software supporting healthcare operations to improve labor productivity will become an industry standard. Healthcare staffing agencies must reshape their recruiting strategies to find talented individuals who are also trained health information systems.
The need for software solutions that can streamline operational processes will contribute to cost savings within the healthcare industry. Clients who use staffing services will expect expert advice and solutions that will reduce unnecessary time that is wasted with manually scheduling staff. Generally, healthcare systems will continue to grow and become more complex, forcing the need to have better processes that improve patient care and budget battles.
Nurses and physicians are not the only two medical professions that will experience more demand. The outlook for pharmacists and diagnostic technicians demand is most likely to increase under healthcare reform. However, the interplay between supply and demand is not because there is currently a shortage of registered pharmacists. Rather, the boost in demand will come from the millions of people expected to enter the health insurance market in 2014.
Diagnostic technicians and other allied health occupations will increase in demand as primary care is reformed. More funding for preventative care will create further demand for healthcare workers and staffing agencies. Prevention measures in the ACA require 100 percent payment by health plans to cover the costs.
Currently, there is a shortage for lab technicians in many parts of the country that might not change any time soon. Where 100 pharmacy schools are graduating more pharmacists, enrollment for technicians has not increased significantly in recent years.
A demand for more healthcare professionals from adding approximately 32 million Americans to the insurance rolls is expected to have the biggest labor market effect of the new law. More community initiatives are springing up to ensure new enrollees receive proper care according to the law. This will jumpstart the increase in jobs available for healthcare staffing agencies to fill so that healthcare providers are in compliance with ACA.
Funding for various communities actually began three years ago in preparation for the influx of new patients. As communities begin to see more Americans take advantage of affordable healthcare services, staffing agencies will have to help fill the gap.
In addition, legislation has also paved the way for school-based health centers, nurse managed clinics and nurse-family home visit partnerships. School-based health centers will reach out to more children who would otherwise not receive care during school hours. Nurse managed clinics will be designed as preventive care facilities in underserved communities and run by nurse practitioners. First-time, low-income mothers will be served through the nurse-family partnerships.
The patient care driven healthcare system that is expected through reform will require enough skilled workers to keep the system running smoothly. Medical facilities will need to focus on meeting standards of care, which requires highly skilled workers to meet operational goals. Healthcare staffing agencies will need to find innovative solutions to fill the shortages created by community initiatives.
Voluntary separations, retirements and an expansion of patients entering the healthcare system will tighten the healthcare labor market. Demand for more workers is good news for the healthcare staffing industry; finding skilled workers to fill this increased need will be the challenge.
The U.S. Bureau of Labor Statistics shows there was an increase in the number of people leaving healthcare during 2012, with an 11 percent increase. Moreover, that number increased by 10 percent in the first three quarters of 2013. This is a bullish trend for healthcare staffing to fill those vacancies with workers who are willing to accept temporary positions.
Clearly, this is a transformational period for the healthcare system in the United States. Flexible and strategic thinking healthcare staffing agencies will position themselves to capitalize on the shifting structures. Those that refuse to move with the changes will not prosper and face an inevitable decline in relevance.
Labor costs generally runs between one-half and two-thirds of the total costs of operating a medical facility. Costs vary based on the type of facility such as hospitals, medical labs and diagnostic imaging centers. Variances, however, do not negate the need for cost containment strategies as more patients enter the healthcare system. Hiring temporary healthcare workers is a growing trend, of which many healthcare executives want to take advantage.