Labor pressures begin to ease for nonprofit hospitals, finds Fitch

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Nonprofit hospitals in the U.S. are seeing more relief on the job front as broader labor conditions become less volatile, according to Fitch Ratings in its latest labor tracker. Payrolls continue to grow while year-over-year wage growth has declined from recent peaks, and job openings are starting to decline back toward pre-pandemic levels.

That said, the sector is by no means out of the woods.

"Hospital workers remain in a favorable position in a hypercompetitive landscape for personnel against a backdrop of higher cost of living and the exit/early retirement of some skilled labor from the workforce," said Fitch Ratings Director Richard Park. "Labor tensions may put more pressure on wages and subsequently make managing costs more difficult for health systems over time as union contract negotiations are occurring during a period of increased bargaining power for workers."

Wage growth for hospital employees has remained relatively flat over the last few months, while hospital/ambulatory payrolls continue to rise and have now eclipsed the levels that were seen just before the onset of the COVID-19 pandemic.

While job openings are still high, the 6.4% rate (as of October) is the lowest level since early 2021. Labor and wages remain among the most integral factors that could make or break hospitals in 2024, according to Fitch.

"Managing salary, wages and benefits is the single most meaningful differentiator between operational success and failure in the current environment," said Park.

WHAT'S THE IMPACT

Data recently released by the Peterson-KFF Health System Tracker details the extent to which the COVID-19 pandemic affected health sector employment. While jobs in the industry had been fairly recession-proof in the past – even adding jobs during the Great Recession from 2007 to 2009 – the recession caused by the coronavirus was different, with health sector jobs falling sharply, by about 14%.

After this drop at the beginning of the pandemic, jobs in both the health and non-health sectors saw a dramatic rebound. Employment had begun to rise in both sectors by May 2020. While the pandemic recession is over, recovery was incomplete – the health industry had reported 95% of pre-pandemic job numbers by July of 2020, but non-healthcare jobs did not return to 95% of pre-pandemic levels until almost a year later in June 2021.

As of October, the health sector added 58,400 jobs over the previous month. Jobs in the health sector are 3.9% higher than in February 2020 (the previous peak), compared with 2.9% in all other sectors.

THE LARGER TREND

The job market is strong for medical residents, with the majority (56%) in a September survey saying they received 100 or more job solicitations during their training. AMN Healthcare's 2023 Survey of Final-Year Medical Residents showed that this is the highest number since the survey was first conducted in 1991.

Seventy-eight percent of residents received 51 or more job solicitations during their training, also the highest number since the survey was first conducted. This marks a strong rebound from where things were in the middle of the COVID-19 pandemic – in 2021, only 30% of residents indicated they received 100 or more job solicitations.

And yet, despite the robust job market, 30% of residents indicated they would not choose medicine if they had their careers to do over, the highest number since the survey was first conducted.

The staffing and skills shortages in healthcare continue as inflation pressures mount, while roles focused on mental health are among the top 50 healthcare jobs in the U.S., according to July research from job search engine Adzuna.

Alarmingly, the talent shortage in the healthcare sector has intensified as the majority of the top 50 healthcare positions had more unfilled roles than a year ago. It's particularly prevalent among highly skilled specialist roles like coroner and audiologist. The advertised job openings for coroner skyrocketed nine times (969.47%), from 285 jobs in June 2022 to 3,048 jobs in June 2023. Meanwhile, audiologist vacancies surged 930.99% within a year, up from 384 jobs in 2022 to 3,959 jobs in 2023.

Compared to a year ago, all nursing vacancies have skyrocketed, growing as much as 351%. However, employers appear more reluctant this year to provide monetary incentives like sign-on and retention bonuses.

While the recurring narrative of nurses being severely underpaid is not new, advertised salaries for nurses averaged just $85,244 in June 2023, despite the high demand.

Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com