Are health care wages unsustainable?

Amid widespread staffing shortages, many hospitals have increased wages and offered bonuses to attract and retain workers—but some experts say more sustainable, long-term solutions are needed going forward, Becker’s Hospital Review reports.

Hospitals bolster wages to attract, retain workers

Currently, hospitals and health systems are struggling with staffing shortages particularly as burnout and dissatisfaction among the health care workforce continue to grow. In addition, a recent report from Elsevier Health found that 47% of US clinicians said they planned to leave their jobs in the next two to three years.

To attract and retain their workers, many hospitals have implemented new benefits, such as wage increases and sign-on bonuses.

For exampleCentura Health last fall offered a $15,000 market bonus for bedside registered nurses—reducing its RN turnover rate from 41% in October to 28% currently. Centura is also holding sign-on bonuses for hard-to-fill positions, offering between $7,500 and $20,000 depending on market, vacancy rates, and more.

similarly, Providence has offered several different bonuses for its workforce, including $1,000 bonuses for all caregivers, up to $7,500 in referral bonuses, and sign-on bonuses for 17,000 positions.

However, some hospitals leaders say that an indefinite increase in wages or bonuses is not a sustainable strategy in the long-term.

“Growth in wages more than revenue trends is not sustainable,” said Michele Cusack, CFO at Northwell Health.

Separately, Andrew Gaasch, CFO of Centura Health, said that, while competitive pay is “paramount for [the organization] to deliver high-quality, whole-person care,” the organization also needs to “maintain a healthy margin to be able to continue to invest in our communities, both from a human capital and physical capital perspective.”

“It really is a tightrope between the two,” he added.

Long-term strategies are needed to sustain the health care workforce

With staffing shortages stabilizing in some parts of the country, hospitals are now turning to more long-term strategies to attract and retain workers, according to Kaufman Hall SVP Therese Fitzpatrick and managing director Dawn Samaris.

“Initially, there was a scramble to find bonus structures and increase everybody’s pay,” Samaris said. “Now, folks are stepping back and saying, ‘Well, that can’t be the only tool. We’ve got to have other options available.”

For example, some organizations are partnering with colleges and universities to train students and move them straight to employment, creating a robust pipeline of workers.

Some organizations, such as the University of Pittsburgh Medical Center, have also implemented “shadow traveler” or internal travel nursing programs. These programs allow nurses to travel within organizations for slightly higher pay instead of going through an outside agency.

Other health systems have offered housing assistance, childcare assistance, and mental health care as new benefits to help retain their workers.

In addition, Samaris said some hospitals are lowering costs by optimizing staffing in the areas that need it most, analyzing where there is a duplication of services, and partnerships with other organizations to offer services, like behavioral health or home health.

Health care unions have also emphasized the necessity of long-term strategies to sustain the health care workforce going forward. According to Tyler Kissinger of the National Union of Healthcare Workerswage increases and bonuses have been successful at attracting new workers, but they do not address the underlying issues driving burnout and resigns.

“Hospitals were chronically understaffed before the pandemic. Short-term bonus programs might help get more workers hired, but they won’t stay if the hospital is chronically understaffed and their patients aren’t getting the care they need,” Kissinger said.

“The only way to sustainably attract and retain workers is to increase staffing to sustainable levels so healthcare workers don’t burn out trying to do everything they can to care for their patients,” he added. “Health care workers get into this field because they want to help people get better. When they see hospitals skimp on staffing, while paying their CEOs millions of dollars, it’s disheartening, and it results in people leaving.”

No ‘hard stop’ to wage increases just yet

Although wage increases and bonuses aren’t a long-term solution to hospitals’ staffing challenges, leaders have noted that there is not a “hard stop” to how high labor expenses could rise.

According to Gaasch, he does not have a set ceiling for labor costs since paying clinicians is crucial to remaining competitive in the current market.

similarly, Cusack agreed, saying Northwell Health has not placed a “hard stop” on how high its labor expenses can grow since it must “ensure” [it has] appropriate staffing levels in the various clinical functional areas in response to the volume of patients that [its providers] care for every day.”

“There really is no hard stop [to labor expenses],” Fitzpatrick said. “… This is a continually evolving situation. … I think the solutions will continue to evolve as well.” (Emerson et al., Becker’s Hospital Review4/4)

Leave a Comment