Overcoming Healthcare Labor Challenges: Strategies & Insights

Solutions to Overcome Healthcare Labor Challenges

Quality healthcare starts with an employer’s responsibility to support its medical professionals in maintaining their quality of life by addressing physical and mental health and wellness for workers. Challenges derived from past, current and projected labor shortages within healthcare are significant, impacting patient care delivery, staff morale and operational efficiency. These shortages put pressure on the existing workforce, leading to burnout and decreased job satisfaction, which exacerbates turnover rates.

PNC Healthcare Asset Management Group delivers actionable insights, helping healthcare leaders make informed financial decisions to achieve sustainability and strategic success. By focusing on operational efficiencies, restructuring staffing models, and implementing strategies to enhance employee wellness, healthcare systems can establish resilience against current and future labor challenges.

Operational efficiency

Hospital labor costs have increased significantly since COVID-19, affecting the operational and financial stability of the healthcare system. Contract labor was a temporary resolution to immediate staffing shortages; however, it caused significant strain on healthcare organizations’ balance sheets and was not sustainable for many traveling workers long-term. This sharp increase in labor expense stifled the ability to improve and innovate within the existing healthcare staffing framework as systems were compelled to prioritize immediate financial stability over long-term process improvements.

Operational efficiency solutions:

Address hospital efficiency through an analysis of current labor allocation and redistribution of resources where appropriate
Implement telehealth and web-based appointments to increase accessibility to care
Utilize artificial intelligence to automate monotonous tasks, freeing up healthcare workers to focus on patients
Apply enterprise financial modeling of multiple asset pools, which can lead to improved enterprise financial stability and more predictable outcomes

Staffing shortages

Post pandemic, pressure on underlying financials has somewhat eased although residual effects remain in the way of healthcare labor supply. The Health Resources and Services Administration found that across all physician specialties in the United States, there is a projected shortage of 187,130 full-time equivalent physicians in 2037 and that nonmetro areas will encounter greater shortages of physicians than metro areas.¹ Furthermore, The National Center for Health Workforce Analysis predicts a 6% shortage of nurses nationwide and a heightened 13% shortage in nonmetro areas in 2037.²

Several factors perpetuate the gap between supply and demand of medical professionals, including the demands of an aging population, increasing rates of illness, the opportunity cost of pursuing more lucrative or less stressful careers in other industries and persistent burnout among healthcare professionals. The Journal of General Internal Medicine conducted a study in 2023 of 11,040 nurses, in which 53.4% of nurses in the inpatient setting and 45.2% of nurses in the outpatient space reported work overload and the intent to leave their job in the next 2 years.³

Staffing shortage solutions:

Offer flexibility in scheduling which can increase job satisfaction by allowing greater work-life balance in labor force
Develop in-house training programs to build an employee pipeline
Partner with an existing academic institution to support recruitment efforts to fill your employee pipeline externally
Share services and personnel with other healthcare organizations

Recruitment and retention issues

These labor challenges have persisted due to structural obstacles that have culminated in recruitment and retention issues. Healthcare workers are more willing and able to relocate over the long-term if offered better circumstances. This contributes to ongoing disruptions, disproportionately affecting rural areas. The lack of resources and limited access to education and training opportunities in more rural communities perpetuates this challenge. The National Center for Health Workforce Analysis supports this in that Mississippi, Idaho, and Oklahoma have the lowest number of patient care practicing physicians per capita.⁴

Given the inherent limited labor supply paired with (in many cases) smaller balance sheets and steadily increasing demand for healthcare services, rural healthcare systems have struggled to keep pace.

Overall, the persistent shortage in healthcare workers has increased competition for talent, highlighting the need for innovative approaches to workforce recruitment, retention and structural reform in the healthcare labor model.

Recruitment and retention solutions:

Combat the issue of recruitment and retention of clinical staff by working with a benefits provider, such as PNC, to benchmark the current benefits with peer organizations
Explore low-cost benefits that healthcare organizations can provide including early wage access, student debt forgiveness, financial education including topics such as saving for college and retirement
Enhanced benefits to consider include increasing employer matching in the defined contribution plan and initiating cash balance plans for physician groups

Employee wellness

With labor market challenges having eased since the midst of the pandemic and the immediate pressure on healthcare systems having subsided to some extent, an opportunity emerges to implement newer long-term wellness strategies. The University of Pennsylvania Perelman School of Medicine conducted a study in partnership with the Philadelphia Museum of Art where they facilitated a workshop focusing on visual arts for which they measured moderate decreases in high emotional exhaustion scores from just one workshop, down to 55.5% from 64.7%.⁵Creative outlets such as art-based therapy can teach employees artful thinking in addition to wellness benefits.

Employee wellness solutions:

Build a community which fosters workplace loyalty, promotes employee connection and creates a feeling of institutional commitment
Include mental health benefits, such as employee assistance programs that offer counseling and support services
Offer opportunities for continuing education to equip workers with new and enhanced skills

Challenges deriving from past, current and projected labor shortages within healthcare are significant, impacting patient care delivery, staff morale and operational efficiency. These shortages put additional pressure on the existing workforce, leading to burnout and decreased job satisfaction, which exacerbates turnover rates. However, with diligence and innovation, healthcare systems can incorporate strategies to address these challenges that strengthen the entire healthcare system.

PNC Healthcare Asset Management Group offers an approach that is transparent, deeply consultative, multidisciplinary and healthcare-specific, aligning investments with both short-term operations and long-term growth. Our team of professionals offer deep healthcare experience and would be happy to discuss the challenges facing your organization.