Anticipating Big Changes in Nursing, Healthcare System Staffing in 2022

Posted by Tim Teague on 1/13/22 11:06 AM

Topics: Health Care Staffing, News, For Recruiters

Let’s talk about the nursing shortage. 

A perfect storm of factors – aging workforce and patients, job burnout and the pandemic, to name a few - has contributed to the growing chasm of supply and demand in nursing, anticipating an estimated shortage of half a million US RN jobs by 2030, according to one study.  To keep caregiving operations running, hospitals are scrambling to employ internal stop-gap measures, like cross-functioning other specialists to work extra hours and repurposing non-clinical staff to perform duties primarily covered by nurses.  Band-aids, at best. 

Externally, this recent season of crisis medicine has launched travel nursing placement in a stratospheric trajectory, up 75% since pre-pandemic 2019. Originally a cottage industry that began in the ‘70’s, the travel nursing niche has now grown to a $20 billion + industry, and hospitals desperate to fill vacancies are now feeling strong-armed into paying two and three times the staff rate, plus signing bonuses and travel and housing expenses, for contract personnel.  At first glance, many might be quick to validate the mass exodus to travel nursing as a sure way to secure the higher pay that’s long overdue these historically underpaid essential healthcare workers, but the temporary nursing monopoly marginalizes non-contract nurses from equitable distribution and is inarguably unsustainable. COVID-19 has created a monster. 

What appears on the surface to be a win-win for travel nurses and the hospitals needing nursing staff, the current model of nurse resource allocation could not be less efficient and is actually a vicious circle.

Let’s break it down.  According to Zippia, a talent and job aggregator, there are currently over 1,696,386 traveling nurses in the United States. We’ll use Jane, a theoretical nurse, to illustrate how efficiently these 1.7 million nurses are being utilized. 

Meet Jane, she’s a CVCU nurse who lives about seven miles from your hospital. Like her professional peers, Jane’s inbox is stuffed with slick marketing emails from travel nurse agencies and her Twitter, Facebook and Instagram feeds are active with alluring ads inviting her to “get out and travel the US,” incentivizing her with unparalleled pay, all-inclusive living expenses, and potentially, a monetary bonus at completion.  It’s not long before Jane signs on with an agency to accept a 13-week assignment with a healthcare system across the country and sublets her apartment, ironically, to an incoming travel nurse (we’ll call him John) from out of state also fulfilling a temporary assignment - you guessed it – just seven miles from Jane’s complex.  Cue the cartoon view, with an animated Jane and John, brightly waving from passing planes en route to each others’ hometowns, to each other’s home hospitals.  Nurse swap, anyone?

So where do agencies get the funds to pay for the airfare, lodging, meals, and incidentals for repeated temporary staffing relocations, anyhow? Have you checked your bill rates lately?

If you think hiring more staff will reduce contingent labor, think again.  Many believe this is only a temporary inflection point that will soon pass as the pandemic subsides.  Not likely.  Hospitals are no longer competing against other hospitals for talent.  

The number of candidates who see themselves going to work in a healthcare system and retiring after 20-30 years is rapidly declining and, frankly, a concept that’s gone with the wind behind Jane’s plane.  How can hospitals continue to compete with agencies when a travel nurse can work six to nine months and enjoy the rest of the year off, yet earn the same, or more, than the full-time employee working year-round?  The answer is simple.  They simply can’t. Not in current terms anyway.

Finally, aside from workforce budget concerns, can contracting temporary staffing affect a hospital’s credit rating? Maybe. Take a look at this article from Fitch Ratings.

With such an unhealthy outlook, is there help on the horizon? Historic business analysis says the time is ripe for disruption but will likely take years.  Disruption clears the way for innovation, though, and hospitals must not rely on patching the problem, but instead should keep watch for innovative technology, in particular the startups being funded with hundreds of millions of dollars for the sole purpose of disrupting the current temporary staffing model.

KPMG has a brief article about the turning point of a market change. It’s a valuable read for this context.

Summary: Henry Ford was reported to have remarked, “If I only wanted to improve the status quo, I would have built a faster horse!”  Whether or not he actually said that is debatable, but we can agree that sometimes it’s instructive to step outside the status quo and find a better solution. 

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