The Healthcare Workforce is Anxious

Labor Day has been celebrated in the U.S. since 1882 to recognize the contributions of workers. Congress passed legislation (28 Stat 96) and President Grover Cleveland signed it into law June 28, 1894 as a national holiday to commemorate the workforce.

In the 132 years since passage, the healthcare workforce has grown as life expectancy increased, clinical capabilities expanded and operating costs grew. Labor costs—including wages, benefits and employee services offered by employers represents almost 60% of total health spending and its increasing at an annual rate above inflation and GDP. Consider, since 1892…

• Total spending on healthcare expanded from $300 million (1% of GDP for 63 million population) to $6 trillion (18% of total GDP for 349 million population) this year.
• The healthcare workforce has grown from 104,000 physicians (no other employee groups were counted) to at least 25 million today (8 million in hospitals, 9 million in ambulatory settings, 3 million in residential/nursing care facilities, 2 million in home/personal care PLUS staffing in law firms, consultancies, facility development et al PLUS 3 million unpaid, fulltime health workers providing care to family/others.
  • Per AMA, this includes 901,954 direct patient‑care physicians, 203,591 current residents (included in direct patient care) and 40,846 physicians in administration/research/teaching (non‑patient care).
  • Per ASRN, it includes 5.2 million registered nurses (RNs) and 7.1 million NPs, PAs, LPNs, CNAs, therapists and techs.

But today, the U.S. healthcare workforce is unstable across the board. The facts are these:

• The healthcare workforce is diverse and growing. The industry employs 1 of 7 workers in the U.S. economy today and will account for 24% of all new jobs in the next decade. Per last week’s Bureau of Labor Report (below), 4 of the 10 fastest growing occupations are in healthcare led by home health care aides. The disparity between healthcare’s lowest paid (and unpaid) workers and its highest paid executives and specialty physicians is problematic to its performance and increasingly exploited by disruptors.
• Productivity is low and wage disparity is high compared to other industries. According to the Bureau of Economic Analysis, over the last 20 years, the productivity of the U.S. health workforce increased 1% versus 55% gains across all other industries (based on output per unit) led by warehousing, logistics, financial services and others. That’s despite massive investments in HCIT and routine downsizing. Per the BEA, healthcare is the only industry that has seen employment growth and productivity decline in the recent past. Per the Bureau of Labor Statistics, the internal pay spread in healthcare is the widest of any major U.S. industry. And, since 2020, income gains of 16% have been wiped out by a 23% increase in costs of living due to inflation. The lowest-paid workers in healthcare are more than a fourth of workers in the most mal-effected in the K-economy.
• The workforce is anxious and frustrated. The tsunami of outside pressures hitting the healthcare is unique compared to other industries because, at its heart, healthcare is about caring for people who need held. The majority of American’s believe more care is better care and access to doctors and nurses anytime and anywhere is key. Public expectations about what constitutes appropriate, evidence-based care vary widely and modernization vis a vis technology., AI and specialization is not fully appreciated. Changes in how care is delivered, where and by whom is a source of anxiety (fear) across the spectrum of roles in the healthcare workforce. Consider…
  • The integration of technologies in healthcare proven to increase efficiency and/or improve outcomes has been slow and its use additive to traditional ways of delivering services.: Most are layered onto pre-existing work-rules, operating policies, restrictive decision-rights and political structures. Physicians control virtually all clinical processes and roles across the eco-system but vary in techno-savvy and data-driven decision-making. Access to technology favors organizations that are credit worthy or willing partners with private investors. And organizations at scale that accept clinical and financial risk for better care at lower costs deploy technology and apply data more strategically than organizations seeking only efficiency gains. Thus, technology and the data it avails users is a strategic advantage enjoyed by some, but not all. And workforce acceptance is a major determinant of its value.
  • Artificial intelligence heightens workforce anxiety about job security. It’s the black box future embraced by administrators (the suits) they use to eliminate positions and correct incomplete/inaccurate diagnoses. It’s the future and they’re the past. Though credible studies have shown diagnostic accuracy higher for AI-based analysis vs. physician opinion, the AMA is cautioning against its use except for the simplest cases It’s protecting its piece of the workforce.
  • Funding sources have the upper hand. Power, influence and funding in U.S. healthcare is increasingly controlled by three groups: 1-large corporate insurers who serve government, employers and individual policy holders, 2-state Medicaid and public health administrators and 3- the Centers for Medicare and Medicaid Services whose oversight impacts every job in the industry. Collectively, these share a view that labor intensity in healthcare as a problem and modernization an urgent need. They support four policies intended to lower overall health costs and improve the performance of the system: 1-price transparency, 2-accountable care organizations, 3-competition and 4-enforcement actions against fraud, waste and abuse. These initiatives intensify workforce antipathy toward investors, lenders and insurers and contribute to dysfunction.
  • Public trust is slipping. The attractiveness of healthcare work has been its calling to meaningful, worthwhile work serving others. In recent years, it’s ethos has been harmed by widespread reporting about employee burnout, layoffs, work stoppages, labor-management disputes, staffing shortages et al which are alleged to impair quality and safety, Employee surveys show the workforce is dispirited, believing business interests are its primary focus and care coordination/delivery secondary. Given the overall size of workforce, and its ubiquitous presence in every community, the public’s opinion about healthcare is significantly impacted by the views of its workforce…and their views are negative.

The result of these is workforce shortages and instability: Demand exceeds supply in primary care and mental health, and in rural and underserved areas where healthcare economics are less attractive. The federal government’s efforts to address shortages through HRSA (Health Resources and Services Administration) and the efforts by professional societies to upgrade training programs have fallen short. And compensation for lower-paid healthcare workers is too low: 15% live below the poverty level, 41% live below 200% of the FPL and 59% depend on some form of public assistance. Their median hourly wage ($16.77) is simply not enough to take care of themselves and their families and appear incongruous to capital spending and executive pay they see every day.

Industry leaders acknowledge its workforce challenge but consensus about a solution is stymied by factors that make changes at best incremental:

• Structural Impediments: Each sector in healthcare deems its workforce needs unique and independent of others. The skilled “professions” of healthcare including physicians, advanced practice professionals (APPs), nurses, technicians and others are self-governed by societies that define their competencies, control access and negotiate compensation for their members. A collective, unified and consistent voice of the healthcare workforce is missing.
• Regulatory impediments: The supply-demand calculus that’s the basis for the healthcare workforce needs is outdated. Improved ways to diagnose and treat health problems, incentives that reward results, roles played by non-licensed or non-traditional providers, technologies that facilitate care anywhere and guided self-care management are not fully incorporated. Healthcare workforce modernization legislation in states and at the federal level are handicapped by the industry’s protections of its guilds
• Advocacy: Workers in primary, preventive, mental health and community health and operators in post-acute, nursing home, home care and public health clinic settings do not enjoy the political influence of specialty providers and operators. Elected officials are influenced by workgroups that buy their favor.

Though workforce modernization is recognized as a critical imperative (Title V, The Patient Protection and Affordable Care Act 2010), little progress is evident.  Looking ahead, attention to workforce issues will spike in the next 6 months as mid-term elections November 3 and Campaign 2028 speculation heightens voter sentiment about the health system. Healthcare affordability will be THE issue. In addition, voter attention will be directed to (1) vaccine and public health preparedness, (2) price transparency and price controls for prescription drugs, hospital services and insurance premiums, (3) accessibility of primary care services in rural populations and in low-income populations, (4) the implementation of work requirements and Medicaid cuts in the Big Beautiful Bill, (5) the influence of private equity ownership and consolidation on prices, staffing and competition, (6)  prospects for Medicare for All as a transformational solution to affordability, access and cost concerns and (7) the prevalence and mitigation of fraud, waste and abuse throughout the system.

The healthcare workforce shares its discontent about the health system with the majority of voters who think transformation is needed. But it sees funding cuts that threaten job security for the frontline workforce at odds with systemic reform.

Final thoughts:

The toughest job in healthcare might be the Chief Human Resource Officer in hospitals, groups, clinics, nursing homes and public health programs. In my work with organizations, CHRO input is sought in strategic planning and always in annual budgeting, but in-depth understanding of human capital trends and issues by senior leaders and Board members is inadequate.

And the bigger issue is this: how should the industry—payers, providers, suppliers and influencers—restore public faith in the system and, in so-doing, invigorate pride in the meaningful, worthwhile work its workforce strives to deliver.

The healthcare workforce is anxious. Understandably, regretfully, and perhaps necessarily.

Paul

PS Last Friday, the judge in the Lindsay Clancy trial declared a mistrial owing to its hung jury. Attention to the case centered on the defense counsel Kevin Reddington’s position that the former nurse suffered from debilitating postpartum psychosis when she strangled her three young children. He argued “the health system failed her”. Tara Bannow, a STAT news journalist, released an extraordinary piece last week chronicling Clancy’s journey through the health. It’s worthwhile reading for those committed to fixing the system.

Lindsay Clancy case shows the perils of health care silos | STAT

Resources used in today’s report: US Bureau of Labor Statistics, Health Resources and Services Administration, Sullivan Cotter, US Department of Commerce, US Bureau of Economic Analysis, US Department of Health and Human Services, American Medical Association, Center for Healthcare Workforce Studies, American Hospital Association, SHRM

Exhibit: Bureau of Labor: Occupations projected to add the most jobs between 2025 and 2035: “Over the next 10 years, BLS projects that the U.S. economy will add 5.9 million jobs. Total employment would increase to 176.2 million, growing 3.5%– slower than the 10.9% growth recorded in the previous decade.” The top 10: