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The Keckley Report

Is the Healthcare Delivery Workforce Nearing a Meltdown?

By May 6, 2019March 1st, 2023No Comments

Friday, the U.S. Department of Labor released its April jobs report, citing a seasonally adjusted gain of 263,000 jobs. It marks the 103rd successive month of gains and resulted in a 50-year low unemployment rate of 3.6%. This report, along with government data showing steady economic growth (1Q GDP growth + 3.2%) and a manageable rate of inflation (+2%), was received favorably, muting fears of a major economic downturn in 2020.

Per the Bureau of Labor Statistics report last week, “Notable job gains occurred in professional and business services, construction, health care, and social assistance… Employment in health care grew by 27,000 in April and 404,000 over the past 12 months.” April job growth included 17,000 in ambulatory health care services, 8000 hospital workers, and 7000 in community care facilities. That’s not a surprise to healthcare industry watchers: healthcare employment growth has been a staple of the economy for a decade.

But for managers that operate in the healthcare delivery sectors- hospitals, clinics, post-acute care and others- job growth is also problematic.


Labor costs are increasing and operating margins are shrinking

In hospitals, post-acute facilities, clinics and other provider settings, labor costs are 60% of net revenues. Wages for their workforce have kept pace with inflation and fringe benefits for most are attractive, but patient acuity has increased, staffing levels have been cut, key functions have been outsourced and operating margins have shrunk as Medicare and Medicaid displace private insurance as their primary payers. The implementation of information and clinical technologies has increased labor intensity- few jobs have been eliminated, and new labor costs have been added.

Shortages for healthcare workers are significant and growing

Due to the aging population, workforce retirement and increasing turnover, demand for health services workers is increasing faster than supply. Per the Bureau of Labor Statistics, to meet demand, the healthcare workforce must increase by 1.26 million annually for the next decade. Per Mercer, by 2025, the system needs an additional 446,300, home health aides, 95,000 nursing assistants, 153,700 lab and medical technologists/ technicians, and 29,400 nurse practitioners every year. The Association of American Medical Colleges projects for a shortfall range of 46,900 to 121,900 physicians by 2032, acknowledging any prediction is an educated guess since there are so many uncertainties about the future. While precise numbers are somewhat elusive, there’s consensus that the healthcare labor pipeline is inadequate to address growing demand.

Job satisfaction is eroding

Burnout is systemic. While physician burnout gets the lion’s share of publicity, it cuts across every work group in the delivery system- skilled and unskilled, hourly and salaried. Research shows a correlation between job dissatisfaction and productivity, patient outcomes, patient experiences and turnover. In most provider settings, the workforce is dispirited believing they’re neither heard nor appreciated. They’re frustrated by operational changes they consider wasteful or frivolous. They seek work-life balance, professional development and compensation commensurate with the job. And they think too much is spent on executive compensation for administration and not enough on patient care. They’re not optimistic about the future of healthcare and increasingly vocal about their displeasure.

Competition for the skilled workforce is intensifying

Every day, the healthcare workforce sees announcements about job opportunities in retail and urgent care clinics, independent emergency rooms, micro-hospitals, on-site/near site primary care clinics and others. Private investors have funded more than 11,000 sites of care that operate outside the conventional purview of local hospitals and medical groups and they’re recruiting from the ranks of local provider organizations effectively. The skilled workforce is open to new job opportunities that offer competitive pay, work-life balance and a culture that recognizes their value. And they compare notes among their peers about the emerging opportunities where they might ply their trades.


As of April, 2019, there are 17,900,300 employed in U.S. healthcare delivery. The unemployment rate in these sectors is 2.1%, down from 2.4% in January and well below the national jobless rate of 3.6%. Thus, it’s a workforce that’s increasingly in the drivers’ seat.

Healthcare delivery is labor intense, capital intense and highly regulated. None of these is likely to change in the near-term. What’s changed is the range of opportunities accessible to the workforce: in most communities, they have more options.

The BLS jobs report is good news for some, but in healthcare delivery, it’s certain to add pressure on operators to attract and keep talent more effectively while also holding down costs. The two are not mutually exclusive, but it’s getting tougher to execute.

The healthcare delivery workforce is under stress: a meltdown is not inevitable but it deserves serious attention and fresh solutions before it’s too late.


PS: Shout out to Erin Keckley who graduated from the University of Alabama Saturday having earned her Doctor of Nursing Practice degree. Last week, the American Organization of Nurse Executives announced its name change to the American Organization for Nursing Leadership—amazing symmetry. Consumers place more trust in nurses than any other profession (Gallup). I look forward to seeing Dr. K. join her peers in advancing new ideas and solutions from nursing. Well done!


U.S. Department of Labor Bureau of Labor Statistics

“Burnout and Resilience: A Framework for Data Analysis and a Positive Path Forward.” 2018 Press Ganey Associates, Inc.

Health Resource and Services Administration “Workforce Analysis” October 2018

“The 2019 Update: The Complexities of Physician Supply and Demand: Projections from 2017 to 2032” Association of American Medical Colleges April 2019

“No sick days, no collars: How tech might help hospitals shrink labor costs” Deloitte February 2018

2018 National Healthcare Retention & RN Staffing Report. NSI Nursing Solutions Inc.