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SUPPLY FACTOR: Dramatic Shortage of Qualified Medical Personnel

With the aging population in America, there will be a major crisis in the US workforce in general. Between 2006 and 2016, the labor force is projected to grow at an annual rate of 0.8 percent, slower than the population growth rate of 0.9 percent. As the Baby Boomers continue to age, the 55 to 64 age group will increase by 30.3 percent or 9.5 million persons, more than any other group. The 35 to 44 age group will decrease by 5.5 percent, reflecting a slowed birth rate following the baby boom generation, while the youth population, aged 16 to 24, will decline 1.1 percent over the 2006-2016 period. The demographics of the labor force will change dramatically in the projected period between 2006 and 2016: the youngest working population (16 to 24-year-olds) will decrease by almost 3%, individuals in their prime work years of ages 24
to 54 will increase with less than 11%, and the 55-and-older age group have the greatest increase in their participation rate: almost 5 percent. This growth rate is nearly 5 times the overall labor force annual growth rate of 0.8 percent. Between 2010 and 2020, the number of people 65 and older is expected to increase 26,4% percent. (Health USA, 2008). Meanwhile, the population of 45 to 64 year-olds will increase only by 4% (U.S. Census Bureau).

Baby Boomers already represent 43% of the total workforce. Forty-four percent of all households in the U.S. have at least one Baby Boomer in their family. Forty-five percent of the U.S. employers are considering the retiring workforce a major challenge to overcome in the next years. The main reason for this concern is the irreplaceable experience and knowledge of the retiring Baby Boomers. In a skill shortage environment across all healthcare professions, the retiring Baby Boomers are significantly aggravating the situation. That applies to nurses, physicians, scientists and managers of healthcare facilities.

Another factor that is working in favor of Internet job advertising is the Generation Y entering in the workforce. According to U.S. Census Bureau figures, Gen-Y (79.8 million members) is slightly larger than the Baby Boomer generation (78.5 million members). This a generation that doesn’t know the world without the Internet, since its members were born after its massive adoption. Second in numbers after the Baby Boomers at 70 million-strong, Gen-Y will soon become the largest generation in the workplace. With predictions from the Bureau of Labor Statistics that the American workforce will drop by 8 percent between 2010 and 2020, it is vital for companies to understand and embrace Gen-Y’s unique workforce attitudes and values in order to attract and retain top performers. One of the main characteristics of this generation is they live and breathe the Internet, mostly mobile. That habit also affects and includes their job search patterns. Another characteristic of Gen-Y is that its members are prone to change jobs more often then the Baby Boomers (49% versus 35%). eCareer Connections will profit from Gen-Y’s heavy Internet usage to place as much job advertising options as technology permits.

Despite recessionary conditions in many sectors, skill shortages (not job shortages) are severely affecting all areas of healthcare, including physical therapy and nursing. According to a study by Robert Half and CareerBuilder.com, 44 percent of resumes presented to hiring managers are submitted by unqualified applicants. The 2009 EDGE Report also found that 47 percent of hiring managers cited under qualified applicants as their most common hiring challenge. About 61 percent of the hiring managers said they are willing to pay for qualified candidates and would negotiate higher compensation if that meant getting the right person for the job. For the healthcare industry this is already a general practice to enter in price war to find and retain the right candidate. eCareer Connections provides the right technology and advertising platforms for employees from healthcare facilities, healthcare recruiting and staffing firms to find a cost-effective solution for these needs.

A recent study featured in the Health Forum Journal reported that in virtually every hospital, the vacancy rates for registered nurses, pharmacists and radiology technologists are greater than 10%. It also stated that more than 15% of hospitals are reporting a severe shortage of nurses – with more than 20% of their nursing positions currently vacant.

Between 2006 and 2016, healthcare employment will grow by 4 million new jobs; representing 25.4% growth in employment for healthcare professionals.

SUPPLY FACTOR: Significant Shortages of Highly Qualified Registered and Executive Nurses

As the largest health care occupation in the U.S., registered nurses held about 2.5 million jobs in 2006. Registered nurses also make up the largest projected shortage area in healthcare. The U.S. Department of Health and Human Services predicts that more than 800,0000 new and replacement nurses will be needed by 2016. Employment of registered nurses is expected to grow 23 percent from 2006 to 2016. Registered nurses are projected to generate 587,000 new jobs, among the largest number of new jobs for any occupation. The shortage is projected to intensify over the next two decades with 44 states, plus the District of Columbia, expected to have RN shortages by the year 2020. Today, fully 75% of all hospital vacancies are for nurses. These shortages are costing long-term care facilities an estimated $4 billion a year in recruitment and training expenses.

By 2020, the demand for nurses will be 29% higher than the supply. In the same time, turnover and cost-per-hire escalate. It costs $6,029 to hire or replace a registered nurse and almost two months to fill the position. Turnover rate remains high at 10.3%, as well as the vacancy rate at 9.6%. The expenses related to hiring and retaining RNs in the U.S. represent $6.5 million for temporary staffing only – which is more than 50% of all staffing expenses in the healthcare staffing industry.

The reasons for this shortage have been identified as follows:  

Low enrollment in nursing schools. The Health Resources and Services Administration (HRSA) projects that nursing schools must increase the number of graduates by 90 percent in order to adequately address the nursing shortage. With an 18.0% increase in graduations from baccalaureate nursing programs since 2006, schools are falling far short of meeting this target. In 2007, more than 40,000 nurses were turned down, despite being qualified for admission, due to shortages in educational facilities and faculty.

Because the number of recently graduated RNs has decreased so dramatically over the past two decades, enrollment in nursing programs would have to increase by at least 90% annually to replace those expected to leave the workforce.

This will not be possible because of the following reasons:

• The nursing programs faculty for a Bachelor of Science degree is decreasing, due to academic retirement and the impossibility to fill faculty positions with new nurses with a MS degree or who obtained an advanced level of education
• The nursing programs physically lack facilities for the schools

The average age in the existing nursing pool is close to retirement.  More than 40% of the current nursing workforce is over 50 years old, according to a study in JAMA.

Alternative career options have opened doors for those who traditionally pursued nursing as a career. Previously male-dominated professions (i.e., physicians, attorneys, computer science, etc.) are now attracting more female candidates, resulting in a much lower supply of applicants for nursing.

Job burnout and dissatisfaction are driving nurses to leave the profession. In a recent survey, the statistics show that an overwhelming majority of the hospital HR managers believe that work-related stress is a major factor in the overall nursing shortage, which has resulted in nurses leaving hospital duty, or even the entire profession. The survey showed that work stress and burnout accounts for 85% of the shortage, 76% of the nurses leaving hospital settings and 77% of the nurses leaving the profession.

Technology advancements will demand an extended curriculum in nursing schools and continuing education programs. This will create an additional gap between the active nursing workforce and the nurses who are attending qualification and improvement courses.

Fewer nursing professionals are remaining in patient care. The significant turnover is due to an oppressive nurse to patient ratio, stressful work environment, unsatisfactory wages and better/more attractive opportunities in other professions.

SUPPLY FACTOR: The Allied Health Professional Shortage – An Attractive Sector for Emerging Companies

Hospitals and healthcare facilities across America are experiencing a critical shortage in allied health professionals, including occupational and physical therapists, clinical laboratory technologists, imaging technicians, pharmacy technicians and radiology technologists.
Based on private research from The Staffing Industry, Inc., and data from the BLS, the allied/other temporary staffing market is estimated to be a $3.5 billion industry and it is expected to grow at an 11% annual rate. An estimated daily average of 70,000 temporary workers are employed in this skill set, making up almost half of total temporary healthcare staffing.

The Center for Health Professions lists the following as the most wanted allied health professionals:

• Physical Therapists
• Occupational Therapists
• Speech & Language Therapists  
• Pharmacists
• Radiologic Technologists
• Respiratory Therapists
• Laboratory Professionals
• Health Information Managers

Hospitals reported vacancy rates ranging from 7 to 7.5 percent among imaging technicians, pharmacists and many other allied healthcare positions. The current shortage is expected to worsen over the next 20 years.

The Bureau of Labor Statistics (BLS) projects that by 2016, the U.S. will need a total of 220,000 physical therapists – 27% more than are currently employed. According to the AHA workforce survey results, shortages are contributing to Emergency Department diversions, a reduced number of staffed beds and increased patient wait times.

Allied staffing is perhaps the most attractive field for emerging companies in the healthcare staffing industry. It is one of the least concentrated of the four sectors of healthcare staffing with large firms generating just one-sixth of total revenue. Segmentation, with small companies comprising the largest part of allied health staffing, opens opportunities to newcomers in the field. It also includes many specialties with low penetration rates (the percentage of temporary staffing versus total of positions in the company), indicating that there will be significant growth.

As projected by the BLS, of the 30 fastest-growing professions in all industries, 12 are in the allied/ other skill set.

There are several factors influencing shortages in the allied health professionals’ field, and the overall aging workforce of allied health professionals is just one of them. The median age of physical therapists is 45. Young allied health professionals cannot join the labor force with the needed speed because of the minimum requirement of a BS degree and higher certification standards. In the meantime, the computerization of hospitals drives the increasing demand for computer-savvy allied health specialists. This requirement is especially critical for radiology technicians, sonographers and many other diagnostic specialties.

PHYSICAL THERAPISTS

Demand for physical therapists is expected to increase faster than the average, as growth in the number of individuals with disabilities or limited function spurs demand for therapy services.

Future medical developments should also allow a higher percentage of trauma victims to survive, creating additional demand for rehabilitative care. In addition, growth may result from advances in medical technology that could permit the treatment of more disabling conditions.

Additional demand will be created by non-conventional use of allied health professionals’ services. A growing number of employers are using physical therapists to evaluate workspace, develop exercise programs and teach safe work habits to employees in the hope of reducing injuries and decreasing long-term healthcare spending.

In the therapeutic category, current demand is strongest for physical therapists, with occupational therapists a distant second and radiation therapists running third. Lab technician temporary placements are being driven by worker shortages caused by declining enrollment in medical schools, as well as higher technological expertise demanded by the hospitals.

SUPPLY FACTOR: Increasing Shortages of Qualified Pharmacists

The market for pharmacists and pharmacy technicians is also on the rise, reflecting expansion of pharmacies into grocery and department stores, as well as Internet and mail-order sales. Thanks to a record number of new drugs, aging Baby Boomers taking more medication and the proliferation of managed healthcare, colleges across the country cannot graduate students fast enough to fill the nationwide shortage of pharmacists.

Data published by the National Association of Chain Drug Stores reflects an alarming trend, predicting that over the next years, there will be a 26% increase in  the number of prescriptions dispensed, and only a 4% increase in the number of pharmacists needed to meet this demand. The annual growth rate for prescription drug spending will soar from 7.4% in 2007 to nearly 10% in 2016. That will require an estimated 672,000 pharmacists and pharmacy technicians by the year 2016 – a 21% and 32% projected growth from 2006 respectively. In addition, college and university pharmacy programs are converting the degree requirements from a bachelor’s degree in pharmacy  to the more recognized Pharm.D. The change has extended the time for graduation of pharmacists. College officials say they are trying to meet the demand by offering accelerated courses and increasing class size, while pharmacies and hospitals are in a bidding war, offering substantial bonuses and tuition reimbursement programs.

In addition to demand factors mentioned above, other factors are responsible for the increasing shortage of qualified pharmacists:

• Lack of qualified faculty in the pharmacist schools and universities
• Internet retail channel growth requires more qualified pharmacists to monitor the prescription filling online
• Conventional retail stores increasing their pharmacy sections are demanding more and more qualified professionals

SUPPLY FACTOR: Trends in Physician Employment

For two decades, health planners have been forecasting impending physician surpluses and policy decisions related to medical schools and residency programs have been based on these expectations. However, the much-heralded surpluses never materialized and a growing body of data and opinions now point in the other direction. The question is whether the United States is headed towards a physician shortage. What is the evidence?

Current information indicates that physician shortages are emerging and they will probably worsen over the next 2 decades. By 2020 or by 2025, the deficit could be as great as 200,000 physicians – 20% of the needed workforce. The growth in demand for physicians and surgeons is projected to surpass 14% between 2006 and 2016.

Another important shift has been the decline in the proportion of physicians practicing independently. In studies published by the Kaiser Family Foundation and Harvard University, the percentage of physicians who were in solo practice declined from 41% in 1983 to 26% in 1999. An important driver for the trend away from solo practice was the physicians’ pursuit of market advantage in negotiating payments from managed care plans. The research also showed another trend affecting the payment and contracting of physicians: 63% of HMOs pay primary care physicians and 42% pay specialists using fee incentives. Still, fee-for-service is by far the most common payment method and its use is increasing.

The proportion of HMOs using fee-for-service payment for physicians almost doubled between 1997 and 2000, increasing from 33% to 74% for primary care physicians and from 49% to 84% for specialists. This trend is changing dramatically the staffing dynamics in hiring and contracting of highly qualified and specialized physicians. As these physicians seek employment with large, well-established companies, they are increasingly turning to physician recruiting companies to assist them in their endeavors.