I began my career in health care more than 30 years ago working at a hospital. For as long as I can remember there has been a nursing shortage. The reasons given for this are many, most of which are wrong. When I was a budget analyst, a senior vice president (SVP) told us nurses are caring people. He added nurses make great mothers and often quit to raise their kids. He explained that the staffing shortage was exacerbating the staffing shortage by increasing the stress levels of nurses on staff. For instance, there are currently 75,000 employees who work for Kaiser on strike, partly because of staffing shortages. Nurses are tired of having to pick up the slack for their missing counterparts. The National Center for Health Workforce Analysis estimates the nursing shortage will reach 78,000 full time equivalents by 2025. By contrast, McKinsey believes the shortage could reach 200,000 to 450,000 nurses by 2025. Either way that’s a lot of missing nurses.
In a budget meeting the SVP told us that first-year nurses are too inexperienced to be good at their jobs. They often got poor annual reviews, which lead to poor raises. As a result, new hires with no experience were often starting at higher salaries than nurses entering their second or third year. Then he revealed something that he probably should have kept to himself: He said when the hospital decided to give second year nurses a boost in salary (to keep from losing them) a counterpart at a competing hospital called the SVP to complain that our hospital must be trying to “poach” the other hospital’s nurses. For those unclear on the concept, that conversation was illegal price fixing and collusion, which goes a long way to explain the real reason for the nursing shortage.
Hospitals are the biggest source of nurses’ employment. Doctor’s offices also employ nurses. Hospitals have been consolidating during the past few years, while physicians increasingly work for hospitals rather than for themselves. Thus, hospitals have significant control over nurses’ salaries. Hospitals are labor-intensive. Nearly half of hospitals operating expenses are labor related, of which nurses are the largest component.
With plenty of job openings you would think that young men and women would flock to nursing schools. However, schools of nursing cannot rapidly increase their enrollment due to a lack of instructors, who were paid far less than nurses with their experience could earn in a hospital. Yet, an estimated 78,000 applicants were turned away due to a shortage of nursing instructors this year. That was just 4-year nursing programs. Associates degree programs also turned away applicants.
Nursing schools have nearly 2,000 full-time faculty positions to fill, according to the nursing college association. Just under 8% of the teaching slots are vacant.
Another barrier to admitting more nursing students is the limited availability of clinical rotations at hospitals or other health care providers, as well as the lack of experienced nurses and other medical professionals to supervise the students.
Yet another obstacle is that hospitals use contract nurses rather than hire more nurses on staff. On the one hand, staffing agency nurses serve an important role when staffing levels change, say, due to a staff nurse taking a vacation or maternity leave. On the other hand, hospitals’ reluctance to raise wages drives more nurses to staffing agencies, where they trade job security for better pay. With a nursing shortage it’s a gamble that is worth taking for many nurses.
According to the American Association of Colleges of Nursing, 89% of students trained in nursing are employed in nursing. Today most newly trained nurses have a baccalaureate degree, while some have a master’s degree and a few even a doctorates. All told, nearly three-fourths of registered nurses have a four-year degree or higher. Although there are 2-year associate’s degree programs that train RNs, it is a tough degree to obtain in two years.
The bottom line is that hospitals conspire to hold down nurses’ wages because nursing is a cost center, whereas hospital-employed physicians are a revenue source. Nurses are a huge labor cost for hospitals. If hospitals would raise wages (and nursing schools would raise pay for instructors), there would not be a perpetual shortage of nurses.