So what does the economy mean for the nursing industry? It is interesting to consider the close tie between nurse staffing and the economy.
What is the Future of Nurse Staffing?
The current nursing shortage has many different and diverse influencers and in light of the current economic market, broad supply and demand factors must be a consideration. From the demand side, the number of nurses needed in the next decade ranges from projections of 250,000 to 1,000,000 (Buerhaus, 2009; U.S.DHHS, 2004). This demand is heightened due to a collision of increasing population, the baby boomer generation needing more health care and the projected retirement of 55 percent of existing nurses in the next 10 to 15 years. Additionally, if health care coverage for the 51 million uninsured people in the U.S. is extended through improved access, more health care providers will be needed (American Hospital Association, Trendwatch Chartbook, 2008).
The supply factor affects the ability to produce new and replacement nurses. Refreshing the nursing pipeline is currently being severely hampered by the lack of nursing faculty, which limits the potential enrollment in nursing schools. In the past two years alone, more that 40,000 potential nursing student were turned away each year due to lack of program capacity (AJN, 2007). Additionally, the ability to augment nursing staff with foreign-educated nurses, who already represent 3.5 percent of the nursing workforce, is stalled with the advent of retrogression (U.S. DHHS, 2004).
What’s more, the broader economy has a less visible but still significant impact on the nursing shortage. Factors such as constriction of general hospital finances, the unavailability of credit, unemployment and underinsurance and concerns about Medicare and Medicaid reimbursements are all causing budget adjustments. Since nurses’ salaries represent the largest line item of a hospital budget, they are frequently the first item targeted for reduction. As positions are eliminated or as demand lessens because admissions are soft, chief nursing officers (CNOs) are asked to decrease or freeze hiring, eliminate vacant positions or get creative with current staff—which also means overtime, float pools and possible burnout of nurses.
Lessons Learned
We have been here before—but what have we learned? We have learned that in a cycle that includes hiring freezes, the resulting slow down of nursing education is predictable. The number of candidates entering nursing school decreases, the funds for nursing education diminishes and further decreases the number of nurses produced. Judging by the past, once this cycle is entered it can take several years before recovery is seen.
As the economy continues to flounder, we are seeing more experienced nurses either staying in the workforce or reentering the workforce. As the unemployment rate continues to rise, many nurses have increased their hours, enlist for overtime or return to the workforce to bolster their financial security at home. With the influx of increased nursing availability, some hospitals are feeling relief from nursing vacancies. Some hospitals are reporting a vacancy rate of one to two percent, down from a national average of eight percent two years ago (H&HN, 2009). Additionally, many hospitals are experiencing a downshift in admissions, as elective procedures become fewer and primary care access is eliminated to those who have lost insurance coverage. The effect of unemployment should not be minimized. For every percentage point increase in the unemployment rate, 2.5 million people lose their employer-sponsored insurance coverage (AHA, 2009, Trendwatch).
In some areas of the country, new nursing graduates are finding it difficult to secure entry-level positions. If new graduates cannot find positions, what outcome is expected? We have seen it in decades past in the cycle of nursing shortages and budget reductions. It is critical that we are not distracted from our focus on the nursing shortage. The economy will eventually turn around and the temporarily-bolstered nursing workforce will shrink again and our nursing shortage will return with a vengeance.
References
Buerhaus, P., Auerbach. D., and Staiger, D. June, 2009. The recent surge in nurse employment: Casuses and implications.” Health Affairs 657 -668.
American Hospital Association. 2008. “Chart 5.12: National Supply and Demand Projections for FTE RNs, 2000 –2020.” Trendwatch Chartbook, 2008.
U.S. Department of Health and Human Services; Health Resources and Services Administration, Bureau of Health Professions. 2004. “Preliminary findings 2004 national sample survey of registered nurses.”[Online article or information, retrieved 12/18/06.]
http://bhpr.hrsa.gov/healthworkforce/reports/rnpopulation/preliminaryfindings.htm
American Hospital Association. 2009. “The Economic Downturn and Its Impact on Hospitals.” Trendwatch, January 2009.
H&HN. 2009. “Study Quantifies Economic Value of Nurses.” Staffing Watch, February, 2009.