Labor

If you ask nurses and hospital administrators about the state of nurse staffing, both will tell you that there are not enough nurses currently working the bedside. 

But that’s about the only thing they can agree on.

From the cause of the problem, to how to fix it or what to name it — hospitals label it a “nursing shortage,” while unions and advocates call it a “safe staffing” failure — labor and management are at odds about the particulars of the nation’s staffing crisis.

Hospitals say they are doing their best to hire, but that there aren’t enough accredited nurses available. The American Hospital Association said it expected to lose half a million nurses by the end of 2022, creating a total shortage of 1.1 million nurses nationwide.

During an investor day presentation in Nov. 2023, HCA chief nurse executive Sammie Mosier said there was no doubt there was a nursing shortage. Hospital operators have been hoping for a reprieve to the so-called “labordemic” that they say has left them struggling to replace nurses lost to attrition. 

But nurses unions bristle at calling the problem a shortage — and reject the idea that the staffing crisis is a new concern for the industry. They claim the term lets hospitals off the hook for their role in creating vacancies, and say any current shortage of nurses is the result of hospitals’ own decisions coming home to roost.

Tensions between the two sides boiled over in 2023, with demands for increased staffing driving strikes at hospital operators like Prime Healthcare, Robert Wood Johnson University Hospital and Ascension St. Joseph, among others.

“They don't own up to the fact that they have created [the shortages] with their practices,” said Margaret Franks, registered nurse and regional director for the New York Nurses Association. “It has been proven that it is not a nursing shortage, it is just a shortage of nurses willing to work in the conditions that are present at the bedside right now.”

Without first fixing the workplace problems in U.S. hospitals, Franks said that any nurse recruitment efforts are essentially building on quicksand — they may get people in the door, but they lack the foundation to succeed.

“We all have friends that have left nursing and they all say the same thing to us: We're not coming back. I'm not coming back to eight patients,” Franks said. “You can’t build up teams on bad foundations. They would rather take less money or work five days a week instead of three shifts where they can do their jobs properly.”

Data shows a pool of nurses, but hospitals are struggling to hire

The numbers present a paradox — the nursing talent pool is growing, and yet, it is getting harder for hospitals to hire.

The number of candidates passing the nurse licensure exam grows each year, according to the national nursing licensing agency. New nurses join a pool of 5.2 million registered nurses currently in the workforce as of 2022 — 89% of whom work in the industry, according to a national survey of nurses conducted biannually by the National Council of State Boards of Nursing (NCSBN) and the National Forum of State Nursing Workforce Centers.

At the same time, there are more job postings for nursing positions in 2023 compared to 2020, said Julia Pollak, chief economist at online recruiting platform ZipRecruiter.

For-profit hospitals are among employers desperate to hire. Executives at operators like HCA Healthcare, Tenet Healthcare and Community Health Systems have reported paying hefty rates for temporary contract nurses since the onset of the pandemic, leading nursing recruitment to become a top priority.

And yet, nursing positions at hospitals go unfilled as the number of interested applicants dwindles compared to years past.

On ZipRecruiter, applications for nursing positions have fallen 11%in 2023 compared to 2022. Companies are also having to work harder for each application, ZipRecruiter’s Pollak said. In order to generate a single “quality applicant,” an average of nine individuals must view a job posting — in 2022, that number was only five. 

Outside of online job boards, data from The U.S. Bureau of Labor Statistics, which produces monthly jobs data to track job openings and turnover, confirms that recruiting nurses is becoming more of a slog. 

Prior to the pandemic, it took less than two months to fill a healthcare job on average during the latter months of 2019, as calculated as the inverse of the ratio of hires to job openings. The time to fill healthcare positions rose to 2.2 months in Sept. 2023, according to the most recent data available from the BLS.

Difficulty hiring persists even as healthcare companies have started raising salaries, offering signing and relocation bonuses, tuition reimbursement and payment for training, Pollak said. 

Hospital employees’ average hourly earnings growth approached 3.8% in July 2023, above the 2.3% average growth reported between 2010 to 2019, according to credit agency Fitch Ratings. 

But, despite pulling out “all the stops,” efforts largely haven’t paid off, according to Pollak.

“Health organizations have done a huge amount of work to get more engagement on their postings,” Pollak said. “The problem is, this is not a labor shortage that is just solvable through pay.”

Why are hospitals failing to attract nurses?

Though there are millions of registered nurses in the talent pool, there are also more quitting, experts said. 

More than 100,000 left the profession in 2021 after the pandemic caused workplace conditions to deteriorate, according to a study published in Health Affairs. The researchers said it was a “far greater drop than ever observed over the past four decades.” 

Nurses who quit the profession told consulting firm McKinsey in 2023 that they left because they felt under valued, inadequately compensated, and unable to manage increasingly intense workloads.

Almost half of respondents in the McKinsey survey said an unsafe working environment impacted their decision to exit direct patient care, an increase of 24% from the prior year. 

Labor conditions inside hospitals have grown more precarious over recent years, with nurses facing increasing on-the-job violence, injuries and illness, according to industry data and experts.

Nurses who remain struggle with rising rates of burnout as they shoulder the workloads of short-staffed units, according to a study conducted by the University of Pennsylvania School of Nursing’s Center for Health Outcomes and Policy Research. The problem is cyclical, studies suggest, as burned out nurses are more likely to look elsewhere for a job.

“Workers are changing. They care more about work life balance now. And, ironically, the shortages of staff have actually made healthcare roles less attractive... and made people have to work crazier hours,” Pollak said. “And so we're seeing physician burnout has reached crisis levels, and there are many people who are leaving long before they otherwise would have.”

That includes nurses who choose to retire early, according to Therese Fitzpatrick, senior vice president of healthcare management consulting firm Kaufman Hall’s performance improvement practice. 

Poor working conditions at hospitals, such as inflexible 12-hour shifts, are driving senior nurses from the bedside, she said.

The churn of more seasoned workers has down-stream impacts.

With a shortage of senior workers, it’s more difficult for junior nurses to receive proper training, said New York Nurses Association’s Franks. She serves as a precept, or trainer for junior nurses, at Vassar Brothers Medical Center, a 349-bed facility that serves the Hudson Valley in New York. 

Franks said that Vassar has hired 123 nurses since the start of 2023, but 93 have already left due to inadequate training.

“The issue is not in recruiting. It's actually retaining once those nurses come in,” she said. “Obviously they're coming in. We have new nurses graduating, usually twice a year in May and December.”

With training costs approximately $88,000 per nurse, Franks said the hospital is burning money when so many nurses quit prior to completing their training. 

“That’s $8 million that walked right out the door alone this year,” she said.

Nurses are looking elsewhere for work

Increasingly, hospitals have to compete with non-traditional employers for nursing talent — ranging from retailers like Home Depot, CVS Health and Walgreens to start-ups. These companies are attractive because they can offer nine-to-five schedules and less stress compared to hospitals, Pollak said. 

One nurse who left her hospital job to work at a non-traditional employer is Sarah Lacy. She quit her job in 2020 to work as a registered nurse in an ear piercing studio.

The New York City-based piercing studio, called Rowan, competes with hospitals for jobs and exclusively hires nurses to pierce ears. 

The job gives nurses an opportunity to apply their medical skills without the “verbal abuse and physical abuse” that some nurses experience in the emergency room, Lacy said. 

“When I first joined Rowan, I had no intention of leaving the hospital. At the time, it was a part time job, and I thought it would be a really fun way to get to use my nursing skills in a situation that is not stressful, like the way bedside nursing is,” Lacy said. 

However, as she logged more hours at Rowan, Lacy came around to the idea of working full-time, piercing ears and training new nurses at Rowan. She said the biggest draw was the environment — studios were clean, people came to see her at some of their happiest moments and she got to apply her clinical expertise.

“I don't know what would be enough to draw me back to the bedside after this,” Lacy said. “As nurses, we have that innate desire to help people and to make a difference in people's lives. It’s transformational when you get to do that in a way that is so fun. 

“I really don't want to go back, if I'm being honest,” she said.

How hospitals can win nurses back

Although hospitals are struggling to hire and retain nurses, it’s not an impossible task, according to Pat Brown, EVP of human resources at Northwell Health. 

Northwell, the largest health system in New York, operates 21 hospitals and had an average of 900 open RN positions in Nov. 2023 — roughly the same number it did in 2019. 

According to Brown, the health system boasted a turnover rate during the pandemic that was half the national average and kept stable staff through this year due to investments in recruitment and retention.

The hospital system has a network of almost 200 nursing programs. Northwell sends representatives to nursing career expos and even has a presence on TikTok.

Still, “The [nursing] supply is definitely constrained,” Brown said.

Other hospitals may benefit from similar strategies to recruit and retain staff, including partnering with nursing schools, offering virtual nursing roles that are less demanding, shorter shift options and “phased retirement” for older nurses, said Kaufman Hall’s Fitzpatrick.

“Organizations are essentially growing their own [nurses], and are willing to make that investment, because when you think about the impact long term, it makes financial sense,” Fitzpatrick said. “It could have a significant ROI when you look at balancing the upfront cost against the cost of contract labor.”

The strongest signal of an investment in nurses, according to nurses unions, is implementing nurse-to-patient ratios, which cap how many patients a nurse can care for at a given time.

Ratios can signal to nurses that hospitals are serious about patient welfare and workplace safety, said Debbie White, president of New Jersey-based nurse union Health Professionals and Allied Employees.

In 2023, White appeared alongside Sen. Bernie Sanders, I-Vt., at a field Senate Health, Education, Labor and Pensions (HELP) Committee in New Jersey to argue the benefits of fixed patient-to-staff ratios. She told Healthcare Dive that ratios might not bring back the Sarah Lacys of the world who have contentedly left the profession — but they could help stop the bleeding.

“I'm not telling anybody that nurses will come back to the bedside,” White said. “What I will promise you is that nurses will stop leaving hospitals. And if we fix that problem, we will retain staff. That is when we fix the profession.”

The Federal Trade Commission voted to ban noncompete agreements on April 23, 2024, obviating the restrictive agreements that lock in physicians — and the patients they treat — with their existing employer.

With the 3-2 vote, FTC commissioners have finalized a rule proposed in January 2023 to prevent employers from enforcing noncompetes, after finding the practice is exploitative, suppresses wages and blocks new businesses from being created.

The ban has far-reaching consequences for a number of sectors, including healthcare, an industry that frequently relies on noncompetes, especially as a growing number of doctors are employed by hospitals and other corporations.

Zeroing out noncompetes equalizes the balance of power between those physicians and their employers, and frees up medical workers to more easily move between jobs, according to experts. It could also cause wages to rise.

However, the ban is almost certain to face a legal challenge that some antitrust lawyers say the FTC is unlikely to win. The U.S. Chamber of Commerce — the largest business lobby in the nation — said it planned to sue over the rule as early as April.

The final rule

The FTC was expected to finalize the ban as the agency under Chair Lina Khan has taken a more aggressive stance in combating anticompetitive behavior than during past administrations. Now, regulators are moving to change the employment landscape for the estimated one in five American workers subject to a noncompete.

“The freedom to leave your job and take another job is fundamental to a free and fair economy,” said Commissioner Rebecca Slaughter, a Democrat who voted in favor of the rule, during the FTC’s meeting.

The final rule bans new noncompetes for all workers. Existing noncompetes can remain in effect for senior executives — employees earning more than $151,164 annually in policy-making positions — but are unenforceable for all other workers after the rule goes into effect, 120 days after its publication in the Federal Register.

In crafting the final rule, the agency found a large body of research that noncompetes make it harder for workers to move between jobs and can raise prices for goods and services, while suppressing wages for workers and inhibiting the creation of new businesses, said Ben Cady, an attorney in the FTC’s Office of Policy Planning, during the meeting.

Of the 26,000 comments regulators received on the proposal, 25,000 were in favor of the ban, Cady said.

A number of those comments were from physicians testifying that noncompete agreements would force them to leave their communities to find work if they wanted to leave their employer, an issue that’s exacerbated by rampant hospital consolidation.

Khan and Slaughter, along with Commissioner Alvaro Bedoya (also a Democrat) specifically called out healthcare workers as a key example of why noncompetes should be overturned when voting in favor of the rule.

“These are doctors who had to move their families or move out of the state just so they could practice medicine. A pandemic killed half a million people in this country, and there are doctors who cannot work because of a noncompete,” Bedoya said.

The FTC also found evidence that noncompetes increase consumer prices for medical care. According to Cady, the FTC’s Bureau of Economics estimates the final rule would lower healthcare costs by $194 billion over the next decade.

In voting against the rule, Commissioners Melissa Holyoak and Andrew Ferguson, both Republicans, said the FTC doesn’t have congressional authority to promulgate the regulation. Holyoak noted her dissent was not an endorsement of noncompetes, while Ferguson said he was “sympathetic to the policy,” but “I do not believe we have the power to nullify tens of thousands of existing contracts.”

However, “the FTC does have the power, just historically has not sought to use it,” said David Balto, an antitrust attorney and former policy director at the FTC.

Hospital opposition

Hospitals, which are the largest employer of U.S. physicians, are also likely not happy with the FTC’s vote. Powerful hospital lobby the American Hospital Association has argued the agency doesn’t have authority to ban noncompetes, and also pushed the FTC to exempt doctors and executives from any final regulation.

“Now is not the time to upend the health care labor markets with a rule like this,” the AHA wrote in comments on the proposed rule in 2023, highlighting the turbulent state of healthcare employment during the coronavirus pandemic. Hospitals did see labor costs skyrocket during COVID-19 as they struggled to retain staff, though the trend has moderated.

Some groups representing medical practices, including the American Medical Group Association, have also opposed the ban, arguing noncompetes improve care continuity for patients. However, the American Medical Association voted to oppose noncompetes for doctors working at hospitals or staffing firms at a meeting in June 2023.

Interestingly, some hospital employers could be exempt from the rule, if it survives legal challenges.

The rule may not apply to nonprofit health systems, which make up about half of all U.S. hospitals, as the conduct of not-for-profit, tax-exempt organizations falls outside of the FTC’s purview.

During the meeting, Slaughter noted the rule will “struggle to reach” healthcare workers employed by nonprofits, despite “powerful stories” those workers submitted on the proposed rule.

Still, “if you claim nonprofit tax status but are really organized for the profit of your members, you are within our jurisdiction and are covered by the rule,” Slaughter said.

The overturn of noncompetes comes as medical workers, including doctors and nurses, report being deeply dissatisfied with their employment — in particular because of low wages. Almost half of healthcare workers said in January 2024 they wanted to quit in the next year, according to a survey by payroll tech provider Everee.

Sponsored content

By Vituity

By: Thomas Sugarman, MD and Hartwell Lin, MD

As COVID-19 surged through New York City this spring, local hospitals increased their ICU capacity by 500%. But despite this feat, they still hit a wall.

They didn’t have enough critical care physicians to staff those beds.

The takeaway: when it comes to pandemic preparedness, your clinical staffing plan is every bit as important as your facilities plan. You not only need more beds and providers; you also need the right expertise — plus systems to support and manage it.

As emergency physicians, we learned this firsthand while providing critical care relief in New York.

In April, California Gov. Gavin Newsom’s office asked our physician group, Vituity, to provide clinical support to New York City Health and Hospitals. In addition, we were charged with helping develop policy recommendations to prepare California for future COVID-19 surges.

When we arrived at our assigned hospitals, we were moved by the resilience of the New York City providers, who had been working tirelessly for weeks. At the same time, the process of integrating relief physicians with diverse backgrounds into clinical care proved complicated – especially as knowledge of COVID-19 changed daily.

Many local physicians assigned to the COVID-19 unit had minimal experience managing ICU patients. (Imagine a psychiatrist or pediatrician who hasn’t changed a central line since medical school.) As emergency physicians, we were comfortable with critical care procedures and resuscitation but were less experienced with ongoing management. We therefore depended on local physicians for both clinical direction and practical help navigating our new hospitals.

Fortunately, the strong climate of teamwork meant no provider was left behind. In addition, we were supported by Vituity critical care partners, who were available to advise and consult with front-line volunteers.

So how can health systems plan now to staff a potential surge? Here are our recommendations.

1. Adapt Your Clinical Command Structure

Because the New York City hospitals had far too many ventilated patients for the available pulmonology/critical care physicians to manage, they implemented an effective pyramid model.

• Native intensivists and pulmonologists (1-2 per hospital) served as both clinical experts and incident commanders who coordinated needed resources with hospital administration.
• Each COVID-19 unit was managed by intensivist fellows or physicians with critical care experience. Emergency physicians sometimes filled this role when needed.
• Finally, teams of clinicians consisting of an attending, resident, and intern from various specialties managed direct patient care. Physician assistants provided additional bandwidth, sometimes replacing interns and performing many procedures.  
• Additionally, dedicated clinical teams covered night shifts, and specialist teams were available for renal, infectious disease, cardiology and related consults.   

Relief clinicians were plugged into the pyramid based on expertise. Each team included local physicians familiar with the hospital.

2. Build Your Team in Advance

While the exact composition of your clinical pyramid will be situation-dependent, it’s never too early to start identifying key leaders. Imagine your hospital sees a three-to-ten-fold increase in critical patients. What roles you can fill from within your health system? If you notice gaps, start reaching out now to potential clinical partners.

Consider how you will integrate visiting doctors, including those working outside of their specialties. It’s vitally important that your local clinical leaders connect with incoming relief physicians to ensure they understand their responsibilities and points of contact.

Also consider logistics. When possible, centralize or outsource credentialing, travel, scheduling, training, orientation and related tasks to free up bandwidth for your front-line clinicians. It’s usually easiest to work with one or two organizations that can supply the specialists you need. Some physician groups also have the infrastructure to assist with the logistics.

3. Connect Daily with the Front Line

Finally, as a healthcare leader, stay engaged with your clinical teams. While centralized support is essential, rapidly shifting knowledge of COVID-19 requires agile decision-making that is best left to front-line providers.

Perhaps the best way to harmonize executive and clinical agendas is through daily outreach. Identify pain points and help to create solutions. Giving your teams just 10 to 15 minutes of undivided attention sends a message of support and solidarity.

In Summary

Adding beds may be the easiest part of preparing for a COVID-19 surge. Don’t forget to give equal attention to clinical capacity, including onboarding, scheduling, and providing practical and moral support to your expanded teams. Ensure that leadership stays visible and keeps communication lines open. Having a well-prepared surge plan along with leadership support will go a long way toward improving patient outcomes and boosting provider morale.

Read more insights from the New York City delegation.

Thomas Sugarman, MD, helped coordinate and deployed to New York City with the Vituity delegation. He is a practicing emergency physician and assistant medical director.

Hartwell Lin, MD, led the Vituity delegation of more than 50 clinicians to New York City. He is a practicing emergency physician, regional director, and elected member of the Vituity Board of Directors.

Nurses are less satisfied with their jobs, more stressed and more likely to report plans to leave the field than in previous years as the repercussions of the pandemic continue to weigh on the profession, according to a May 2023 survey. 

About 30% of nurses said they would leave their career in 2023, up from 23% in 2021, according to a survey from AMN Healthcare.

Nurses, on the front lines of the pandemic, have been adversely affected by COVID-19, dealing with burnout, patient violence and moral distress, according to past surveys and reports.

AMN polled more than 800,000 nurses in early Jan. 2023 and received more than 18,000 completed questionnaires.

Health systems have been struggling with labor costs as they have relied on pricier contract labor amid shortages. Hospitals CEOs said in Feb. 2023 that workforce challenges were their No. 1 concern for the second year in a row.

“Job turnover is a huge cost for healthcare organizations. Unfilled jobs decrease revenues when they affect the delivery of services,” AMN Chief Clinical Officer Cole Edmonson wrote in the report. “Lower job and career satisfaction among nurses can affect the quality of care and patient satisfaction. The need for job redesign within care delivery model redesign is clear, as well as where care will be delivered.”

Still, there have been some signs of easing, with for-profit systems recording lower labor costs in the first quarter of 2023 and reports surfacing of nurses returning to hospitals permanently.

Nurses' satisfaction with their jobs was at 71% in 2023 after hovering around 80% to 85% from 2015 to 2021, according to the AMN survey. Older nurses and those with more than five years of experience reported higher satisfaction levels.

About half of nurses said they were likely to encourage others to become a nurse in 2023, down from 64% in 2021.

They also reported having less time to spend with patients and less satisfaction with the quality of care they provide.

More than three-quarters of respondents agreed that they often feel emotionally drained, while 35% said they never used resources to address mental health and well-being.

Staffers cited reducing the number of patients per nurse as the top priority for lessening stress. Staffing levels have been key points of contention for multiple contract negotiations with nurses recently. In March 2023, federal lawmakers reintroduced legislation that would set minimum nurse to patient ratios.

Research has shown that such laws — as well as unionization — may improve nurse retention.

In legislatures across the country, advocates for nurse and hospital associations are clashing over proposed nurse staffing bills, many of which require nurse-to-patient ratios.

Since the beginning of 2023, at least 18 states have introduced or advanced nurse staffing bills, according to data from the American Nurses Association. And in March 2023, Congress reintroduced federal legislation to set minimum nurse-to-patient ratios nationwide.

But the proposals are being met with resistance and lobbying from hospital associations, who argue the laws would impede their ability to provide patient care.

For lawmakers like Minnesota Rep. Sandra Feist, the COVID-19 pandemic put frontline providers’ concerns front and center. Feist, a Democrat who introduced the “Keeping Nurses at the Bedside Act” in March 2023, was motivated to act by hearing first-hand accounts from nurses. She told Healthcare Dive by email that nurses reported that staffing levels were “the main cause” driving Minnesota nurses to “leave the bedside in record numbers.” 

Those concerns echo nationwide, as hospital nurse turnover remained elevated in 2022 at almost 23%. Since 2020, staffing shortages have created bottlenecks for care and strained relations between labor and management, becoming a source of friction driving historic nursing strikes across the country.

Mary Turner, president of the Minnesota Nurses Association and an advocate for safe staffing legislation, told Healthcare Dive that her organization surveyed bedside nurses who exited the profession 2023, and 80% would return to the bedside “if staffing improved.”

Uneven adoption

Across the country, at least 16 states have successfully passed laws or regulations related to nurse staffing levels, which require nurse-to-patient ratios, staffing committees with nursing representation or disclosure of staffing policies.

In June 2023, Oregon legislators passed a bill that would require staffing committees and set minimum nurse-to-patient ratios in acute settings including emergency departments, intensive care units, labor and delivery units and operating rooms. Hospitals that violate the law could face up to $5,000 in penalties per offense.

And in April 2023, Washington passed a safe staffing law that requires nurse staffing committees and mandates reporting of staffing plans.

But other states have pushed back on nurse staffing mandates.

In Connecticut, the legislature rejected original language in one bill that mandated nurse-to-patient ratios, citing prohibitive costs to hospitals. Instead, Gov. Ned Lamont signed a law offering nurses more input in creating staffing plans.

In Minnesota, Feist’s legislation, which required staffing committees to consist of 35% direct care nurses, passed both the House and Senate but fell apart at the final hour after pushback from the state’s largest private employer, academic medical system the Mayo Clinic. The nonprofit threatened to send billions of dollars of investments out of state if the hospital was required to abide by the law. 

Nurse representation on staffing committees was dropped. Instead, Gov. Tim Walz, a Democrat, signed the revised Nurse and Patient Safety Act into law three weeks later. The law includes provisions addressing workplace violence, health professional education loan forgiveness and creates a study on staffing and retention.

Nurses’ unions argue staffing ratios enhance patient care — using quantitative metrics, like readmittance and mortality rates, as well as patient experience reports to bolster their claims— while hospital associations say the set standards limit flexibility and are out of date with current care models.

Staffing ratios “do not consider advanced capabilities in technology or interprofessional team-care models. These newer models incorporate nurses at various levels of licensure, but also respiratory therapists, occupational therapists, speech-language pathologists, physical therapists and case managers,” said Robyn Begley, chief nursing officer of hospital lobby the American Hospital Association.

Opponents point to the nationwide staffing shortage, arguing that staffing laws might exacerbate the problem. Begley said mandated staffing laws could “increase stress on a health care system already facing an escalating shortage of educated nurses” and do “not create more nurses.” 

Advocates, including MNA’s Turner and Anne Tan Piazza, executive director at the Oregon Nurses Association, argue that there isn’t a shortage of nurses — there’s a shortage of nurses willing to work in unsafe conditions.

Paradoxically, requiring more nurses on staff could, in their view, help alleviate the staffing shortage.

Linda Aiken, professor of nursing at the University of Pennsylvania and founding director of the Center for Health Outcomes and Policy Research, who has studied staffing ratios for three decades, agrees. She said the first nurse ratio law passed in California in 2004. At the time, she recalled, there were similar concerns over staffing shortages.

“The number of hours of nursing care started going up immediately, which means more nurses came back in the field,” Aiken said. “Today, patients in California get three more hours of [registered nurse] care on average than patients in other states because of that legislation.”

Aiken added that patient care — regardless of the restrictions imposed on California providers — has improved. She pointed to peer-reviewed research demonstrating elevated care for poor and minority patients as well as those at safety net hospitals. Plus, she said, no hospitals closed.

Yet in states like Maine, Michigan, Missouri, Pennsylvania and New Jersey, nurses and hospitals remain at odds, waiting on the outcome of staffing bills as they move through state legislatures.

Despite the setbacks some localities have encountered, nurse staffing advocates are focused on passing legislation they view as vital to protecting patients and nurses.

“We have to work damn hard to get change. And it sometimes can take a decade,” Turner said. “Are we going to see it in the next year or two? Maybe not. But we're starting the process.”

When COVID-19 cases surged in Texas in the summer of 2021, health systems buckled as bedside nurses dwindled. Houston officials warned that “a breaking point” was near due to the high demand of care and low supply of labor, according to the AP.

One organization impacted by this shortage was Memorial Hermann Health System, a 115-year-old organization with 17 hospitals across the Houston area. Turnover hit nearly 30% as the pandemic intensified, and the hospital saw the steepest decline in its nursing workforce in 20 years, according to the health system’s SVP and CHRO, Lori Knowles.

The nursing shortage pushed Memorial to test new staffing models, explore upskilling efforts and invest in staff support. HR teams across the U.S. made similar changes, Knowles noted, as they responded to the pandemic and other crises that marked 2020.

“The employer-employee pact that had been in place for so long fundamentally shifted,” Knowles said. “We met a confluence of pressures and influences we had never seen before. And organizations looked directly at HR to solve all of that.”

Still, Knowles chose to look on the bright side. “I’ve seen so many amazing things come out of this time,” she said.

It started with staffing

Memorial Hermann is a large operation. It employs more than 32,000 people across its 265 sites, which includes 17 hospitals. It’s one of the largest not-for-profit healthcare systems in Texas, and the biggest in Houston.

“Our vision is to create healthier communities now and for generations to come,” said Knowles, who has served as the organization’s CHRO for five years. “We talk about that all the time. It shapes how we think about the work we do. It shapes, from my perspective, how we think about our people.”

This mission guided Memorial as it first began to deal with the labor shortage and related challenges. Like many healthcare organizations, it turned to contract nursing, a fix Knowles was quick to critique. She noted its expense — rates for travel nurses exploded during the pandemic. In January 2020, the national average weekly pay rate for travel nurses was $1,894, according to nurse staffing platform Vivian Health. By December 2022, that figure had risen to $3,173.

Knowles also noted another downside of using contract nurses. “It’s detrimental to culture. It creates challenges with equity. It’s all these things when a large percentage of your workforce aren’t your employees who you’re paying a premium for.”

To ease these frustrations, Memorial Hermann looked to its internal staffing agency of more than 1,000 floating employees. Through this group, the organization now offers a number of flexible work programs, each prioritizing something different. One program caters to employees who want more time off, offering 13 weeks of work, followed by six weeks off. Another allows employees to work at the four closest hospitals to their homes. Yet another enables nurses to earn a higher rate by working at whichever hospital needs them most.

Memorial Hermann still uses contract nurses, but usage is down by more than 80% since the height of the pandemic, Knowles said.

“We’ve had to be creative to meet the needs of people while still providing great care to our patients,” Knowles said.

What emerged at Memorial: ‘Well Together’

As Knowles witnessed the events of 2020, she received a daunting task from Memorial Hermann CEO David L. Callender. 

“We’re in the fall of 2020 and it’s dawning on all of us that COVID is not a short-term affair,” she recalled. “My CEO says to me: ‘We’re about to see a level of PTSD we’ve never seen. We’re going to have to figure out how to address that here.’”

Knowles wondered how to tackle such a project. She landed on listening: First to experts, then to her fellow leaders and finally to her employees.

As she listened, she learned. Her first realization was about the nature of the trauma she and her colleagues were experiencing. “This wasn’t going to be traditional PTSD. This was going to be collective,” she said. “And people were going to have to manage their day-to-day lives while going through this.”

Knowles next needed to learn how her people would manage this stress — and how her organization could help them through it. So, with HR, hospital chaplains, employee wellness directors, and physicians and nursing leaders, she began to study the employees that make up Memorial Hermann. The team borrowed a tactic from marketing and conducted a persona study. Eight types of employees emerged.

“Then we stepped back and said, ‘If those are the people who work here, what do they need?’” Knowles said. “We did entire listening tours, town halls to find out what people wanted. What can we do for you?”

People needed help with child care. People needed help dealing with inflation. People needed access to greater flexibility. To respond to these needs and unify their approach, Knowles and her team created Well Together. Well Together is a model for Memorial Hermann’s employee experience, Knowles said, that seeks to ensure its workers are:

• Encouraged to grow and develop.
• Supported in body and spirit.
• Inspired by a shared purpose.
• Valued as an individual.
• Connected.

This model orients Memorial Hermann’s approach to people, Knowles said. “In every decision we make, how do these five pillars show up?” 

Knowles and her team began to create, design and implement benefits that corresponded with each of the five pillars of Well Together. Memorial Hermann tossed its old-fashioned tuition program, for example, and created a new benefit that addressed the barriers of its predecessor. “You as an employee don’t have to worry about the money changing hands,” Knowles said. “It just goes directly to the school. And you get money for the books and the fees.”

One focus of Memorial Hermann’s new programming is mental health. Employees can now make appointments to see in-house mental health professionals during the workday. They can also call on staff trained in psychological first-aid to help them through emergent mental health needs they encounter on the job.

‘We are doing much, much, much better.’

Memorial Hermann will continue to look to Well Together as its guiding principles in employee experience for at least five years, Knowles said. In the meantime, Knowles watches its impact spread.

“The feedback from our teams and employees has been really positive,” Knowles said. “They feel supported. They feel cared for as individuals. We are doing much, much, much better.”

She acknowledged the challenge of finding hard evidence that illustrates the impact of Well Together. But Memorial Hermann’s turnover is “down by half from where it was at the top of the pandemic,” Knowles said.

With Well Together continuing to grow, Knowles said her biggest takeaway from its creation is transparency. “It’s scary to go to your workforce and to be vulnerable,” she said. “It’s hard to ask hard questions about how they’re doing and what they need. Because there’s a sense that you may not be able to provide.”

Even so, Knowles said this radical transparency has been “transformational” in allowing her organization to create strategies that answer to the needs of its employees. HR leaders pursuing similar goals should do likewise, she said.

“Press yourself to do things that feel a little bit scary,” she said. “Try things. Don’t be afraid to do a pilot. If it doesn’t work, move on quickly.”

 

Kaiser Permanente’s historic labor management partnership was on shaky ground in Sept. 2023 as the window of opportunity narrowed to negotiate a new contract for over 75,000 healthcare workers represented by the Coalition of Kaiser Permanente Unions and avert an October strike, according to union leaders and labor experts.

Over a dozen union leaders, labor relations professionals and former Kaiser consultants told Healthcare Dive that the bargaining process had become increasingly dysfunctional and protracted in the summer of 2023, in contrast to most negotiations in the past.

The coalition had not carried out a strike in over 25 years. Labor experts attributed the period of stability to Kaiser’s unique national labor management partnership, formed in 1997, which brought the workforce into company decision-making processes from the ground up.

Until 2023, the partnership negotiated effectively, driven by a shared vision for the company, said John August, former head of the union coalition when it was a broader group of 34 unions and current director of healthcare and partner programs at Cornell University’s Scheinman Institute on Conflict Resolution.

Management had shared financial information to inform bargaining, and union members — who were often covered by Kaiser plans — were invested in the health system’s mission of providing affordable, high quality care, said Adrienne Eaton, dean of the Rutgers School of Management and Labor Relations and co-author of the 2009 book Healing Together: The Kaiser Permanente Labor-Management Partnership.

“People felt like they had achieved a good, amicable relationship,” August said. “The performance agenda really meant a lot to everyone, and, as a result, Kaiser became a leader in the industry in terms of quality and affordability.”

The working relationship typically allowed for smooth bargaining and, in the past, contracts had often been negotiated “significantly before [their] expiration” dates, according to Hal Ruddick, executive director for the Alliance of Healthcare Unions, a venture of 53,000 Kaiser employees not affiliated with the current negotiating coalition.

However, negotiations came down to the wire in 2023.

Leaders for the Coalition of Kaiser Permanente Unions — the group that negotiated its contract — and Kaiser executives met eight times by Sept. 2023 to bargain about staffing, wages and benefits, according to both parties. They hadn’t made a deal — and tensions were escalating.

On Sept. 22, 2023, the Coalition released a statement that Kaiser was negotiating in “bad faith,” and issued a 10-day strike notice, alerting Kaiser that members in California, Oregon, Colorado, Virginia, Washington and Washington, D.C. would hold an unfair labor practice strike, and some sympathy strikes, beginning Oct. 4 if an agreement was not reached. The Coalition added that it was prepared to hold an additional, potentially longer strike, which could include workers from Washington state, in Nov. 2023.

Kaiser Permanente leadership continued to express confidence that parties could still achieve a contract and urged employees to reject a strike as negotiations continued.  

“Given the progress being made in national bargaining over the weekend and Monday, there is no reason to strike,” said Hilary Costa, communications manager for Kaiser, told Healthcare Dive in Sept. 2023. “The best place to reach an agreement is at the bargaining table. We will ask our employees to reject any call to walk away from their jobs.”

It was not the first time in recent years that the labor partnership and Kaiser bargained into the eleventh hour. In 2021, the Alliance of Healthcare Unions and Kaiser narrowly averted a strike of 28,400 workers in southern California, after parties agreed to a contract days before a strike was set to begin.

At the time, labor experts and union members said the labor-management partnership was deteriorating. Eaton characterized the state of the partnership in Sept. 2023 as even worse: It was barely “limping along.”

The contract stalemate, according to multiple experts, was the result of a communications breakdown between the two parties — and infighting among the unions themselves — that had been in the making since 2018.

"[Negotiations have] taken a kind of very militant stance," Eaton said, "Politics and personalities within the union [have] made it more difficult to reach an agreement."

A “culture shift” at work

The bedrock of Kaiser’s labor management partnership, according to Eaton and August, was commitment to collaboration that began at the top. 

Following years of acrimony in the 1990s, including layoffs and strikes, then-CEO David Lawrence realized the standard tough-on-labor approach would be a “dead end” for the system that would lead to “continued labor strife in every corner of our organization,” he said at the time, according to a research report Eaton co-authored.

Lawrence hired consultants to teach employees and managers a new way to cooperatively interact. Employees and managers took courses on problem solving, conflict resolution, consensus decision making and unit-based teams — versions of which were still offered in Sept. 2023. The emphasis on partnership created transparent bargaining that was “unprecedented,” Eaton said. 

When Lawrence departed, new management continued the labor partnership, August said, because it proved beneficial to all. Both Kaiser and the unions were growing. 

However, Kaiser union members said there had been a shift in Kaiser’s approach to labor relations in recent years.

“There used to be this real collaborative problem solving approach. My manager would approach me and say, ‘Hey, look, we've got this problem. How do we fix it? Here's my ideas.’ And they would ask for my ideas, too,” said Maria Jostes, a workplace safety consultant and union member who had worked at Kaiser for more than 30 years. In recent years, she told Healthcare Dive that there’s been, “a culture shift from folks at the very top.”

Jostes attributed the change to the unexpected passing of former CEO Bernard Tyson in 2019. Eaton echoed Jostes’s comments, noting that Tyson had been “beloved” by much of the workforce.

Since Tyson’s passing, Alliance and Coalition representatives told Healthcare Dive that the company had made a series of decisions that made them question Kaiser executives’ investment in the labor management partnership.

One example included the narrowly-averted 2021 strike bargaining sessions, which Ruddick said began contentiously.

Another included Kaiser’s announcement in April 2023 that it planned to acquire Geisinger, a non-unionized health system, to form a new nonprofit called Risant Health. The announcement raised “huge concerns” for union members, according to Caroline Lucas, executive director for the Coalition of Kaiser Permanente Workers.

“If Kaiser's future growth strategy is in a non-union non-partnership environment, it definitely calls to question their commitment to us,” Lucas said. Kaiser’s Costa said, “we disagree with the Coalition’s position on Risant Health.”

During the negotiations in 2023, coalition members alleged management snubbed collective bargaining representatives by not sitting in person with bargaining teams, according to Jostes, Lucas, and Jeffrey Sanders, a contract specialist for SEIU Local-49. 

In a statement to Healthcare Dive, Kaiser expressed commitment to the labor-management partnership, stating that it had hired more than 9,800 people as of Sept. 2023 into jobs at Kaiser represented by the Coalition.

Splits in the partnership

Eaton said that the unions were also not “without fault” for the breakdown in the partnership. Prior to 2018, the Coalition and Alliance were a joint unit, representing 34 unions. They negotiated a single national contract.

However, the unions parted ways in 2018, in part because the Alliance unions had a “fundamental disagreement” with Coalition leaders about how negotiations ought to occur, Bloomberg Law reported at the time. Twenty-two unions left to form the Alliance and thirteen unions remained in the Coalition (those numbers have since shifted as union allegiances changed).

Since 2018, August said that, “bargaining… has been made more complicated” for Kaiser. Kaiser negotiated separate contracts with the Coalition and the Alliance. August said the two groups were tacitly competing to show that they were “doing better” than the other, creating headaches for the healthcare conglomerate.

In labor relations, the term is “whipsawing,” Eaton said. Unions leverage a previous contract within their employer’s network to negotiate an equal or better deal.

“It puts extraordinary pressure on the next deal that comes,” Eaton said, because the employer likely understands that whatever they agree to in this round of negotiations will become baseline terms for the next negotiation cycle with their other unions. The split of the broader union coalition of prior eras had been difficult for Kaiser because of this, she said.

During negotiations after the Kaiser split, both the Coalition’s 2019 contract negotiations and the Alliance’s 2021 contract negotiations reached the point of strike authorizations, however, ultimately neither strike happened.

There were signs of continued infighting. One labor union in the Kaiser negotiations voted to leave the Coalition and return to local bargaining. On Sept. 18, 2023, UFCW Local 555 members voted to leave the Coalition and issued their own strike notice to Kaiser.

Miles Eshaia, press contact for UFCW Local 555, told Healthcare Dive that members voted overwhelmingly to leave a process that wasn’t working for them, adding that their member issues were not “getting the attention they deserved” at the bargaining table. 

“We've been working on this thing for months, and we didn't think we were gonna get a deal through the Coalition,” Eshaia said. “It was in our members best interest to return this to local-employer-to-employee bargaining.”

Healthcare workers faced an escalating mental health crisis between 2018 and 2022 driven by increased burnout, harassment and a lack of support from employers, according to survey data published by the Centers for Disease Control and Prevention in Oct. 2023.

More than 45% of healthcare workers reported feeling burned out often or very often in 2022, with the percentage of workers reporting feeling frequently burned out increasing from 11.6% in 2018 to 19% in 2022. 

Reports of harassment more than doubled during the study period and the number of workers very likely to seek another job increased by almost 50%. In contrast, turnover intention declined for workers in other essential industries.

The CDC study compared U.S. healthcare workers’ mental health and well-being metrics to those reported by workers in other essential industries, finding health workers' mental health deteriorated at higher rates. 

Debra Houry, chief medical officer for the CDC, warned on a Oct. 2023 call with reporters that COVID-19 has intensified longstanding industry challenges among healthcare workers like compassion fatigue, depression, anxiety, substance use disorders and suicidal thoughts.

“To label our current and long-standing challenge a ‘crisis’ is an understatement,” said Casey Chosewood, director and senior medical officer at the CDC’s Office for Total Worker Health, during the media briefing. “Many of our nation’s healthcare systems are at their breaking point. Staffing crises, lack of supportive leadership, long hours of work and excessive demands and flexibilities in our nation’s health systems all must be addressed.”

Healthcare workers most at risk of reporting negative mental health outcomes included those who experienced harassment on the job or working in negative conditions. 

Among healthcare workers who reported being harassed, 85% reported anxiety symptoms, 60% were depressed reported depression symptoms and 81% were burned out, the report found. Negative working conditions, including being short-staffed, were also associated with higher rates of depression and turnover intention.

Burnout can further exacerbate short staffing concerns, because some workers who seek to depart their job are considering exiting the industry entirely, the CDC’s Houry said in the media briefing.

“Some are not just jumping from hospital to hospital, but they are quite concerned about the system in general,” Houry warned. “So clearly, this reiterates the need to sound the alarm that the focus needs to be on long-term systemic fixes.”

Employers can proactively address healthcare workers’ mental health problems by creating conditions that allow workers to participate in decision-making, increase trust in management, offer supervisor assistance and support for productivity, and decrease harassment, according to the CDC.

The agency’s National Institute for Occupational Safety and Health planned to launch a national campaign for hospital leaders in the fall of 2023 to help providers “think differently about how to identify and remove barriers to health worker well-being,” Houry said.

The initiative builds on other government programs addressing burnout. In 2022, President Joe Biden provided $103 million in awards to combat burnout and promote mental health and wellness among the healthcare workforce. 

Also in 2022, the U.S. Surgeon General released an advisory on burnout among healthcare workers, noting that employers could play a critical role in reducing distressing work environments that contributed to burnout. 

More than a third of nurses said it’s extremely likely they’ll change jobs in 2024, according to a survey by staffing firm AMN Healthcare. 

The results suggest frustration is still high among nurses in the wake of the COVID-19 pandemic, and turnover will likely remain elevated, the report said. 

Higher compensation and increased staffing are key to improving job satisfaction, according to the report. Three-quarters of nurses said better pay was extremely important to them, while 68% reported allocating more nurses per patient was crucial in their workplaces.

The survey from AMN is the latest report to find mounting employee discontent after the pandemic, when burnout pushed nurses to consider leaving the profession. 

During the public health emergency, health systems faced heightened labor costs as pricey temporary staff and a more competitive market made it expensive to hire — which added significant strain to hospital margins in 2022.

Those pressures are now alleviating, but hospitals will still likely need to offer higher salaries and better benefits to attract and retain staff, according to a December 2023 report from credit agency Fitch Ratings. 

But nurses aren’t so confident conditions are improving for them. The AMN survey, based on responses from 1,155 nurses nationwide, found just 20% believed 2024 would be better than 2023, and 37% predicted the year would be worse for nurses.

Overall, 55% reported they were extremely or somewhat likely to change jobs in 2024. Similarly, 35% said it was extremely likely they’d adjust their hours or schedule, according to the report.

“Turnover and volatility in the nursing workforce have been endemic over the last several years,” Robin Johnson, group president of nursing solutions at AMN Healthcare, said in a statement. “That trend is likely to continue until nurse concerns are addressed.”

Schedule flexibility is also increasingly important in the wake of the pandemic, including options for part-time work, telehealth or hybrid roles, per diem arrangements or travel nursing jobs. 

Fifty-eight percent of surveyed nurses said better schedules or hours were extremely important at their workplaces. 

Wellness and diversity programs were less valued by respondents, suggesting tangible benefits like higher pay, improved staffing and better schedules were more essential to retaining staff. 

Just over 40% of respondents said more wellness programs were extremely important, while 26% said more diversity among nurses was extremely important. 

The COVID-19 pandemic had an outsized impact on the nursing home industry, as workers left positions in record numbers due to burnout, low wages and increased stress associated with caring for vulnerable populations during a public health emergency.

As of June 2023, employment levels in long-term care facilities remained depressed at 11% below pre-pandemic levels industry-wide and 3% below pre-pandemic levels for workers in elder care facilities, according to the Bureau of Labor Statistics.

By September, the CMS introduced guidance in response to longstanding concerns that inadequate staffing levels negatively affect nursing home residents’ care. The rule would require nursing homes to have a minimum of 0.55 RN and 2.45 nurse aide hours per resident day, and an RN on staff 24 hours per day, 7 days per week.

Eighty-one percent of nursing home facilities nationwide and 90% of for-profit facilities would need to hire additional registered nurses or nurse aides to meet the minimum nursing staff hours standards, according to a KFF estimate.

Industry leaders immediately pushed back on the proposal, arguing that a nationwide nursing shortage would prevent facilities from meeting staffing targets. Staffing levels currently vary by type of facility and geography. In over half of states, less than a quarter of nursing facilities would meet the requirements under the proposed rule, according to the KFF study.

In light of current workforce shortages, industry leaders have argued that the CMS staffing proposal, which would be the first federal regulation mandating specific staffing levels in nursing homes, is untenable. 

Mark Parkinson, president and CEO of the American Health Care Association, which represents over 14,000 skilled nursing facilities and assisted living centers, said in a statement that the policy would require homes to “hire tens of thousands of nurses that are simply not there.”

“It then penalizes us and threatens to displace hundreds of thousands of residents when we can’t achieve the impossible,” Parkinson said in a statement. 

However, others didn’t think the proposal went far enough and had hoped the CMS would require 4.1 hours of nursing care per resident per day, a number first proposed by a CMS-funded 2001 study measuring the relationship between nursing care and patient outcomes. 

Dr. Bianca Frogner, director of the UW Center for Health Workforce Studies at the University of Washington, told Healthcare Dive that concerns about a labor shortage in the industry are not overblown. 

Currently, nursing facilities are competing with hospitals for talent, as RNs are steered toward hospital settings during their training. Larger systems also typically pay higher starting wages, she said.

When RNs do work in nursing homes, Frogner explained it can be a fraught environment where nursing assistants turn over at rates of 100% to 300% annually. The stress “reverberates through the system, because it conveys a feeling that nursing homes are not desirable places to work,” she said. 

Attracting more RNs and nursing assistants would cost the industry an estimated $40 billion dollars over the next ten years, KFF estimates — a cost that is likely to be passed on to public and private payers, including residents and their family members. Already, residents paid $45 billion in out-of-pocket costs for care in nursing homes and other institutional long-term services and support settings in 2020, according to KFF.

Even with a sizable financial investment, Frogner is skeptical that nursing homes will be able to attract talent without additional investments in training and benefits, like healthcare or transportation.

“Even if they did offer good pay, they are struggling to find a pool of workers who can even fill these jobs,” Frogner said.

There are currently no firm answers as to how the CMS will audit compliance, and it’s unclear whether future federal budgets will have funds for nursing facility inspections and enforcement, according to KFF.

There was a “substantial” increase in healthcare quits during the COVID-19 pandemic in 2020 and 2021 compared to 2018, according to a study published in JAMA Health Forum in January. 

Early in the pandemic, researchers found most departing workers quit without a new job lined up. However, by 2021, workers increasingly left healthcare positions to pursue roles in other industries.

Though turnover was high, employment rates remained relatively stable through 2021 due to the industry’s ability to attract new talent. However, researchers said new hires during the pandemic often lacked experience and were hired from non-healthcare professions.

This study, which analyzed jobs data between 2018 and 2021, adds to research suggesting the COVID-19 pandemic exacerbated healthcare staffing and care quality concerns.

A disproportionate number of Black and female professionals left healthcare roles during the study, while fewer Black workers entered the field. The researchers warned continued poor recruitment and retention of Black workers could impede patient care. 

Meanwhile, healthcare organizations increased the hiring of unemployed individuals and workers without healthcare backgrounds in 2021 by nearly 30% and 20%, respectively, compared to 2018.

Healthcare professionals — particularly nurses — said that high levels of burnout during COVID pushed seasoned professionals to seek early retirement or alternate jobs, contributing to a brain drain in the industry.

Nationwide, the median time that nurses worked for their organizations fell by 19.5% between March 2021 to March 2022, according to a study from Epic.

Without a deep bench of experience, relatively green employees may have to train or supervise even greener recruits.

In October, California Gov. Gavin Newsom signed a law raising the minimum wage for thousands of healthcare workers in the state from $15.50 an hour to $25 per hour.

State lawmakers argued in the law’s text that competitive wages are necessary to attract and retain healthcare workers who provide critical services, noting that “even before the COVID pandemic, California was facing an urgent and immediate shortage of healthcare workers, adversely impacting the health and well-being of Californians.”

The law, backed by California healthcare unions, broadly defines healthcare workers as full-time or contract employees of a healthcare facility, including those in roles supporting the provision of healthcare, such as janitors, clerical workers, food service workers and medical billing personnel. 

Although wage increases will begin rolling out next year, the timeline for implementation depends on facility type. Large health systems with more than 10,000 workers and dialysis clinics must implement the law fully by 2026, while rural independent hospitals and those with a high mix of Medi-Cal and Medicare patients have until 2033 to implement the new wage minimums. 

The wage increase is projected to impact approximately 469,000 employees, many of whom are currently living on the margins, according to an analysis from the University of California, Berkeley’s Labor Center.

Nearly half of California’s healthcare workers do not presently earn enough to cover basic needs, such as housing, and are enrolled in public safety net programs, according to the UC Berkeley Labor Center.

Newsom signed the bill into law on the same day that Kaiser Permanente unions announced they had secured a tentative $25 per hour minimum wage for over 60,000 California-based Kaiser employees, pending ratification from members. California healthcare workers were represented by SEIU-United Healthcare Workers West president Dave Regan during Kaiser bargaining.

In Senate analyses of the minimum wage bill conducted in May and September, lawmakers said that SEIU-UHW’s organizing elsewhere in the state had motivated the state-level analysis of pay. The union spearheaded several similar local ordinances last year, including in Los Angeles and San Diego. 

SEIU California, which sponsored the bill, released a statement on Friday saying that raising healthcare workers’ wages is a matter of equity. Three out of four workers who will see increases in wages thanks to the new law are women, and 76% are workers of color, according to SEIU California. Almost half of all healthcare workers affected are Latino, the union said.

“Governor Newsom signed SB 525 into law because he heard our call for change to a status quo that has left us exhausted and struggling to pay our bills,” Dr. Kelley Butler, resident physician at San Francisco General Hospital and member of SEIU California, said in a statement. “I’m proud of our collective advocacy as a union and proud of our Governor for doing right by the California healthcare workforce and the patients it serves.”

The law went through several edits since the beginning of the legislative session to make it more palatable to healthcare facilities, which largely opposed its passage earlier this year. An earlier version of the bill, debated in May, tasked all healthcare providers with instituting the new minimum by June 2025.

The final version of the law has a phase-in approach that grants some workers the new minimum by 2026 and leaves others waiting ten years to reap the full sum. Healthcare facilities that are in financial distress can also apply for a waiver program to temporarily delay payroll hikes. Tribal clinics are excluded from the new pay requirements entirely. 

The California Hospital Association, a lobbying organization, ultimately supported the law, saying in a statement that it provided “stability and predictability for hospitals” by providing more reasonable phase-in requirements and “preempting city and county minimum wage measures for 10 years and local compensation measures for six years.”

The dialysis industry also got on board after lawmakers added an amendment which prevents SEIU from pushing for ballot measures targeting dialysis centers. The union’s unsuccessful lobbying for changes in the dialysis industry has cost the healthcare industry over 100 million dollars in recent years, according to reporting from CalMatters.

The labor outlook is stabilizing for U.S. nonprofit hospitals as employment increases and healthcare job openings decline, according to a December report from Fitch Ratings. 

Hospital and ambulatory healthcare services payrolls have risen for 22 and 34 consecutive months respectively, according to the credit ratings agency. Wage growth has remained “relatively flat” at 4%. 

Though the statistics indicate the hot labor market is cooling, Fitch said recruitment is still “hyper-competitive.” Health systems may need to offer higher salaries and better benefits to attract talent and dissuade skilled labor from seeking early retirement, the report said. 

 

Throughout 2023, nonprofit health systems honed in on recruitment and retention strategies to cut pricey contract labor costs and remedy staffing shortages after burned out healthcare workers exited the field between 2020 and 2021. 

Some operators, including Mayo Clinic, CommonSpirit and Providence, reported progress on the labor agenda in recent quarters relative to the same period in 2022, citing slowing contract labor cost growth or reduced spend on the heels of successful recruitment initiatives.

The recent Fitch report called hospitals’ ability to manage salary, wages and benefits “the single most meaningful differentiator between operational success and failure in the current environment.”

“Hospital workers remain in a favorable position in a hyper-competitive landscape for personnel against a backdrop of higher cost of living and the exit/early retirement of some skilled labor from the workforce,” said Richard Park, a director at Fitch, in the report.

Though quit rates have fallen from a May peak of 2.9%, they remain above pre-pandemic levels of 2.3% as of October, Fitch said.

Wage growth for hospital employees increased 4% between June and October but remained relatively flat, according to the report. The growth is above the 2.3% increase in average hourly earnings between 2010 and 2019. 

Increasing union activity may also pressure health systems to offer higher wages, according to Fitch.

“Labor tensions may put more pressure on wages and subsequently make managing costs more difficult for health systems over time as union contract negotiations are occurring during a period of increased bargaining power for workers,” Park said.

Labor tensions have caused strikes at health facilities, with some prompting wage increases.

More than 1,700 nurses at Robert Wood Johnson University Hospital in New Brunswick, New Jersey announced this month they had reached a tentative deal with management that would raise wages after walking the picket line for nearly four months.

The deal followed the Coalition of Kaiser Permanente Unions’ three-day October strike, which resulted in a new four-year contract, covering more than 85,000 healthcare workers. The contract includes a 21% wage increase over four years, a minimum wage of $25 an hour in California and $23 an hour in other states.