Staffing shortages create financial risk and limit the profitability of health care firms. For some health care employers, the costs of an agency nurse can reach $175,000 per year, compared to $55,000 to $75,000 for a nurse on staff.
“Staffing is an area that is creating enormous expense inflation for health care providers and presenting one of the biggest areas of uncertainty in assessing an organization's credit quality. . .salary and benefit costs are the key determinants of profitability. . .managing labor costs is critical to achieving profitability, especially as the ability to increase revenue diminishes." 1
Staffing shortages in health care today are widespread and persistent.
As the baby boomer population ages and the demand for health care increases, shortages are expected to grow. Looming retirements in the current health care workforce will further constrain available staffing.
Patient care is negatively affected by staffing shortages.
“Inadequate staffing is fertile ground for medical errors. Longer hours or leaner staff drives up rates of pneumonia, upper gastrointestinal bleeding, shock or cardiac arrests and failure to rescue a patient.” 2
An American Hospital Association 2004 survey reported the following:
- Temporary emergency department closings (38%)
- Emergency patient diversion (24%)
- Reductions in staffed beds (23%)
- Services discontinued (17%)
- Elective surgery cancellations (10%)
1Nursing Shortage Update, Fitch Ratings, May 13, 2003.
2Pierce, Neil and Curtis Johnson, Boston Unbound, The Boston Foundation, 2004, p. 12.