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Healthcare’s Labor Challenge
Why is it happening and what can you do about it?
Dan Unger SVP & GM, Health Catalyst

2. Agenda
• Today’s Labor and Economic Challenges for
Health Systems
• What’s Driving these Challenges?
• Short-Term Improvement Opportunities
• Longer-Term Improvement Opportunities
• Q&A / Discussion

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Today’s Labor and
Economic Challenges
for Health Systems

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The U.S. Healthcare System Is Experiencing a Workforce Crisis
200k-450k Shortage of registered nurses for direct
patient care by 20251.
38k-120k Shortage of physicians by 20342.
Percent of nurses planning to leave their job in
the next 12 months.
1 https://www.mckinsey.com/industries/healthcare/our-insights/assessing-the-lingering-impact-of-covid-19-on-the-nursing-workforce
2 https://www.aamc.org/media/54681/download
3 https://www.incrediblehealth.com/blog/nursing-report-covid-19-2022/
50%
Percent of nurses planning to retire or leave
the field entirely3.
32%

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The Labor Crisis is Wreaking Havoc on Health System Finances
Labor
Expense
Labor
Supply
Labor costs make up 50%+ of total
expenses.
Many health systems saw labor costs
increase 10%-15% YoY in 2022.
Insurance increases likely to be 4%-5%.

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The Numbers Don’t Lie
-0.6% Median hospital margin 2022.
-1.1% 2023 YTD median hospital margin (thru Feb).
https://www.kaufmanhall.com/insights/national-hospital-flash-report-november-2022

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What’s Driving these
Challenges?

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Number One Driver of Quitting and Retiring
Burnout and Lack of Support
Top Reasons for Burnout/Dissatisfaction 1, 2
- Insufficient staffing.
- Worker safety.
- Feeling unsupported.
- Benefits & Pay.
1 https://www.fiercehealthcare.com/providers/many-nurses-still-eyeing-exit-pandemic-frustrations-linger-survey-finds
2 https://www.incrediblehealth.com/blog/nursing-report-covid-19-2022/

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The Talent Pool is Not Keeping Pace with Demand
Aging workforce1:
- 55% of nurses are 50 or older.
- 62% of nurses 55+ are planning to retire in the next 3 years.
Insufficient training resources2:
- 80,000+ qualified nursing applicants were turned away in 2020.
- Main causes are a shortage of clinical sites, faculty, and other resource
constraints.
1 https://online.simmons.edu/blog/aging-nursing-workforce/#:~:text=Because%20demand%20for%20RNs%20is,to%20reach%20retirement%20age%20within
2 https://www.aacnnursing.org/News-Information/Press-Releases/View/ArticleId/24802/2020-survey-data-student-enrollment

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New Competitive Landscape for Talent
Covid and the New Remote World Broke
Down Competitive Barriers for Talent
- Telehealth.
- Remote care management.
- Clinical informatics.
- Customer service.
- Travel work.
Better pay.
Similar or better benefits.
More flexibility and remote options.

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What Can Be Done?
Short-Term Improvements

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Efficiently Leverage Current Resources
Improve patient throughput & review care models and services.
Better match staffing resources with demand.
Implement shared governance around staffing, scheduling and workflow.
Reward and pay current team members better by finding efficiencies elsewhere.

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Outsource Non-Clinical Functions
98% of hospital leaders looking to leverage
vendors for outsourcing one or more functions1
Hospitals are recognizing they can’t be the best at everything. Identifying
the right long-term partners for outsourcing non-clinical functions can
have the following benefits:
- Guaranteed cost savings.
- More predictable cash flow.
- Improved services.
- More focus on strategic items.
1 https://www.newswire.com/news/negative-operating-margins-drive-health-systems-to-expand-outsourcing-21862022

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Leverage Pragmatic and Proven Automation
Report writing and analytics.
Medical coding and certain billing functions.
Self-service scheduling…kinda/sorta automation. 

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What Can Be Done to Fix this?
Long-Term Solutions

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Start Investing in Long-term Solutions
Start building the next-generation workforce - Policy,
Promotion and Training & Education infrastructure.
Become a “destination” workplace…won’t happen overnight!
Plan for meaningful shifts to innovative and aligned
economic models.

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Questions &
Discussion

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Dan Unger
dan.unger@healthcatalyst.com
Thank you!!!