The US healthcare system is experiencing a severe workforce shortage, with projections of 200k-450k nurse shortages and 38k-120k physician shortages by 2025 and 2034 respectively. This labor crisis is significantly impacting health system finances, with labor costs over 50% of expenses and increasing 10-15% annually, outpacing insurance revenue growth. The key drivers include burnout from insufficient staffing during the pandemic, an aging workforce with over half of nurses over 50 planning retirement, and new competitive opportunities in telehealth that offer more flexibility. In the short term, health systems can improve efficiency, outsource non clinical functions, and leverage automation, while long term solutions require investing in the next generation workforce through training programs

1. © Health Catalyst. Confidential and Proprietary.
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

3. © Health Catalyst. Confidential and Proprietary.
Today’s Labor and
Economic Challenges
for Health Systems

4. © Health Catalyst. Confidential and Proprietary.
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%

5. © Health Catalyst. Confidential and Proprietary.
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%.

6. © Health Catalyst. Confidential and Proprietary.
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

7. © Health Catalyst. Confidential and Proprietary.
What’s Driving these
Challenges?

8. © Health Catalyst. Confidential and Proprietary.
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/

9. © Health Catalyst. Confidential and Proprietary.
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

10. © Health Catalyst. Confidential and Proprietary.
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.

11. © Health Catalyst. Confidential and Proprietary.
What Can Be Done?
Short-Term Improvements

12. © Health Catalyst. Confidential and Proprietary.
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.

13. © Health Catalyst. Confidential and Proprietary.
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

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

15. © Health Catalyst. Confidential and Proprietary.
What Can Be Done to Fix this?
Long-Term Solutions

16. © Health Catalyst. Confidential and Proprietary.
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.

17. © Health Catalyst. Confidential and Proprietary.
Questions &
Discussion

18. © Health Catalyst. Confidential and Proprietary.
Dan Unger
dan.unger@healthcatalyst.com
Thank you!!!