Nursing Workforce Challenges
By Witney McKiernan & Lily Chang, HealthQuest Capital (5-minute read)
At HealthQuest we develop theses through best ideas brought by our investment team members and voted on by the full team. The selected “best ideas” form research pods to go deeper on a particular trend or hypothesis. In early 2022, we focused a pod on the challenges facing the nursing workforce. Healthcare stakeholders have been aware of these challenges for decades; however, the stress levied on the healthcare system and on nurses during the Covid-19 pandemic brought these challenges to a national and global stage. It also fueled our interest in understanding the needs of one of our most critical healthcare resources: nurses. Our findings are detailed below.
Nursing Workforce Challenges
The nursing workforce has experienced a multitude of challenges ranging from recruitment, education, training and licensure to job culture, safety, retention, scope of practice, job satisfaction, growth, and career progression. While we expect many of the solutions to the nursing workforce challenge to arise from within provider entities (e.g., a change in hospital culture or creation of nurse leadership opportunities) or from policymakers (e.g., national licensure), we also anticipate that the private sector will generate solutions targeted at the nursing workforce.
Our research highlighted several themes – some of which have existed for years, and have been exacerbated in the wake of the Covid-19 pandemic:
Demand for nurses is outstripping supply. This is not news. There are over 200,000 job openings for nurses annually, a figure that is not being adequately addressed by the constrained number of spots in nursing education programs. Equally problematic is the issue of retaining nurses. With a national staff registered nurse turnover rate of 27% in 2021 and a 17% nurse vacancy rate in hospitals, we do not expect supply to meet demand in the near future.
Broad nurse dissatisfaction with aspects of their job. Nursing can be a physically and emotionally grueling job and demands on nurses are higher than ever. Nurses report stress related to caring for certain patients for whom they feel inadequately trained to care for.
Burnout among nurses is costly and exceeds other professions. The national nurse turnover rate of 27% dwarfs the 11% average turnover rate across industries during a recent peak turnover period. Turnover exacerbates the nursing supply issue, drains the healthcare system of experienced workers, and costs the average U.S. hospital between five and nine million dollars annually.
Hospitals and health systems are distressed and hamstrung. Nursing is the largest budgetary line item for hospitals, and hospitals are stretched thin as they try to break the cycle of nurse burnout leading to turnover, which then leads to increased work and burnout among those remaining nurses.
Nurses have newfound leverage and options. As new models of care arise, so do opportunities for nurses to step away from traditional “bedside” nursing and into different clinical roles (e.g., telehealth services, community or home-based care), or depart patient care roles entirely. A survey of registered nurses in the U.S. found that 32% may leave direct-to-patient care, an increase of ten percentage points in only ten months. The pandemic-related nursing crisis also allowed nurses to command levels of compensation beyond what the profession had ever seen. More than ever, nurses have leverage to determine the conditions under which they work, placing additional pressure on hospitals and health systems.
Hospital and health system leadership are looking for solutions to address the needs of their nursing workforce across the following categories. These represent areas where technology solutions can have an impact on the nursing workforce, either on their own or in conjunction with policy, culture, leadership and educational initiatives.
Streamline Nurses’ Workload & Focus Their Efforts on Advanced Care
Our research uncovered very few innovations targeted at reducing or streamlining nurse workload. A starting point for innovation might be to look at how nurses spend their time. In one survey, hospital-based med-surg nurses working the day shift reported spend 86% of their shift on admissions, discharges and medication administration. Charting, both in the EHR and on paper, is another time-consuming effort.
Nurses also want to practice at the “top of their license,” focusing their efforts on providing more advance care to patients. One study found that nurses spend 10% of their time on “delegable and non-nursing activities.” This is an area where technology is starting to play a role. For example, sensor or video-based patient monitoring and engagement technology may be helpful to the nursing staff (e.g., fall prevention, patient engagement, call light management).
Adequate Nurse Staffing
California is the only state in the nation with mandated nurse-to-patient ratios, which means that nurses in most states have little protection from overwhelming patient loads, particularly in times of critical nurse shortages. Adequate nurse staffing not only supports patient safety, it has also been demonstrated to improve nurse job satisfaction and reduce burnout.
The traditional approaches to staffing include using internal float pools (experienced nurses who can work in different types of units), per diem nurses, and travel nurses. Some multi-hospital health systems are evolving their staffing models by creating “in-house” travel nursing opportunities. Other hospitals are increasing the size of their float pool and adding perks like the ability to self-schedule.
Travel nurse staffing has traditionally relied heavily on human capital to recruit, screen, and onboard travel nurses, a process that has helped fill roles, but at a tremendous cost to the system (in 2021, the nurse staffing market was estimated at $11B). The Covid-19 pandemic created opportunities for innovation in travel nurse staffing – a great example of this is HealthQuest portfolio company, Nomad Health, which created a more efficient marketplace for travel nurses that leverages technology to match qualified nurses with open positions.
Ensure nurses are adequately trained to care for their patients
There is a need to expand access or scale existing programs to support continuing education and support the development of new skills, certifications, and advanced degrees. On-the-spot or on demand training might be helpful during a nurse’s shift (e.g., to relearn the steps of an infrequently performed procedure). Solutions may arise at the intersection of education and technology, such as the use of virtual and augmented reality to simulate procedures or test a nurse’s competency in responding to different clinical scenarios.
Retaining Nurses
Retention is a high priority and complex issue for all provider organizations, and it’s an indicator of job satisfaction, workload, stress, compensation, and other factors we’ve discussed. The cost of replacing a registered nurse can range from $22,000 to $64,000. Retention tactics may include improved compensation, retention bonuses, educational loan repayment, leadership opportunities (e.g., charge nurse boot camp), mentorship, advanced coursework, wellness/mental health support programs.
Retaining “new grads” – nurses who have practiced for less than one year – is also a focus area for hospitals, in part because of the especially high rate of turnover in this population. Dignity Health is an example of a health system that has initiated a nurse residency program to support and retain new grads during their challenging first year of work.
If you’re working on solutions for these problems or interested in this space, reach out to our team at HealthQuest.