Healthcare hiring boom will bypass hospitals

(This story has been updated with a correction.)

The healthcare sector of the U.S. economy will be hiring at a faster pace in 2015 as a healthier economy and shrinking uninsured population fuel an uptick in demand for routine and discretionary services. The era of hiring restraint—fueled by the recession and the steady rise in high-deductible plans—appears to be ending.

The hiring binge will be uneven, though. The outlook for growth in hospital employment—healthcare's largest employer—is modest at best. Many hospitals will be reducing head counts. Others are holding the line on adding new employees since the federal government plans to keep a tight rein on reimbursement while private insurers are pushing more participation in risk-based contracts. Hospital margins shrank over the past year as rising labor costs ate into a slower-growing top line.

Hiring at outpatient facilities and ambulatory surgical centers, on the other hand, is expected to continue its rapid growth as technological changes and financial pressures push the locus of care from inpatient to outpatient settings. Home healthcare's need for personal aides will continue to mushroom.

And beneath it all, healthcare human resource departments will continue to face a major skills gap, especially when it comes to filling nursing positions. That problem will worsen as hundreds of thousands of aging baby-boomer nurses retire. New delivery models, which are expanding the need for people steeped in population health management, patient outreach and care coordination, exacerbate the problem.

Hiring across healthcare grew at less than 2% a year since the 2009 recession because of a long, anemic recovery. But the pace picked up as 2014 drew to a close. The sector's monthly hiring more than doubled over the course of the year, finishing with 14.9 million jobs, up 2.1% from the end of 2013.

The year-end pace of hiring will likely continue this year, said Ani Turner, deputy director of the Center for Sustainable Health Spending at the Altarum Institute. “I don't see any reason why it's going to drop off,” she said, citing the Patient Protection and Affordable Care Act creating more households with health insurance and a falling unemployment rate giving people more income to spend on healthcare.

But healthcare's largest sector—hospitals—is the outlier. Facing continued financial pressure from public and private payers, hospitals are intensifying their efforts to reduce their largest expense: labor. “I think we're going to see pockets of layoffs,” said Jennifer Stewart, managing director of research and insights at the Advisory Board Co.

It's already happening at Denver-based Catholic Health Initiatives, which in December announced it would eliminate about 1% of its 90,500-person workforce. The 92-hospital system said the move was in response to its poor financial performance. “The CHI workforce reduction was limited to about 1,000 positions,” the system said in a statement.

It's a microcosm of the sectorwide trend. The Bureau of Labor Statistics projects hospital employment will grow by 815,000, or 17%, over the next decade. But overall healthcare employment will grow significantly faster—29.4%—with the much smaller home health and skilled-nursing facility sectors each adding almost as many jobs as hospitals. Hospital employment will fall to 25.5% of the sector's jobs in 2022 compared with 28.2% in 2012.

That leaves hospital recruiters with a new problem—a growing shortage of experienced registered nurses to replace older nurses and to fill slots in care coordination, a fast-growing specialty. The nation will need a million new registered nurses by 2022, according to personnel placement firm NAS Recruitment Innovation.

Carolinas HealthCare, based in Charlotte, N.C., increased by 15% the number of advanced-practice nurses and other practitioners last year as the system worked to expand its primary-care capacity. The number of advanced practitioners Carolinas employs has doubled in the past five years to 741.

“We're focused on meeting our patients where they want to receive assistance,” said Debra Plousha Moore, chief human resources officer for the 22-hospital system.

While it has no overall projection for hiring this year, Carolinas did eliminate 100 executive- and management-level jobs as part of an effort to reduce operating expenses by $110 million annually. “There is clearly increased pressure for hospitals to improve their bottom lines,” said John Klare, a managing director and healthcare practice leader for Navigant Healthcare.

Post-acute-care companies, which continue to expand, will pick up the slack in healthcare hiring. It will be concentrated in the home health field, which grew 4.3% last year to 1.3 million jobs. “You're seeing a trend across the states, especially for the Medicaid populations to … move patients out of skilled-nursing facilities and get them into a home,” said Toby Wann, founder of Nashville-based equity research firm Obsidian Research Group.

FirstLight HomeCare, a Cincinnati-based provider with more than 120 franchises across the country, added 500 caregiver jobs last year and expects to add a similar number this year. “Our outlook for hiring is very bullish, both at new offices and at existing offices,” said CEO Jeff Bevis. “Demand has certainly increased the latter part of 2014 going into 2015 compared to where we were this time last year.”

Skilled-nursing and residential-care facilities—which saw anemic growth of only 1% last year, bringing total employment in the sector to 3.3 million jobs—face a mixed employment picture in 2015. While home care is often touted as being more cost-effective, it increases the demand for nurses and nurses' aides.

“Home care is less efficient than skilled nursing because you have a one-on-one care model,” said Fred Benjamin, chief operating officer at Medicalodges, a Coffeyville, Kan.-based long-term-care provider. “Therefore, you need more people.”

But given the overall shift toward home care—the American Health Care Association, which represents long-term care and post-acute providers, projects 27 million people will be receiving long-term care, including home health services, in 2022, up from 6 million currently—the hiring pace at nursing homes may slow.

“We don't foresee any reductions in our workforce in 2015,” said Gerald Coggin, senior vice president for National Health Corp., a Tennessee-based operator of 73 skilled-nursing facilities in 10 states. “By the end of the year, once we get all of our new building projects completed, we could add approximately 250 to 400 new employees.”

To Obsidian Research's Wann, that translates to very different recruitment pressures on the home health and nursing-care segments of post-acute care. “You probably will see a little pressure to raise wages on the home-health side,” he said. “Conversely, on the skilled-nursing side, I don't see much upward pressure in terms of wage rates in the skilled-nursing facilities.”

The hunt for qualified physicians interested in primary care will continue to dominate the physician employment landscape in 2015. The Bureau of Labor Statistics projects total physician employment will grow only 18% to 814,700 positions in 2022, significantly below healthcare as a whole. But filling those extra slots will be exacerbated by the baby boomer retirement wave among doctors, just as it will be with nurses.

Phillip Miller, vice president of the Irving, Texas-based physician-recruitment firm Merritt Hawkins, notes 66% of oncologists are 55 or older, as are 60% of psychiatrists, 54% of cardiologists and 52% of orthopedic surgeons. “Now that the stock market has rebounded, we do anticipate an unprecedented wave of retirements that the industry is not prepared for,” he said. “It's like a tsunami lurking off shore.”

Yet specialist recruiting isn't the major problem faced by Dr. Matthew Gibb, chief medical officer at the Carle Foundation, an integrated health system with a 393-bed hospital in Urbana, Ill. “We're seeing the biggest difficulties in our primary-care recruiting,” he said. “There's a lot more competition for primary-care physicians both nationally and regionally.”

His solution? Signing bonuses, educational loan repayments and a $10,000 to $20,000 boost in the current starting salary of $190,000.

“We've placed a high emphasis on coordinated care, team-based care and population health,” which is attracting candidates, he said. “The employed model doesn't seem to bother our recruits.”

—Bob Herman, Steven Ross Johnson, Beth Kutscher, Jaimy Lee, Andis Robeznieks and Adam Rubenfire contributed to this report.

Follow Melanie Evans on Twitter: @MHmevans

(This story has been updated to indicate that the American Health Care Association represents long-term care and post-acute providers.)