Healthcare jobs go unfilled even as demand for care increases

The healthcare industry has significantly increased its staffing over the past few years, returning overall employment levels to pre-pandemic trend lines and leading other sectors in job growth. It’s a monumental accomplishment, but experts say these gains aren’t nearly enough to offset healthcare’s understaffing woes. 

With employee turnover, clinician retirement and health systems building more facilities to meet the service demands of an aging patient population, industry job openings still vastly outnumber the staff available to fill them. 

Related: Healthcare organizations hiring, retaining more employees

This year, the healthcare industry is expected to continue adding jobs at a rate similar to its 2023 monthly average of 58,000 positions. However, that pace of growth still won’t ensure health systems have an adequate number of clincians or support staff to properly care for patients, said Danny Schmidt, healthcare senior analyst at consultancy RSM. 

“Organizations need to think about how they can collaborate or form new partnerships with value-based care and managed care organizations, and really lean into technology to best meet their demand for services,” Schmidt said. 

While healthcare employment has increased by around 4.6%, or nearly 800,000 jobs, since February 2020, the demand for services based on spending in the industry has increased by 20%, he said.

A slow climb back to the top

Shortly after the start of the pandemic, healthcare facilities experienced a steep drop in employment as temporary closures hit and elective services plummeted. 

“A lot of healthcare work became nonessential and a lot of people were putting off going to the doctor for all sorts of reasons early in the pandemic,” said Elise Gould, senior economist at the Economic Policy Institute, a nonprofit think tank in Washington, D.C.

The ambulatory healthcare services sector saw the biggest initial downturn in April 2020, with employment falling by 16% as dentist office visits and outpatient care appointments stopped due to concerns about spreading COVID-19. 

Hospitals had a smaller but longer slump that lasted through 2021, as clinicians left the workforce in droves, and employers tried to determine the best number of clinicians to meet the demands for care.  

“We still needed those hospital employees to help manage the pandemic and the additional inpatient care that was required as a result,” said Corwin Rhyan, director of research at Altarum, a nonprofit healthcare consulting organization. “[But] there was a huge reduction in the amount of elective care being provided, and individuals were not getting care for optional needs, where they could delay or avoid it.” 

Hiring began to ramp up for hospitals in 2022 and 2023, as more patients started returning for the elective care they postponed, Rhyan said. To keep up the steady employment growth amid a tight labor market, hospitals have increased wages and gotten creative with benefits. 

Likewise, employment growth in the ambulatory care sector since 2021 has been driven by an increase in outpatient services utilization, and individuals returning to the healthcare workforce to be where the jobs are.

“Ambulatory services and hospitals are where the most growth for job gains have been, because healthcare is moving to where patients want to be seen,” Schmidt said. “Organizations are building to meet patient and consumer demand.”

Nursing and residential care sectors still lagging

Although hospital and ambulatory care employment has grown by 3.7% and 9.2% respectively compared with February 2020, employment in the nursing and residential care sector is still 4.6% below pre-pandemic levels—more than 154,000 jobs short, according to the Bureau of Labor Statistics. 

Nursing homes and residential care facilities were arguably hit the hardest by the pandemic, experiencing high rates of COVID-19 spread, employee turnover and a disproportionate number of deaths among their elderly population, decreasing the need for post-acute care services. 

Much of the hiring lag in this sector is also due to more patients seeking alternative sites of care like aging-in-place programs, rather than nursing homes or residential settings, Rhyan said.

Last year was a period of faster employment growth for nursing and residential care facilities, which have been slow to climb above their lowest staffing levels in 2022. At this rate, projections show that the sector won't return to its pre-pandemic employment level until the end of this year or early 2025, Rhyan said. 

Job openings go unfilled

Following a few years of playing catch-up, the healthcare industry is in a stronger position thanks to more effective hiring efforts. But the industry is still consistently falling short when it comes to filling open positions created by industry growth and departing workers. 

In December 2023, the industry had about 1.8 million job openings and added only around 70,000 employees, according to BLS data. 

For some health systems, this means that 2024 will be a year of doing more with less: having more locations, service lines and hours to access clinical services, with fewer employees, said David Mitchell, partner and senior human resources transformation consultant at Mercer. 

“All indications are that the number of open positions and the demand for healthcare workers are only going to get more severe,” Mitchell said. “Between the demands of legislation for minimum coverage, the shortage of labor and the high cost of labor, something's going to have to break at some point.”

Systems trying out AI, other solutions

In response to the challenges, healthcare executives are incentivizing retention while pushing for nurses and physicians to operate at the top of their license to help fill gaps, which may mean clinicians offloading administrative tasks and prioritizing patient care, Mitchell said.

Artificial intelligence may also play a role in lowering the need for additional workers, if the technology is used to help clinicians operate at full efficiency, Schmidt said. 

“We will never see AI replacing jobs,” he said. “But we would expect tools like generative AI to assist physicians and nurses to make better and faster decisions to create better care outcomes for their communities.” 

External factors, including a cooling labor market in other industries and a stabilized interest rate environment, could also help health systems ramp up their hiring, Schmidt said. And with more digital health companies laying off staff, health systems may have more access to a skilled, technology-focused workforce specializing in AI and data analytics. 

Regardless of their current employment levels or existing staffing-ratio mandates, facilities will have to continue hiring, competing with other industries for lower-level healthcare workers and increasing wages to attract talent, Rhyan said.

“It’s an ongoing question of where we're going to find those workers,” he said.