Healthcare Hunkers Down to Weather Storm

We've been talking for months and years about a shortage of nurses and other healthcare workers. Well, that may change—at least for the short term. A couple of new reports by Longbow Research in Cleveland indicate that the recession has created a "bunker mentality" among nurses and other healthcare workers. The new data show that—like everyone else—nurses and other healthcare workers are digging in, putting their heads down, and staying put until the storm passes.

Using November figures from the Bureau of Labor Statistics—the latest available—the Longbow report shows that hospital payrolls, hiring, and turnover are all slowing considerably, while hospital employees are working a slightly longer week. Not counting executives and administrators, the hospital industry hired 123,400 "production" workers in the 12 months preceding November, 2008, an average of 10,283 new jobs per month. That represents job growth of 3.1% in a sector that numbers 4.05 million workers.

However, job growth tapered off in November, with only 6,900 new jobs reported for the month. "We are still seeing good growth year-over-year for hospital payrolls, but it does appear that we are seeing some softening in that growth rate," says David Bachman, an analyst with Longbow.

Even with slowing growth, BLS statistics show that the hospital and healthcare sectors are still outperforming the rest of the labor force as measured by jobs created and rising payrolls. Hospital payrolls increased 3% for the 12-month period, as compared with a 1.8% decline for the rest of the non-farm labor payrolls.

In a separate bimonthly survey of 33 nurse-staffing firms in 19 states, Longbow found that 73% of the companies reported year-over-year declines in the demand for temporary nurses, while only 9% reported an increase in demand. More than half of the survey staffing companies had an increased supply in nurses and therapists, while demand for allied staff is flat. Texas appears to be the only area where temp demand remains high.

"When we look at temporary staffing, that industry's business is falling off the charts," Bachman says. "Hospital nurses working in this economic environment are often the second wage-earner in the family, and they're not leaving. Right now, they're thinking 'we really need that extra income so we are going to wait this out.'"

In addition, hospitals are seeing reduced patient volumes, which reduces staffing demands. Declining patient volumes has particularly impacted hospitals in winter havens like Arizona and Florida. "We're hearing, at least anecdotally, that hospitals are seeing fewer of those season's residents because people aren't traveling," Bachman says.

Here's an oddity: Historically, hospital payrolls are counter-cyclical with the non-farm labor market. During tough economic times, hospital payrolls grow while the non-farm labor payroll shrinks. During prosperous times, hospital payrolls drop while the non-labor payroll grows. "No one has given me a crisp explanation," Bachman says. "It might be that healthcare is seen as a safe haven and a service that will always be needed. When other jobs go away people turn to healthcare jobs, which I guess makes some intuitive sense."

"Go back and look at '98 and '99 before the tech bubble burst and everybody was feeling like their stock portfolios were doing great. We saw the rate of nurses quitting the business rise pretty substantially," Bachman says.

It seems like the only winner in this dire portrait of economic gloom and misery are the chipper folks in the human resources department. "For HR, this is all a benefit," Bachman says. "Turnover is a costly for hospitals. To the extent that they are holding on to trained, experienced staff and not having to replace them, that's a positive. Reduced turnover means they've also got less money going out the door for temporary workers, so that should give them some relief on the payroll front."

I finally figured out what HR stands for: Happy Recession!