Nursing Shortages, Surpluses, & Skills · Nursing Shortages, Surpluses, & Skills Factors Driving Uncertainty in California and National Nursing Employment Joanne Spetz, PhD, FAAN

Nursing Shortages, Surpluses, & SkillsFactors Driving Uncertainty in California and National Nursing Employment

Joanne Spetz, PhD, FAANProfessor, Philip R. Lee Institute for Health Policy StudiesAssociate Director for Research, Healthforce Center University of California, San Francisco

May 2018

Health care system challenges

Fragmentation

Health care disparities

Aging and sicker

populationPrimary care

shortage

High costs

2

Presenter

Presentation Notes

The IOM Committee was focused on the role of nursing in addressing the enormous challenges faced by our health care system: fragmentation, health care disparities, an aging and sicker population, a primary care shortage, and skyrocketing costs.

Nursing is key to solving these problems

Nursing is by far the largest health profession

• There are 4 times as many nurses as physicians

Nursing care is related to quality and satisfaction measures that will be tied to value-based payments

Nurses provide care across settings for the “whole person”

Nurses’ generalist education makes them adaptable to new roles and functions

3

Tales of a nursing shortage…

4

Some historical context

Since WW2, there have been cycles of nursing shortages

Cycles of surplus and shortage have been studied by policymakers and economists

Recent history of shortage cycles

• Shortage ~1988-1992

• Surplus ~ 1993-1997

• Shortage ~ 1998-2008 (longest one, perhaps ever)

• Surplus ~ 2009-2013?

• Is there a shortage now?

Why does it seem like we always have shortages of nurses? Interest groups have reasons to like shortages

• More money for medical and nursing schools

• Higher pay

But there may be some truth

• Baby boomers aging

• Smaller subsequent generations

• Residency funding has not increased

• Immigration of nurses and doctors may drop

6

How do we know if there is a shortage?

Reports of shortage

Vacancy rates

Time to recruit for new positions

Econometric demand models

These measures are highly correlated!

Ages of working RNs

Source: Spetz et al., California Survey of RNs, 2012Source: Spetz et al., 2016 California Survey of RNs

0%

5%

10%

15%

20%

25%

<30 years 30-34years

35-39years

40-44years

45-49years

50-54years

55-59years

60-64years

65+ years

1990 1997 2004 2008 2012 2016

Share of RNs employed, by age

Source: Spetz et al., 2016 California Survey of RNs

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

< 30years

30-34years

35-39years

40-44years

45-49years

50-54years

55-59years

60-64years

65+ years

2006 2008 2010 2012 2014 2016

California RN graduations per year

6,158

11,512 11,302

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

10 Source: California Board of Registered Nursing, Annual Schools Reports

Presenter

Presentation Notes

California nearly doubled the number of graduates between 2003-04 and 2009-10. The number of graduates has stayed steady, even through the recession and budget challenges for education programs.

Average income from all nursing positions

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

1990 1993 1997 2004 2006 2008 2010 2012 2014 2016

Nominal 2016 dollars

Source: Spetz et al., California Survey of RNs, 2012Source: Spetz et al., 2016 California Survey of RNs

Shortage ShortageSurplus Recession Recovery / ACA

Some from-the-field data…

UCSF Survey of Chief Nursing Officers

• Web-based survey with option to return paper survey via fax or email

• Fall 2010-Fall 2017

Analyzed alongside…

• Vacancy/turnover data collected by Hospital Association of Southern California

• HealthImpact survey of recently-graduated RNs

12

Perceptions of employers: Overall labor market

37.9%

34.3%

40.1%

18.4%

8.6%

5.5%

4.7%

5.3%

49.7%

55.2%

46.9%

49.0%

32.3%

45.2%

43.9%

30.9%

8.3%

7.6%

6.8%

13.1%

18.7%

19.8%

6.8%

11.8%

4.1%

2.9%

5.6%

12.6%

26.8%

17.1%

23.6%

27.0%

0.6%

6.8%

13.6%

12.4%

20.9%

25.0%

0% 20% 40% 60% 80% 100%

2017

2016

2015

2014

2013

2012

2011

2010High demand: difficult to fill open positionsModerate demand: some difficulty filling open positionsDemand is in balance with supplyDemand is less than supply availableDemand is much less than supply available

13 Source: Chu & Spetz, 2018, Survey of Nurse Employers Fall 2017

Presenter

Presentation Notes

The orange and yellow colors indicate shortage, and the blue shades indicate surplus. There has been a trend from surplus toward shortage since the surveys began in 2010. For the past 2 years, nearly 90% of hospitals indicate they are having at least some difficulty filling open positions.

Differences across regions: Overall RN labor market

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4.2

4.3

4.3

4.1

4.1

4.7

1.0 2.0 3.0 4.0 5.0

Sacramento & North

SF Bay

Central CA

LA

Inland Empire

S. Border

20172016201520142013201220112010

Source: Chu & Spetz, 2018, Survey of Nurse Employers Fall 2017

Presenter

Presentation Notes

There is some variation across regions in perceptions of the labor market This chart presents the average score for each region. A score of 1 indicates an extreme surplus, and a score of 5 is an extreme shortage. A score of 3 is a balanced market. There is a greater perception of shortage among the hospitals that responded to the survey in the Border counties and the Central Valley regions. Across all regions, the perception of shortage rose after 2013, with a particularly sharp rise between 2014 and 2015. The data in 2016 are similar to 2015, with the exception for the Border region. We should note that we had a very low response rate in this region, however, so the data may not be representative.

Differences across regions: Experienced RNs

15

4.2

3.8

4.5

4.3

4.2

4.0

1.00 2.00 3.00 4.00 5.00

Sacramento & North

SF Bay

Central CA

LA

Inland Empire

S. Border

20172016201520142013


Presenter

Presentation Notes

In the past 3 surveys, we’ve asked hospitals to report their perception of the labor market for experienced RNs and new graduate RNs, in addition to their overall perception. This chart has the same scale Across the state, employers perceive a shortage of experienced RNs. These perceptions are strongest in the Border counties, Inland Empire, and Central Valley. The 2015 and 2016 data generally indicate similar degrees of shortage, although the reports of shortage changed the most among respondents from the Border counties. There were fewer respondents from this region than in previous surveys, however, so the data should be viewed with caution. Employers most often noted that they are looking for RNs with experience in the operating room, intensive care, the emergency department, and labor and delivery. These are the same areas of expertise reported as being in short supply in 2015.

Differences across regions: New Grad RNs

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2.6

2.6

2.5

2.1

2.2

1.5

1.0 2.0 3.0 4.0 5.0

Sacramento & North

SF Bay

Central CA

LA

Inland Empire

S. Border

20172016201520142013


Presenter

Presentation Notes

In contrast, here are employers’ perceptions of the labor market for newly-graduated RNs. In most regions of the state, employers perceive a surplus of new graduates. It has improved since 2014 but still exists. In the Central Valley, respondents view the labor market for new graduates as fairly balanced. This perceived surplus is greatest in the Southern Border counties. Even though these reports of surplus are a serious problem for new graduates, it’s worth noting that the labor market is continuing to improve for them.

Rural vs. urban perceptions

4.2 4.2

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Rural Non-Rural

20102011201220132014201520162017

17 Source: Chu & Spetz, 2018, Survey of Nurse Employers Fall 2017

Presenter

Presentation Notes

Rural regions of California consistently face more of a shortage than do urban areas. Rural California has reported at least a bit of a shortage throughout the past five years, and now is in a dire shortage situation, at least for experienced RNs.

RN Vacancies, HASC Survey, 2010 - 2017

3.4%4.0%

3.2%

4.2%4.8%

6.9%

5.9%6.3%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

All RNs

Fall 2010Fall 2011Fall 2012Fall 2013Fall 2014Fall 2015Fall 2016Fall 2017

18Source: Hospital Association of Southern California Quarterly Vacancy & Turnover data

Presenter

Presentation Notes

The highest vacancy rates are for nurses in emergency departments, NICU, and case management. The vacancy rate for new graduates was 6.4% in fall 2016

New Graduate Employment

57% 57% 54%59%

65%74%

85%81%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2010 2011 2012 2013 2014 2015 2016 2017

19 Source: HealthImpact, 2018, Survey of Recent RN Graduates

Presenter

Presentation Notes

3.6% decline in employment over the previous year. Although small, still concerning and needs to be closely monitored when considering the 2.56% margin of error rate calculated in this study. 10.5% increase over previous year in 2016

Some Regional Differences

0%10%20%30%40%50%60%70%80%90%

100%

20162017

20 Source: HealthImpact, 2018, Survey of Recent RN Graduates

Presenter

Presentation Notes

LA/Ventura –2017 – 79%, 2016 - 85.7%, 2015 - 74.6% 7% drop from previous year SF Bay – 2017 – 70.5%, 2016 - 77.7%, 2015 - 63.3 % 7% drop from previous year Orange/Inland Empire – 2017 – 85.8%, 2016 - 87.4%, 2015 - 73% N CA – 2015 – 2017 – 80.6%, 87.6%, 2015 - 79.7% San Diego – 2017 – 81.8%, 2016 - 83.6%, 2015 - 69.6% Central Valley – 2017 – 93.2%, 2016 - 94.7%, 2015 - 86.3% Sacramento – 2017 – 76.4%, 2016 - 79%, 2015 - 76.2% Central Coast – 2017 – 94%, 2016 - 81.8%, 2015 - 63.2% Northern Sacramento Valley – 2017 – 76.5%, 2016 - 94.7%, 2015 - 66.7%

Percent of new hires that were new graduates

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32% 34%29%

33% 32%37%

0%

10%

20%

30%

40%

50%

60%

2012 2013 2014 2015 2016 2017

Source: Hospital Association of Southern California Quarterly Vacancy & Turnover data

Presenter

Presentation Notes

New graduate hiring has accounted for about 30% of total RN hiring over the past few years.

Recruitment of internationally-educated RNs

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6.7%

4.0%

1.9%2.6%

4.2%

5.3% 5.7%

9.7%

0%

2%

4%

6%

8%

10%

12%

2010 2011 2012 2013 2014 2015 2016 2017


A quick lesson in labor economics

23

Supply and demand models tell us about labor market shortagesSupply depends on:

• Number of licensed nurses able to work

• Flow of nurses into labor force (graduations)

• Flow of nurses out of labor force (retirements)

• Decisions of licensed nurses to work

Marginal benefits vs. marginal costs

Wages that can be earned

Family economic situation

Marital status, children, other dependents

Burnout, stress, schedules, interests

# nurses

wageSupply of nurses

A supply model

Note: CA RN wages are higher than in neighboring states

Supply and demand models tell us about labor market shortagesDemand depends on:

• Patient care demand

‒ Population demographics and numbers

‒ Community health

• Health care financing

• Costs of health care inputs

‒ Wages for each group of worker

‒ Costs of capital and other resources

# nurses

wage

Demand for nurses

A demand model

# nurses

wageSupply

Demand

Demand for nursing personnel

Wage is too low – demand exceeds supply

Wage is too high – supply exceeds demand

In perfectly competitive markets, there is no shortage In a “perfect market”, there are no restrictions on supply, demand,

or price

Prices adjust to reach an equilibrium of supply and demand

Short-term “shortages” may occur if prices do not adjust immediately

Why do we see shortages?

Limited number of employers

Delays in wage increases

Licensing regulations

• Delays in producing new nurses

Minimum staffing requirements

Backward-bending labor supply

Backward bending labor supply

Classic model is that wage increases lead to supply increases, uniformly

Competing model: target income

• Once you reach a “target”, if you can stay at the target with fewer hours, you will work less

• Wage increases reduce supply once the target is reached

# nurses

wageSupply

Can we learn anything from forecasts?

National forecasts indicate the market is balanced

• National Center for Health Workforce Analysis, 2017

‒ National surplus of 293,800 RNs by 2030 (8.2%)

‒ Assumes supply = demand in 2014

• Auerbach et al. 2015 – 128,000 RN shortage by 2025 (4%)

California forecasts

• NCHWA 2017 – 44,500 short (11.5%)

• Auerbach et al. 2017 – only 0.7% per capita supply growth in Pacific region

• Spetz 2017 – no shortage but one could emerge if….

Forecasting supply is simple (mostly)

Stock-and-flow model

Forecasting demand is harder

Number of nurses per capita

• What is the target?

‒ National average?

‒ Some arbitrary benchmark?

‒ Estimates of how many providers are needed to provide XYZ?

Demand-based models can be based on economic demand models

• Easier said than done….

Typical forecasts assume:

Wages do not change

Changes in numbers of graduates follow a time trend

Demand does not fundamentally change

• Health workforce demand is based on health care demand

Graduations are expected to hold steady

New enrollment

Projected enrollment from 1 yr

Projected enrollment from 2 yrs

Graduations

2014-2015 13,318 12,162 13,347 11,1192015-2016 13,152 13,110 12,177 11,1912016-2017 13,862 13,236 10,7612017-2018 14,219 10,6272018-2019 11,2002019-2020 11,489

36Source: California Board of Registered Nursing Annual Schools Report, 2015-2016

The range of California supply forecasts (RN FTEs)

37

390,487

242,710

409,597

372,628

389,900

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

Best Supply Forecast Low Supply Forecast High Supply Forecast2015 Forecast HRSA Supply Forecast

Higher forecasted supply in 2017 vs. 2015 due to more nurses moving

into CA & higher employment rates

Source: Spetz, Forecasts of RN Supply & Demand, 2017

California RN supply and demand forecasts, 2017-2035

38

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

Best Supply ForecastLow Supply ForecastNational 25th percentile FTE RNs/populationNational average FTE RNs/populationOSHPD hours per patient day-based forecast

Regional differences are importantSupply & demand forecasts for San Joaquin Valley

39

0

10,000

20,000

30,000

40,000

50,000

60,000

Baseline Supply ForecastLow Supply ForecastDemand: National 25th percentile FTE RNs/popDemand: National average FTE RNs/popDemand: OSHPD hours per patient day-based forecast

Thinking like an economist…

Recession reduced demand

• Fewer patients seeking care

• Incumbent employees not retiring

• Incumbent employees increasing hours

Long-term labor demand will rise

• Retirements impending

• Affordable Care Act

41

Thinking like an economist

If supply drops…

• RNs move away

• Schools shrink

And demand rises…

• Retirements

• Increasing need for health services

We get a new shortage

• Wages rise

• Increased expenses for employers

42

Costs of shortages and turnover

Productivity losses due to instability in the workforce

Premiums paid to temporary RN staff

Losses when beds are closed, patients are deferred

Expense of overtime pay

Training and orientation costs

Patient safety failures when understaffed

43Source: Cheryl Jones, Nursing Outlook, 2004

Policy strategies: EducationNeed to target education growth to areas with greatest shortage

Faculty vacancy rate: 8.1% in 2016-17

• 19.7% of faculty were age 61 years and older

Partner with employers

• Offer electives in the clinical areas of shortage

• Expand partnerships beyond acute care settings

• Recruit students likely to work in underserved areas

• Look for opportunities for distance learning

‒ New Mexico

‒ Bakersfield College

• Include employers in education program content discussions

Policy strategies: Employers

Employers need to support new graduate hiring & education

‒ Less expensive than a shortage

• Don’t rely long-term on travelers

Provide clinical faculty

• Explore joint appointments with nearby education programs

Invite faculty to sit on practice committees

Flexible scheduling for RNs pursuing advanced degrees

Invest in transition to practice/residency programs

Strategically plan to retain nurses who are approaching retirement

• Flexible opportunities to contribute to nursing

Policy strategies: State leaders

Policymakers: Maintain education capacity

• Target growth to shortage regions

• Do not let enrollments drop

‒ Shifts from some areas to others may be needed

Support scholarship programs

Support non-traditional clinical placement settings and use of simulation

Support distance learning strategies

46

Presenter

Presentation Notes

Judee

Check out the UCSF website!http://rnworkforce.ucsf.edu

57

Interactive data displays

57

Also go to the BRN websiteForms & Publications

49

Questions?

Thoughts?

Ideas?

Perspectives?

50

Documents

Nursing Shortages, Surpluses, & Skills · Nursing Shortages, Surpluses, & Skills Factors Driving Uncertainty in California and National Nursing Employment Joanne Spetz, PhD, FAAN