Hospitals continue to wrestle with staffing shortages

Hospitals and health systems continue to face staffing challenges, and many say it’s a factor in their inability to run at full capacity.

A solid majority of health systems say they haven’t operated at maximum capacity because they don’t have enough staff, according to a new report released Tuesday by Kaufman Hall, a healthcare consulting firm. Most hospitals and health systems say they have raised pay and employed other strategies to recruit and retain workers, the report found.

Health system executives are also reporting that they are seeing more denials from insurers, and that’s slowing down their economic recovery.

Despite a host of challenges, some hospitals say they are showing signs of improved financial performance after a terrible year in 2022.

Still, hospital leaders around the country have said they are having difficulty finding enough workers, and those sentiments are echoed in Kaufman Hall’s 2023 State of Financial Performance Report. The report includes responses from 106 hospital and health system executives.

Two out of three respondents (66%) said their organizations weren’t running at full capacity at some point over the past year due to staffing shortages, and that figure is the same as last year. And 70% of executives say they are keeping patients in emergency departments due to a lack of staffing or bed capacity.

In addition, 32% of healthcare leaders say they are getting more complaints from patients about access to physicians.

Lance Robinson, managing director at Kaufman Hall, said staffing continues to be a thorny problem.

“Having enough healthcare workforce to meet patient demand continues to be one of the most pressing concerns for hospitals and health systems,” Robinson said in a statement. “It’s clear that for many, this is a long-term issue. The older generation of providers is moving into retirement without a robust talent pipeline in place to fill the gaps retirees leave behind.”

Many hospitals have been struggling to recruit and retain nurses. But hospitals have been struggling to find other critical workers.

Becky Hultberg, the president and CEO of the Hospital Association of Oregon, said in a recent interview with Chief Healthcare Executive® that hospitals in that state are having difficulty finding nurses, along with surgical technicians, laboratory workers and other essential workers.

“I'm not sure that there are many roles in the hospital right now that are easy to fill,” Hultberg said.

On the upside, hospitals are relying less on staffing agencies to hire temporary nurses, the Kaufman Hall report found. Three out of five respondents (60%) said they have been using contract agencies less over the past year. Only 4% said they had higher use of contract agencies over the past year.

The vast majority of hospitals (90%) said they have increased salaries and minimum wages at their facilities. More than three-quarters (77%) of those surveyed said they have offered signing bonuses to hire staff, while 58% said they have provided retention bonuses.

Nearly all respondents (98%) said they have engaged in multiple strategies to hire and keep workers.

Many hospitals and health systems have been embroiled in battles with staff over compensation levels. This month, Kaiser Permanente and its unions reached an agreement on a new contract that would provide 21% raises over the next four years. The deal came together a week after more than 75,000 of the system’s workers went on strike.

A year ago, more than half of all hospitals were reporting negative margins, and the report found many executives said they are seeing improvement. But hospital leaders told Kaufman Hall that they expect it will take a good amount of time before they return to typical operating margins of 3% and 4%.

While the aforementioned staffing shortages are playing a role in modest margins, hospitals and health system executives say the rising number of denials from insurers is emerging as a big issue. Nearly 3 out of 4 executives (73%) said they have experienced an increase in claim denials.

Hospitals also continue to find difficulty in obtaining necessary supplies, with 71% saying they have experienced distribution delays in their supply chain.

Some shortages of drugs and other important supplies are hurting patient care, according to a report released earlier this month by ECRI and the Institute for Safe Medication Practices. Shortages of certain drugs are leading to delays in surgeries and chemotherapy treatments for cancer patients.