The healthcare system is the largest employer in the US. It is a lucrative enterprise with a significant economic impact that continues to attract new businesses, creating opportunities for mergers and acquisitions. Business giants like Amazon, Apple, and Walmart, for example, are exploring opportunities to expand into healthcare.
There are significant challenges to being the largest employer in the US. If COVID-19 has taught the healthcare industry anything, it is that one can never be too prepared for unexpected challenges. As the world changes, so too must the healthcare industry evolve to meet new needs and provide care in new and innovative ways.
Here, we will explore the latest HR trends, learn how businesses are adapting to the changing healthcare industry, and find out what it takes to stay on top by attracting, retaining, and motivating talent, even during talent shortages in healthcare.
The current state of the healthcare industry in the US
The healthcare industry continues to evolve as the world adjusts to a post-pandemic reality. Because of its size and influence, the recovery and growth of the healthcare industry are essential to the US economy’s success.
This pressure has inspired healthcare companies to become innovators, which benefits the economy.
Adjusting healthcare industry operations and supporting the growth of the business starts by building a team of qualified employees. Key to building a strong team is a plan for attracting new talent, retaining current talent, and motivating employees amid industry challenges.
Trends influencing the healthcare labor market
Mercer’s deep experience across the healthcare industry means that we have a knowledge base of employee insights that help us better advise our clients. Ninety percent of healthcare employees understand their job contribution, believe they deliver high-quality services, and consistently go above and beyond the requirements of their jobs. These employees understand the significance of their roles and invest a considerable amount of time and energy into their jobs.
Healthcare workers look forward to going to work, believe they receive the necessary training, and feel a sense of personal accomplishment in their roles.
Healthcare workers expect better compensation, which they want to align with their contribution to their organization and their patients’ care. Most healthcare workers don’t feel they have a healthy work-life balance.
These are issues current healthcare organizations hope to remedy with updated compensation strategies and clinical practices geared to meet their employees’ expectations.
Three talent issues most affecting healthcare
Labor shortages, the high cost of labor, and employee burnout (leading to turnover) are barriers healthcare organizations face in executing their talent strategy.
Labor shortages in healthcare
With insufficient talent to fill the demand for skilled healthcare workers, healthcare is facing extreme labor shortages. Factors contributing to this shortfall include retirement, high-risk working environments, layoffs, employee burnout, and reduced elective procedures. The most significant shortage is among nurses — the industry is 1 million nurses short of demand.
Cost of labor
The median hourly rate for all healthcare providers is significantly increasing. For example, a patient care technician’s hourly rate rose by just 4.5% from 2020 to 2021 and then by 18.5% from 2021 to 2022.
Pay rates for both patient-facing and support or administration roles are seeing similar adjustments, ranging from 6.8% increases to 14.3% increases. These increases are significantly higher than in past years and much more difficult to absorb in healthcare budgets.
With continued labor shortages and increases in the cost of living, the cost of labor will continue to rise.
Burnout of healthcare workers
While the healthcare industry has always had a higher burnout rate than in other industries, it has worsened in recent years as healthcare struggles to meet patient needs with limited staff.
Burnout has become so evident in the healthcare industry that 95% of nurses feel fatigued at the start of their shift, before work even begins. Inadequate staffing, excessive workloads, and emotionally challenging experiences all contribute to one third of nurses reporting experiencing burnout.
How healthcare organizations can respond to talent shortages
What can a healthcare organization do to combat these challenges? Building a custom healthcare compensation plan that suits the budget, creating an appropriate staffing model, and understanding employee demographics can increase employee engagement and maximize the organization’s brand as a potential employer.
Maximize what you have available
Understand your budget in the context of your unique situation. Not all healthcare facilities will have the same amount of resources available. Trying to stick to a best practice or relying on another healthcare organization’s plan won’t necessarily lead to success.
Instead, look at unique and creative ways to use your budget. Understand what you have available now and what might become available throughout the year. Leverage partnerships in the industry or in your community to augment the compensation and rewards you are able to provide employees. You can also reward and support employees through benefits and incentives that might work better with your current budget, like tuition reimbursement programs or referral bonuses.
Prioritize the hourly workforce
A competitive hourly compensation strategy that rewards hourly workers for their contributions is an investment in these employees which shows they’re a crucial part of the organization.
Consider recruiting outside of the healthcare when filling hourly positions that don’t require certifications or specialized training. Hospitality and retail workers have skills that could transfer to healthcare and fill the labor shortages in those roles.
Regularly checking in with your employees allows you to understand their needs and provide support before they reach the point of total burnout. This proactive approach indicates to your employees that they are a priority within the organization, which in turn could reduce your turnover and add to your hourly employees’ satisfaction.
Today’s employees value transparency and clear communication, thanks to the vast amount of readily accessible data available on the internet. You control the story your company tells. Build a strong philosophy, mission, and vision that aligns with your compensation plan and work to integrate and communicate it in everything you do.
The story starts when you attract talent. Decide how transparent you will be on the job description and salary ranges. Sharing your competitive benefits, salary, and incentives encourages qualified talent to apply.
During the interview and negotiation, you will want to offer an attractive yet honest view of the company, which will further demonstrate your commitment to transparency and clear communication.
Once you hire new talent, keep your employees informed about their compensation and benefits and clear on other employee options, like promotions, when to expect pay raises, and how to apply for different benefits.
Use creative hiring strategies
As the labor shortage continues into 2023 and costs continue to rise, healthcare organizations are finding creative hiring solutions to attract and retain talent. Some top practices companies use include tuition reimbursement, sign-on bonuses, and retention bonuses.
Sign-on bonuses are one of the most popular incentives. Knowing the industry standard for each role helps you know the best sign-on bonus amount to attract qualified talent. In 2022, for example, the average maximum sign-on bonus for RNs was $12,105, with an average bonus of $6,378. This is 34% higher than the average maximum bonus and 36% higher than the average sign-on bonus of 2020.
Need a trusted advisor?
Mercer is here to help healthcare leaders prepare for the future through strong pay practices. Our insights, experience, and knowledge base will help you attract and retain the talent you need to overcome future challenges.
Our expertise in healthcare HR, compensation data, and consulting will help you get ahead of your competitors and confidently address recession challenges.
For more information on our Clinical Pay Practices data, view the complete survey.
Gain deeper insights into healthcare compensation with our US IHN: Healthcare Compensation Survey Suite.
Find competitive hourly rates within our Hourly Pay Database.
Contact us if you need help understanding the survey results or are looking for more data on healthcare compensation.
Email us at surveys@Mercer.com or call us at 1-855-286-5302.