Key Takeaways from the 2023 Outlook for Healthcare Workforce Management

Labor shortages, an inflationary market environment, and compressed margins are continuing to make it harder for hospitals and health systems to fill open roles in 2023. They are also, relatedly, driving up costs. Even as revenues rose at most health systems in 2022, costs – especially labor-related expenses – rose faster. Specifically, net operating revenue has increased 15% for U.S. hospitals between 2019 and 2022, but labor expenses grew 22% over the same period. Most health systems will continue facing similar pressures throughout 2023.

The quality of an organization’s workforce management plays an outsized role in navigating workforce and labor-related challenges like these. The market has changed so much in just the past few years; as a result, workforce tactics and tools need to adapt as well. On the plus side, those who do meet these issues head-on will find they are well-positioned to rise above the competition.

So, what can healthcare organizations do in today’s world, not just to survive current challenges, but to find ways to thrive and seize competitive advantage? To help hospitals and healthcare systems improve their workforce management strategies and performance, Hallmark Health Care Solutions has published its 2023 Outlook on Healthcare Workforce Management report.

This report provides comprehensive analysis and insight for healthcare organizations drawn from industry experts on recruitment and training, workforce strategy, and managed staffing. Here are three key findings from our Outlook Report:

1: Let 2023 be the year to accept that the gig workforce is here to stay.

Use of contract labor as a percentage of total labor hours increased tenfold between 2019 and 2022. Even if labor rates manage to stabilize or fall, that much use of contract labor is simply not sustainable. “That kind of labor spend will bankrupt organizations over time,” says Matt Dane, Senior Vice President of Business Development for Einstein II. “The focus for 2023 should involve coming to peace with the need to have a plan for reducing reliance on premium labor.”

One of the best plans: compete with managed service providers directly by tapping into the gig economy yourself.

“One thing hospitals can do now to better position themselves is establish ‘internal agency’ and float pool systems,” Jennifer Mattocks, Senior Vice President for Healthcare at Cielo Talent, a global leader in talent acquisition, told us for the 2023 Outlook Report. By deploying vendor management and internal resource pools powered by the right technology, health systems can avoid the 20-30% markup that MSPs add to bill rates. That way they can successfully lower labor costs while filling openings faster.

2: It’s possible to become the employer of choice for clinicians by offering them the flexibility they want.

Appealing to gig workers is easier said than done, but it’s not nearly as hard as many hospitals fear. In fact, with the right workforce programs and technological support, hospitals can transform themselves into the employer of choice for clinicians by offering them exactly what they want. Right now, that means flexibility. McKinsey’s 2022 American Opportunity Survey found that one of the most common reasons for shifting into gig work is “the autonomy and flexibility” it offers.

With workforce programs that allow nurses and other clinicians to work as little or as much as they want, one shift at a time, health systems can attract talented workers who otherwise wouldn’t be able to take a job with them. It also creates opportunities for otherwise employed nurses looking to pick up extra hours, or for recently retired nurses to continue picking up the occasional shift.

The result is the ability to increase clinical capacity at a lower cost even when nurses are in short supply, as they are likely to remain throughout 2023.

3: Tech-enabled workforce management is more important than ever.

One of the biggest challenges in creating more flexible workforce models is operationalizing and executing them. The right technology and tools are key. “Health systems need to more purposefully embrace technology in 2023 to attract all generations of talent,” says Mattocks.

Virtually everything that health systems need to do to stay competitive requires technology to work effectively, from communicating with prospective nurses about open needs to actually scheduling them to managing credentials and certifications. “Whether improving their decision support capabilities or their ability to interact with their workforce, technology that can provide less friction in performing business tasks will be critical,” says Sean Hartzell, a Principal at ECG Management Consultants.

These takeaways are only the start.

The full HHCS 2023 Outlook for Workforce Management report also examines issues like the following:

• What do health systems need to do to address the human need in preventing nurse burnout and turnover?
• What regulatory changes stand ready to affect nurse hiring and associated labor rates?
• What new competitors are health systems facing in trying to recruit nurses and other providers?
• What do health systems need to think about when evaluating workforce technology?