The U.S. population is aging. With the oldest baby-boomers already in their mid-70s, the youngest boomers are quickly approaching 60. As older Americans retire from the workforce, they simultaneously require more access to healthcare, whether in hospitals, nursing homes or at-home care.
U.S. Census data shows that 16.8% of the population was 65 or older in 2021 and projects that number will grow to 21% in 2030. Not surprisingly, the Bureau of Labor Statistics (BLS) projects that healthcare will add nearly 2.6 million jobs between 2021 to 2031 – the most of any sector.
In addition to retirement, current talent shortages are also exacerbated by mental and physical burnout in the wake of a global pandemic. A recent Definitive Healthcare report estimates 333,942 healthcare providers left the workforce in 2021. McKinsey estimates a gap of 200,000 to 450,000 nurses available for direct patient care in the US by 2025.
Addressing Labor Shortages through the Extended Workforce
The pandemic forever changed the way organizations engage and manage talent to address critical staffing needs. According to a recent Staffing Industry Analysts (SIA) report, the total number of full-time-equivalent (FTE) contingent workers in the U.S. was 33 million in 2021. This equated to nearly $1.7 trillion of total spend.
The COVID-19 pandemic placed enormous financial pressure on hospitals. An AHA/Kaufman Hall report projected that hospitals lost $54B in net income during the pandemic, even after factoring in relief provided by the CARES Act. A recent update to this report states that more than half of hospitals are projected to have negative margins throughout 2022.
With so much uncertainty in the economy and the labor market, the contingent workforce is a critical strategic imperative for healthcare organizations as they navigate massive talent shortages in 2023 and beyond.
The Strategic Utilization of Contingent Workers
Despite efforts to centralize contingent labor, most integrated delivery networks (IDNs) lack clear visibility into non-FTE labor and cost. However, that paradigm is starting to shift as CHROs, CNOs, CFOs, CPOs and CIOs recognize that their current strategy for contingent workforce management is not sustainable.
Magnit’s Integrated Workforce Management (IWM) platform enables healthcare organizations to strategically manage, optimize and adapt their modern workforce through integrated technology, data and services. Our platform drives value through savings, speed and quality.
Forward-looking health system leaders are now centralizing not just clinical, but also non-clinical, IT, Statement of Work, and locum tenens (physicians) under a single streamlined vendor management system (VMS) technology. When managed in a purely vendor-neutral manner, centralizing all non-FTE labor gives healthcare executives the necessary visibility in exploring innovative models to secure necessary talent while effectively controlling cost.
The Rise of Flexible Staffing Models
We expect to see gradual rises in flexible staffing models to reduce healthcare systems’ dependency on staffing agencies, decrease costs and create pipelines to secure FTEs. These include hospitals reimagining internal float pools and turning to direct sourcing.
With direct sourcing, organizations supplement traditional agency utilization by creating private talent pools of known (alumni, silver medalists, referrals, retirees) and unknown (brand-attracted) talent. These pools are then used to fill requisitions by “direct sourcing” workers. This strategy allows hospitals to regain the balance of power that has been relinquished to external agencies throughout the pandemic. (Read more on direct sourcing.)
Although there can be several nuances to how a direct-sourcing solution is designed and deployed, healthcare organizations (normally with the help of a partner) typically begin by creating their own “private” talent network. As candidates enter the organization’s private talent pool, it becomes a repository for matching candidates to new manager requests for contractor positions.
Done correctly, direct sourcing produces significant cost savings since it provides an alternative to supplier mark-ups. It can also drive many other benefits, including improved talent quality and faster time-to-fill.
As we emerge from the pandemic and learn to accept COVID-19 as part of the “new normal,” the healthcare industry continues to face worker shortages, increased patient volume, and intense financial pressure. The time has come to lean into the extended workforce as a critical tenet of a best-in-class modern labor program.
To learn more about how optimizing your contingent workforce strategy can drive value in the years ahead, download our white paper.