The State of Staffing: Healthcare Demand Adjusting

Making Sense of Post-Pandemic Healthcare Staffing

Published on Jul 25, 2023

Updated on Sep 19, 2023

Written by Elaine Pierson & Ron Hetrick

healthcare staffing demand

Over the last three years, healthcare staffing companies have experienced unprecedented highs. But now, the market is trying to find its way back to a state of normalcy. 

As we seek to make sense of what's happened, where we are now, and where we’re headed in staffing, we continue our series, The State of Staffing. First, we tackled the truth about IT demand, followed by a deeper look into light industrial’s shifting landscape. Next up? A sector that’s touched every American in recent years: Healthcare. 

During the pandemic, demand for healthcare workers skyrocketed. Even after Covid faded, demand to fill these roles remained. With about 100,000 nurses leaving the workforce during the pandemic, hospitals were increasingly desperate. Like never before, they turned to staffing services to meet their needs and were willing to pay high prices. Prices well above any level the market could sustain. 

Now, having to live with the aftermath of this spending spree, hospitals are being forced to take a step back. The bill rates that staffing agencies were able to secure from numerous bidders are no longer realistic for many healthcare providers, so clients aren’t using their services like they were. However, demand for healthcare workers isn’t slowing down. It will only increase as Baby Boomers need additional care as they age and hospital staffing shortages persist. 

So, how can staffing companies respond? Let’s consider what happened during the pandemic and observe where we stand today. 

17 top healthcare occupations
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When hospitals couldn’t find workers to fill critical roles during the height of the pandemic, they turned to staffing companies. From September of 2021 to August of 2022, there was a 343% increase in postings by staffing companies for key healthcare roles (see image). During that same time period, advertised wages increased across the board by 56.7% for these roles. 

Advertised wage for healthcare roles
Source: Lightcast Analyst, 2023

There was over a 600% increase in demand for travel nurses in just two years. 

Faced with the triple impact of internal quits, incredible demand, and a sharp decline in immigration, hospitals were desperate for workers, namely travel nurses. They looked within US borders for anyone that would come to them, largely taking them from other hospitals in equal need who then searched for more travel nurses. In response, demand for travel nurses accelerated rapidly before peaking in January of 2023. Postings surged, leading to an unbelievable 400% revenue growth for travel nursing staffing companies between 2020 and 2022. But now, this demand has cooled, though not entirely.

travel nursing demand surge
Source: Lightcast Analyst, 2023

Hospitals are still desperate for workers, but they can’t pay the same price as before. 

During the pandemic, job postings from healthcare staffing companies were listing extraordinary pay rates. Over the course of a year, their advertised wages for Registered Nurses increased by 127.6%, with the median advertised wage topping out at $205,000 in October 2021. However, they have since seen a steady decline and are currently leveling out at about $115,000. When we look at postings by non-staffing companies for RNs during that same time period (October 2020 to October 2021), advertised wages only increased by 6.5%. 

This created an uncomfortable difference between travel and local nurses, one that hospitals are desperately trying to fix.  In the last year, wages posted by non-staffing companies have continued to see an increasing trend, but those posted by staffing agencies have steadily declined. 

What happened during the pandemic wasn’t sustainable, but postings and wage trends are still much higher than they’ve been historically. 

When we compare what’s currently happening to historical trends, job postings for our select healthcare roles are still at levels 300% higher than they were prior to the pandemic. There are currently about 160,000 postings for our set of healthcare roles in the US, with about three-quarters of them by non-staffing companies. Isolating Registered Nurses, there are roughly 80,000 unique job postings for these roles, and about two-thirds of those are from non-staffing companies. 

Unlike many sectors that experience declines because their customers no longer need as many workers, healthcare staffing is seeing their clients in almost constant desperation. So, why aren’t hospitals using staffing services to fill these roles?    

As hospitals look to save on costs, they are still facing staffing shortages and are seeking innovative ways to find and retain workers. 

After taking a reactive approach to staffing needs, many hospital systems have started to be more proactive with their people strategy. Not willing to continue paying the high prices they were backed into over the last couple of years, more health systems have started to create internal staffing agencies. Universally, staffing challenges are top of mind for health system leaders, with 85% saying these concerns would greatly affect their 2023 strategy. So, even as healthcare employers are hesitant to use staffing agencies today, there are significant opportunities to be had in the future with the right approach. 

In the wake of the pandemic and the exorbitant bill and pay rates it supported, it’s important to recognize those times have passed and to embrace a new mindset. 

Healthcare staffing companies should reassess their pricing models and seek to return to strategies that were effective before the global crisis. While healthcare staffing spend rose to extremely profitable levels, it’s important to consider the bigger picture. The incredible need for healthcare workers that accelerated over the past several years came at a great cost. Being a healthcare worker is more difficult now than ever, and those who were on the frontlines are more stressed, burnt out, and seeking retirement. Hospitals are feeling the pain associated with these circumstances. They need strategic partners to help them envision solutions that ease their talent shortages in the long run and rates that help maintain profitability. Collectively, stakeholders will have to be in agreement when it comes to reaching reasonable travel nursing wage rates.

With data and staffing insights on wage trends, job postings, and talent supply, staffing companies can approach hospitals as these strategic partners to help solve their most crucial problems. Looking at pricing structures with a data-backed perspective will allow for more collaboration and innovation when it comes to the future of healthcare staffing. And with a cooperative approach, staffing companies can ensure a more sustainable and mutually beneficial future with their clients.

If you enjoyed reading this blog, check out the latest in our State of Staffing series where we dive into professional and office staffing trends!

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