The Intensifying Healthcare Labor Shortage
The healthcare labor market is in critical condition.
Healthcare organizations are facing increasing worker shortfalls across the United States in alarming numbers. The effects of this worker shortage can already be intensely felt on the organizational side, with patients increasingly experiencing that things are not as they were years ago. Lightcast data uncovers a healthcare outlook that could have dire consequences for organizations and society at large: Hospitals at capacity risk turning away patients to other places, and wait times for standard procedures stretch beyond days and weeks into months.
Risk Factors
2.05
Occupation Risk Score
Five million healthcare workers (out of roughly 20 million) are over age 55, and the younger population to replace them is dwindling. Simultaneously, an aging population is driving higher demand for services, including geriatric care, chronic disease management, and home health. The population of prime-age workers—those who are established in critical occupations and are not nearing retirement age—is decreasing as stressful working conditions and training barriers to specialized practices and career progression are motivating workers to exit healthcare roles in favor of other paths, which can mean leaving the healthcare industry altogether.
2.46
Market Risk Score
Healthcare organizations can expect to be in geographic competition with one another for talent as workers are in high demand. As hospitals, private practices, labs, and other means of patient care delivery are unable to move locations, it is important to understand demographic composition and migration patterns. In virtually all markets where the healthcare organizations in this study operate, there are more exits happening than entrances, both in terms of a significant decrease in younger workers approaching prime-working age and not enough foreign-born workers moving into these markets, and prime-age workers moving elsewhere.
5.00
Industry Risk Score
Healthcare largely requires in-person interaction; as such, offshoring is not an option to fill labor shortages, nor can AI replace practitioners. Bridging talent gaps in critical roles leaves healthcare organizations with only two options: to focus on local workforce development, or to rely on immigration. Over-reliance on immigration is highly risky—geopolitical legislation is unpredictable. For example, 5% of all nurses in the US emigrated from the Philippines; however, this created a nurse shortage in the Philippines, causing the Philippine government to place strict limits on the number of nurses leaving the country.
3.13
AI Skills Gap Score
In healthcare critical roles—those oriented in care delivery—AI and automation skills are severely lagging. Naturally, care requires human interaction and analysis. However, two-thirds of practitioners spend their time on administrative work, which AI and automation have early potential to alleviate capacity to focus on patient care. If organizations are not taking steps to expose frontline employees to these skills and increase the speed of adoption, the window of opportunity to proactively upskill healthcare workers in a cost effective manner begins to close, and organizations may find themselves paying a premium to bridge these skills gaps.
Healthcare Organizations in the Fortune 1000
In the Workforce Risk Outlook, Lightcast found little correlation between workforce risk exposure and their Fortune 1000 ranking. C-suite leaders must align their workforce strategies with their quadrant position, as opposed to assuming their revenue makes them immune.
High Risk/High Scale to Address: Organizations in this quadrant face significant risk of being disrupted in their industry, but also have the financial resources to reduce their risk if they are proactive. These organizations should invest heavily in reskilling programs, automating routine administrative tasks, retaining talent, and building partnerships with educational institutions.
High Risk/Lower Scale to Address: Organizations within the riskiest quadrant are lower on the competitive ladder and have less resources to address their incoming risk. These organizations must prioritize operational efficiency, focusing on cross-training employees, leveraging telemedicine, and collaboration with larger systems for shared resources, such as mobile clinics or rotating specialists.
Lower Risk/High Scale to Address: Organizations in this quadrant may not face immediate workforce shortages, but should remain proactive to maintain and reduce their exposure to risk. Investing in precision medicine, expanding AI-assisted diagnostics, and enhancing workforce well-being programs can help retain top talent while positioning themselves as innovators.
Lower Risk/Lower Scale to Address: Organizations in this quadrant, if they are proactive, have a chance to be the disruptors. Specifically, they can disrupt industry competitors in the High Risk/High Scale quadrant. These organizations should focus on niche specialties, data-driven insights to improve patient outcomes, and upskilling existing staff to sustain operations without significant financial strain.
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Solving Healthcare Workforce Management
Talent Analyst
Strategies to Address Labor Supply Challenges
Identifying high-risk supply gaps and adopting a proactive approach through a deeper understanding of skills in regional markets is critical. External market data will also be crucial in sourcing talent with adjacent skills to meet care delivery needs, talent from non-healthcare sectors that can fill entry-level roles, and talent in other regions to expand recruiting efforts. Additionally, organizations will need to think ahead of immediate talent acquisition. Taking steps to analyze employee demographics (with particular focus on retirements), turnover and retention rates, and leadership and career paths strengthen long-term retention and internal mobility to combat tight competition.
How Providers Are Sourcing Nurse Talent
A rehabilitative healthcare provider is using Lightcast’s Talent Analyst to map the supply and demand of critical roles, such as registered nurses. With an index of available nurses and job postings, the organization identified high-risk staffing areas and determined appropriate regional compensation. Insights on the external nursing talent market and industry trends unlocked the organization’s ability to implement strategies to build career pathways, which has reduced turnover and improved recruitment and retention. Talent hot-spot data also provided critical insights into talent demands across regions, informing decisions about opening new facilities and balancing staff.
Talent Transform
Keeping Pace with Skills Strategies
Mapping internal roles and skills against the external market to adopt a skills-driven approach is critical for retaining talent that possess skills that are hard to find and expensive to acquire. This requires a data-driven and organized approach to evaluating existing roles, normalizing job architecture, and understanding career paths and disruptive skills. Accurate, real-time data of the skills market enables organizations to adapt to new technologies and ensure employees receive tailored and targeted training and clear career paths, especially in frontline roles. Integrating these insights into workforce planning drives employee retention and stability amongst changing business priorities.
How Hospitals are Developing a Skills-Based Talent Strategy
A regionally-focused hospital network is using Lightcast’s Talent Transform to analyze job roles, profile skills, compensation data, and skills gaps. By first leveraging its internal insights from Workday, the organization is able to enrich internal data against external insights to benchmark roles, skills, and salaries against the broader market. This outside-in approach helped standardize and consolidate roles, which created opportunities to pursue foreign-born talent and available workers in adjacent regions.
