How to design a national strategy to end the healthcare workforce crisis

Signs that the United States is in the midst of a healthcare workforce crisis are everywhere:

• More than 7,000 nurses returned to work in January at two major New York hospitals, having won commitments for higher staffing levels in settling a three-day strike.
• Physician groups, including many from America’s Physician Groups, report steep hurdles and costs in recruiting everyone from medical assistants to physicians.
• Health plans are struggling to build networks with sufficient numbers of behavioral healthcare providers who have advanced training, such as psychiatrists, psychologists and substance use treatment providers.
• A recent McKinsey report predicts clinical labor cost growth of 6% to 10% for 2023-24, a rate two or more times higher than prevailing inflation.^a

A mounting national problem

While exacerbated by the pandemic, the crunch has built for decades. The biggest driver is demographics: By 2029, one in four Americans will be 65 or older, translating into declining labor force participation, including in healthcare.^b Those exiting will doubtless include 660,000 baby boomer registered nurses still working in 2020, but who are expected to retire by 2030.^c Simultaneously, population aging is driving strong demand for healthcare services andpeople to provide them.

National response needed, but remains poorly defined

The complexities of the healthcare labor force mean that balancing supply and demand can’t be left to the marketplace; it requires a national strategy. The closest we have come to having such a strategy was a provision of the 2020 CARES Act, which directed the Secretary of the U.S. Department of Health and Human Services to develop a “comprehensive and coordinated plan” to educate and train the healthcare workforce.

The result so far is thin gruel, but then again, the CARES Act attempted to backfill a void in federal policy.^d The Affordable Care Act in 2010 authorized creation of a National Health Care Workforce Commission to support interagency collaboration to advance health workforce goals, but in the protracted battles over the law that followed, Congress never appropriated funds to operationalize it.

What’s left is a mishmash of uncoordinated, insufficient and broadly dispersed public and private efforts to produce the healthcare workforce that the nation needs.

What’s needed to get there

Creating the most skilled part of that workforce requires major investment in years of education and training. Thus, a national strategy requires the following key areas of focus:

• Lining up adequate numbers of education and training slots, faculty and funding to support students’ education across a range of health professions
• Creating sufficient graduate medical education slots for physicians
• Developing multiple policies to ensure that, once educated and trained, healthcare professionals work at the top of their licenses and are distributed across the country where their skills are needed

Nothing like a strategy with this kind of coordination exists.

Congress has taken some useful steps: In 2021-22, it added Medicare funding for more than 1,000 new graduate medical education slots over five years (including 200 in the 2022 year-end federal spending package, half of which are for psychiatric specialties).

But it’s essential to do more. A workforce strategy should support the nation’s other healthcare goals, including CMS’s target of ensuring that the roughly 30 million enrollees in the traditional Medicare program — as well as most Medicaid enrollees — are in accountable relationships with their providers by 2030.^e This goal requires that vastly more of the U.S. healthcare system embrace value-based payment arrangements and that about 4 million Medicare enrollees annually move into Medicare Shared Savings Plans or similar accountable care entities.^f

Why we need a strategy focused on value

A workforce strategy supporting value-based care would prioritize keeping people as healthy as possible and out of hospitals by expanding the nation’s primary care workforce — not just of physicians, but also of entire teams composed of advance practice providers, behavioral health providers, pharmacists, health coaches and community health workers. The strategy would emphasize interprofessional education and training, expand residency settings beyond hospital walls and into communities and create new positions in care coordination to address health system fragmentation.

Training the next generation of providers for acute inpatient care would still be a priority, particularly as most U.S. hospitals now operate below optimal nurse staffing levels. Even as the number of nursing schools and programs grows, tens of thousands of qualified applicants are turned away annually, primarily due to a shortage of clinical sites and faculty and resource constraints.^g Thus, a national strategy should aim to recruit more diverse nursing students and create new training sites, while improving staffing levels and retention of nurses still willing to work in hospitals.

No time to wait for recalcitrant policymakers

Unfortunately, a U.S. Congress increasingly dominated by those who resist concerted federal action is unlikely to invest in creating and executing a comprehensive national strategy. Even in such an environment, however, U.S. hospitals and health systems leaders should continue to advocate for one.

In the meantime, they will also have to take action on their own, and across multiple fronts, to shape the healthcare workforce — starting with offering the kind of culture where caregivers truly feel capable of doing their best for patients. 

Footnotes

a. Fleron, A., Krishna, A., Singhal, S., The gathering storm: The transformative impact of inflation on the healthcare sector, McKinsey & Co., Sept. 19, 2022.
b. U.S. Bureau of Labor Statistics, “Projections overview and highlights, 2019-29,” September 2020.
c. Buerhaus, P., et al., “Nurse employment during the first fifteen months of the COVID-19 pandemic,” Health Affairs, January 2022.
d. HHS, Report to Congress: Implementation of the health workforce strategic plan, 2022.
e. CMS Innovation Center, “Strategic Direction,” Page last updated Dec. 13, 2022.
f. Cavanaugh, S., Cohen, M.K., Mostashari, F., “We have a national strategy for accountable care, so what’s next?” Health Affairs, June 30, 2022.
g. American Association of Colleges of Nursing, Student Enrollment Surged in U.S. Schools of Nursing in 2020 Despite Challenges Presented by the Pandemic, Annual Survey of Institutions with Baccalaureate and Higher Degree Nursing Programs, April 1, 2021.