Staffing shortages at hospitals-- cui bono?

Hospitals take aim at staffing agencies as nurses beg for relief

A desire for an end to the pandemic is palpable, especially among the nation’s beleaguered health care workforce. The New York Times led its Sunday paper with a story hailing last week’s small drop in new COVID-19 cases. But the regional press was filled with stories about hospitals struggling to keep up with the steady influx of seriously ill patients.

What’s driving the surge in hospitalizations? While complete (boosted) vaccination is only 50% effective at preventing contraction of the Omicron variant, getting the three-shot regimen is 90% effective at preventing the serious illness that leads to hospitalization or death.

It is now crystal clear that Covid is taking its greatest toll on those who remain unvaccinated, who are driving the extraordinarily high hospitalization rates we’re seeing in many parts of the country. These are the same people who refuse to wear masks or maintain a prudent social distance when in public settings.

More than a third of the population in the U.S. remains unvaccinated and is likely to remain so given the politicization of public health. A new analysis of Centers for Disease Control and Prevention data by the Kaiser Family Foundation shows counties that voted in 2020 for Joe Biden are 65% vaccinated while counties that voted for Trump are only 52% vaccinated as of Jan. 11. Even among the vaccinated, there is a growing spread between those who’ve found their way to obtain boosters shots.

The drumbeat of vaccine opposition by influential conservative voices (the Wall Street Journal editorial page, Fox News and many Republican governors, for instance) guarantees that spread will grow in the coming months. The single most significant correlation with vaccine hesitancy is a person’s political ideology. Future historians will one day marvel at the hypocrisy of people who oppose a woman’s right to choose but march under banners that read, “vaccine mandates violate bodily autonomy.”

Nearing the breaking point

Given those entrenched attitudes and the high unvaccinated rate, it seems clear that Covid will eventually become endemic in the U.S. New variants will emerge in much the same way that seasonal variants of influenza emerge. We shouldn’t forget that the annual flu scourge takes anywhere from 40,000 to 80,000 lives, mostly among the elderly and health compromised – just like COVID.

Though the recent rise in cases has leveled off, the sheer number of new cases is once again taking its toll on the nation’s hospital workforce. Two years into the pandemic, emergency room physicians and nurses are nearing a psychological breaking point.

Turnover is rampant. Nearly one in five health care workers quit their jobs in the past year. A survey by the American Association of Critical-Care Nurses said two-thirds of their members are considering leaving the field. An American Nurses Foundation poll found 21% of nurses plan to leave the field in the next six months and another 29% said they might.

Last week, a hard-hitting opinion video by New York Times journalists Lucy King and Jonah M. Kessel blamed hospital greed for the growing shortages in frontline personnel, which, they said, predated the appearance of Covid-19. “There have never been more licensed nurses in America,” the narration alleged. “Hospitals just aren’t hiring them.”

The video concluded with a call for more state laws limiting the number of patients that any one nurse can be required to handle during his or her shift. California is the only state in the country with such a law, although Gov. Gavin Newsom had to waive its requirements during the first Covid wave as hospitals in the nation’s largest state became overwhelmed with patients.

The opinion piece drew an angry retort from American Hospital Association CEO Rick Pollack, who accused the Times journalists of ignoring the underlying realities. Before the pandemic started, more than half of nurses were 50 and over and almost 30% were 60 or over, with a half million expected to leave the profession by the end of this year.

“Yet, due to significant shortages of faculty, classroom space and clinical training sites, nursing schools actually had to turn away more than 80,000 qualified applicants in 2019,” he wrote. “Overall, hospital employment today is down 91,600 from pre-pandemic levels.”

As for hospital greed and not pandemic stress being the cause of the high turnover and mass exodus, Pollack suggested nurses and the press take a closer look at the nurse staffing industry, which has been doing a booming business during the pandemic.

“Some nurse agencies and other direct care staffing agencies are exploiting the severe workforce shortages during the pandemic by charging uniformly high rates — two or three times pre-pandemic rates — and retaining up to 40% or more of those amounts for themselves,” he charged. “The behavior of some of these staffing agencies suggests widespread coordination and abuse, which is why the AHA and lawmakers have asked federal agencies to investigate possible collusion and price gouging by these staffing agencies.”

Staffing agencies profit

The latest Securities and Exchange filings by the largest publicly-traded staffing agency in the country – Dallas-based AMN Healthcare Services – suggests there may be something to the charge. During 2019, the last full year before the pandemic, the company earned $114 million in profits on $2.2 billion in revenue, a profit margin of 5.2%. But during the first nine months of 2021, AMN earned $211 million on $2.67 billion in revenue, a profit margin of 7.9%.

Meanwhile, hospital margins (at least in the non-profit sector, which houses about 80% of all beds in the U.S.) hovered around 4% all last year if one includes government subsidies under the CARES Act, according to the latest Kaufman Hall report on hospital finances. Their margins would have been 2-3% without the government aid.

Last November, the most recent month covered in the report, “per-patient expenses continued to increase across all measures as hospitals continued to feel the strain of nationwide labor shortages and global supply chain challenges,” the report said. Labor expenses per discharge rose 26.4% compared to November 2019, while non-labor expenses up 20.5%.

It looks like somebody in health care is making out like bandits during the Covid-19 emergency. A closer look at the staffing agencies raking in big fees might be a good place to start looking if Congress is interested in addressing the issue.