U.S. Hospitals Pushed to Financial Ruin as Nurses Quit During Pandemic
U.S. Hospitals Pushed to Financial Ruin as Nurses Quit En Masse
(Bloomberg) -- The U.S. health-care profession is suffering its own Great Resignation, pushing more hospitals into financial distress just as a winter surge of the coronavirus hits.
Across the country, hospitals are buckling under the strain of nursing shortfalls and the spiraling cost of hiring replacements. For Watsonville Community Hospital on California’s Central Coast, those costs became too much to bear, and contributed to the facility’s bankruptcy this month, according to a person familiar with the situation.
The shortages are most acute at hospitals like Watsonville that rely on government funding to treat poorer patients, since they have fewer resources to compete against the rising cost of keeping staff. The situation adds to the stress facilities have already experienced responding to the early onset of the virus, just as the last of federal aid is being doled out.
“This is like survival stakes,” said Steven Shill, head of the health-care practice at advisory firm BDO USA. Winners are “whoever’s highest on the food chain and who has the biggest checkbook.” The staffing companies -- agencies that provide nurses and other staff on a temporary basis -- are “really, really, really gouging hospitals.”
Saint John’s Episcopal Hospital Chief Executive Officer Jerry Walsh has been on the losing side of those battles, beat out by larger, wealthier systems while laying out thousands of dollars a week more to pay what he calls “exorbitant” rates to outside agencies to keep his hospital properly staffed. St. John’s, in a remote corner of Queens, treats some of the city’s poorest and sickest patients and relies mainly on less-lucrative government-insured patients.
“This is the worst nursing shortage that I have witnessed in my career,” Maureen May, a 30-year veteran of the pediatric ICU and the president of the Pennsylvania Association of Staff Nurses and Allied Professionals, a union, said in an interview.
The issue is emerging in the capital markets, too. Aveanna Healthcare Holdings Inc. went public in April in an effort to expand beyond its leading position in pediatric home health services. But a shortage of caregivers has pummeled its stock, while credit raters gave a debt issue to fund acquisitions low-tier junk level assessments.
Insurers are trying to move patients out of hospitals more quickly due to the staffing shortages and have offered the home-care company premiums to do so, according to an emailed statement from Executive Chairman Rod Windley.
The pain spreads beyond nurses. A report by human-resources firm Mercer this year estimated a shortfall of 3.2 million lower-wage workers, such as nursing assistants and home health aides, by 2026. Employers will also need to hire more than 1.1 million registered nurses in that period, Mercer said. Walsh said his hospital is also struggling to fill lab, respiratory therapist and administrative positions.
The stakes also were evident at a Nov. 12 hearing for bankrupt nursing-home chain Gulf Coast Health Care, with the company pleading for permission to pay $4 million to staffing agencies and other wages before compensating landlords and other creditors with a higher priority for payment. The homes were relying more on staffing from outside agencies to fill shortages, Gulf Coast lawyer David Hurst said, and one agency was threatening to cut off the company in a few days without payment.
Hospital labor costs rose 12.6% in October over the year-ago period, according to consulting firm Kaufman Hall, further eating away at operating margins.
Two-thirds of nurses surveyed by the American Association of Critical-Care Nurses said their experiences during the pandemic have prompted them to consider leaving the field. And 21% of those polled in a study for the American Nurses Foundation said they planned to resign within the next six months. Another 29% said they might.
Longstanding Problem
Unlike some other areas of the economy, in hospitals and other care facilities, staffing crunches have been a longstanding problem that the pandemic and its fallout have exacerbated.
“When we talk to our nurses, they are screaming about safe staffing,” said Scott Palmer, a spokesman for the Oregon Nurses Association, the result of years of underinvestment in everything from wages to training.
Another issue is the disconnect between wages for permanent nursing positions, which haven’t budged much, and temporary rates.
“Permanent jobs aren’t compelling enough for people to stay,” said Parth Bhakta, chief executive officer of digital health-care staffing company Vivian, whose website highlights traveling nurse positions that pay as much as $13,000 a week. And why work in the ICU for $30 an hour when you can take a retail job for $25?
Bhakta predicts the strain on weaker systems means federal aid helping hospitals cope with Covid-19 will have to be extended.
“With aid ending, it’s going to be difficult to survive, and ultimately, the government is going to have to continue to step in,” he said.
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