Nursing Shortage Hits Hospitals Where it Costs

The nursing shortage and continued double-digit cost increases are two issues health care companies will face again this year, said Nancy Weaver, an investment counselor with Stephens Inc.

Attracting and retaining qualified nurses will continue to be a big obstacle for hospitals, Weaver said, adding that there’s “a strong demand and just not enough interest” in the field.

Susan Barrett, president/CEO of Mercy Health System of Northwest Arkansas, said the state is “significantly disadvantaged in the recruitment arena” because of the Medicare reimbursement formula. Physicians in neighboring states are reimbursed as much as 28 percent more for services to Medicare patients.

Managed care and for-profit hospital companies should continue to realize decent profits, despite the double-digit health care cost increases, but nonprofit hospitals will struggle, Weaver said.

The nonprofits tend to lose money in operating costs but earn money from their endowments. Revenue from the endowments are down as hospitals fight for fewer contributions and face bottomed-out interest earnings.

Shortage Statistics:

• There are 126,000 hospital nursing positions unfilled nationwide.

• Fifty-six percent of hospitals report using agency or traveling nurses to fill vacancies.

• It is estimated that by 2020, there will be at least 400,000 fewer nurses available than needed.

• There are approximately 21,000 fewer nursing students today than in 1995.

• Faculty shortages forced nursing schools to turn away 5,000 baccalaureate program applicants in 2001.

Source: Joint Commission on Accreditation of Healthcare Organizations.