How is nursing evolving? (from my email)

From Andrew K. Stein, MR reader:

There’s a massive and massively underreported shift going on right now in hospital nurse staffing that is interesting from a health and labor economics POV.

In normal times, hospitals pride themselves on having little or no use of “agency” nurses — i.e., not relying on nursing staffing companies to fill their bedside nursing slots. But it seems now that most hospitals can’t escape using agency (e.g., travel nurses) for a large plurality of their nursing staff. (In my day job, I talk to hospital Chief Nursing Officers somewhat regularly.)

Agency nurses are very expensive (high wages + agency markup) and also rather disruptive — every new travel nurse needs to learn the local hospital care processes (e.g., IV dressing changes). What you’re paying for as a CNO is the convenience of an on-tap nursing workforce. Pre-COVID, you’d hear agency labor described as an addictive drug — once you get hooked, it’s hard to wean yourself off.

What’s happening in the labor market, I think, is that there are two paths for a bedside nurse in the COVID era — keep working for a hospital or go work for an agency. Agency pay has gotten ridiculously high, so more and more nurses are quitting the local hospital, signing on with the agency, and then going to work for any hospital that can pay the agency’s rates. In exchange for going wherever the highest bidder is, they get huge increases in their take-home pay. No shame in that.

The net effect, I suspect, is that the bargaining power of nursing labor is going way up, though with unequal gains; to benefit, you have to quit your hospital-employed job and be willing to go wherever the agency sends you.

And then your open slot gets backfilled by another agency nurse from somewhere else!

It’s a reinforcing cycle: As nursing shortages rise, nurses increasingly “work short” — i.e., caring for more patients per shift than is reasonable — or work more shifts per week than typical. That daily stress spurs many nurses to either leave the bedside for something more 9-to-5 (think outpatient clinics) or jump into travel nursing to at least get paid for the extra load everyone is being forced to bear right now.

Agencies and travel nurses win, hospitals and hospital-employed nurses lose.

You could also tell the story that the labor supply of nursing has historically already been constrained (though of course now more so), and that nurses have historically been underpaid from a supply-demand perspective, and that now it’s a more liquid market (with agencies acting as market makers), so the price for labor is rising.

I’d be interested if any MR readers have seen data on how big of an effect this is (e.g., hospitals’ average % of agency staff).

I suspect that high use of agency staffing is the new normal, at least until the nursing labor supply grows to meet it — emergency authorization of 100,000 work visas for immigrant nurses? — or we invent robot nurses.


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