Health Care in Critical Care June 19, 2002

The large and growing shortage of nurses is itself a pressing problem and it is also a symptom of the looming healthcare cost crisis. It is no surprise that there is a shortage of nurses, since shortages have been commonplace for over 25 years. Today, over 126,000 nurses are needed to fill hospital vacancies, and over 75% of all hospital personnel vacancies are for nurses.

Historically, nursing shortages in the U.S. were in part cyclical and economically based. A booming economy produced shortages. But this time the problem is structural in nature. The demand for healthcare and for nursing is growing. First, the population is growing. Second, people are living longer. Third, there are more teenagers today engaging in risky teenager behaviors. Fourth, the baby boomers are aging. Finally, advances in technology and treatments stimulate new demand for healthcare. So, demand will remain strong. Unfortunately, the supply of nurses is shrinking rapidly. The supply of nursing in the short run depends upon the number of licensed nurses and how many hours they choose to work. The number of hours nurses, or anyone else, chooses to work is positively related to wages paid.

Unfortunately nurses wages have declined since 1994. The advent of managed care and stricter Medicare reimbursements hurt hospital profitability badly. Since 1/3rd of a typical hospital's budget is spent on nursing salaries, hospitals lowered salaries, increased working hours, and shifted work to non-nurse assistants. The sharp deterioration in nursing pay and conditions of work has resulted in plummeting enrollments in nursing schools. Since 1995 the number of candidates sitting for licensure exams has dropped almost 30%. The nursing workforce is aging just like the rest of the U.S. workforce and today the average age of a licensed nurse is 44. All of this is symptomatic of our health care systems' general problems. Demand is increasing rapidly, costs are rising, and our attempts at reforms, managed care and Medicare reimbursement controls, are not working. More fundamental reforms are needed to better control demand and to provide additional resources. Until we really reform our healthcare system we cannot address the nursing shortage.