The healthcare labor pool continued its incremental crawl back to pre-pandemic trends during the waning months of 2023 with higher payrolls and flattening wage growth, per data from the U.S. Bureau of Labor Statistics and Fitch Ratings.
Still, hospitals and ambulatory providers are facing an uphill battle and should expect “a protracted period of inflationary cost increases,” the credit ratings agency wrote in a recent bulletin notice.
“Hospital workers remain in a favorable position in a hypercompetitive landscape for personnel against a backdrop of higher cost of living and the exit/early retirement of some skilled labor from the workforce,” Fitch Ratings Director Richard Park said in a statement. “Labor tensions may put more pressure on wages and subsequently make managing costs more difficult for health systems over time as union contract negotiations are occurring during a period of increased bargaining power for workers.”
The healthcare sector added 77,000 jobs in November, which is up from the sector's monthly average of about 54,000 jobs, government data show. Hospitals alone added about 24,000 jobs in November while ambulatory care services added 36,000.
Hospital and ambulatory payrolls have been on the rise for 22 and 34 consecutive months as of November, Fitch said, and now sit 3.5% and 9% above the low of February 2020.
Hospitals have averaged a monthly gain of about 16,000 positions during the past year, which is up from the prior year’s average of 10,500 additions, Fitch wrote. For ambulatory care settings, the most recent year averaged 27,000 additions a month while the prior year brought almost 25,000 average monthly additions.
Meanwhile, average hourly earnings for hospital employees “has remained relatively flat” at 4% year over year (YoY) between June and October, as opposed to the 4.8% YoY of January to May, Fitch wrote. Both of those are far above the 2.3% average of the 2010s.
Ambulatory average hourly earnings have similarly held steady in recent months, at 3.1% YoY from June to October. This is up from 3.6% YoY between January and May as well as the 2.4% of the 2010s.
Though the situation has become less volatile overall, the healthcare sector’s ongoing labor struggles led Fitch to reiterate its recent claim that “managing salary, wages and benefits is the single most meaningful differentiator between operational success and failure in the current environment.”
Earlier this month, the ratings agency predicted that labor spending would remain pressured “for the foreseeable future,” and extend beyond just the hard-hit nursing pool. These and other industry factors led the group to reiterate its “deteriorating” outlook for the nonprofit hospital sector.