Healthcare workforce modernization is needed to align the industry’s future with clinical innovations, economic realities and the population’s health needs. Efforts to this end are a focus in the field’s trade associations; educational institutions; federal, state and local licensing agencies; and organizations operating within the $4.9 trillion U.S. healthcare economy.
Recent federal and state legislation has advanced awareness of the need to assess the availability and preparedness of the expansive healthcare workforce. These efforts are promising, but they may fall short unless the scope of modernization strategy is expanded in a public-private partnership.
The U.S. healthcare industry employed 21.4 million people and accounted for 12.8% of total U.S. employment in 2023 (most recent data available), according to the U.S. Bureau of Labor Statistics. The need for labor is expected to increase to 24 million by 2030, as public health professionals, alternative health providers and technology-enabled self-care management are added. In 2023, 29% of physicians and 15% of nurses were foreign born, almost three-fourths of the workforce were women, two-thirds were non-Hispanic whites, and the majority were older than 50.
Most of the healthcare workforce (70%) are employed in caregiving settings (doctors, nurses, techs, therapists and support staff), and one-third (7.4 million) work in hospitals, per BLS. Wages and benefits account for 60% of operating costs in hospitals, clinics and long-term care settings—increasing faster than inflation and other direct costs since the COVID-19 pandemic.
The industry’s growth and complexity are attributed to three major factors: the aging of the population, the growing prevalence of chronic diseases and an increased demand for clinical innovations that clinicians accept, payers cover and consumers expect.
The population of seniors is expected to triple in the next three decades, according to the U.S. Census Bureau. The “silver tsunami” of baby boomers—those born between 1946–1964—are now all over age 60, further driving the demand for healthcare services. In addition, the prevalence of disease in the U.S. population is expected to increase to 180.4 million (63.5%) by 2030, from 137.3 million (52.1% of the population) in 2020, according to the U.S. Centers for Disease Control and Prevention.
Social services involving food insecurity, loneliness, clean air and safe housing are critical factors in the prevalence and intensity of chronic care demand, necessitating collaboration between state and local public health agencies, licensed provider professions, family caregivers and faith communities. The workforce necessary to address chronic care needs extends well beyond traditional roles in healthcare.
Clinical innovations, such as noninvasive or minimally invasive surgical procedures, and precision diagnostics and therapeutics have changed how, where and by whom care is provided. Coverage determination by health insurers has introduced payment uncertainty into the workforce, and direct-to-consumer social media/advertising for new drugs and devices has increased patient expectations about workforce/patient interactions. Collectively, these outside factors contribute to the workforce’s growing stress and organizational costs for equipping them to adapt.
Current modernization efforts focus primarily on physicians and nurses, including the areas of clinical training, job satisfaction, recruitment and retention, compensation and error avoidance. Using state and federal government funding, education and training programs for licensed professional nurses and physicians have been upgraded to accelerate competency-based performance using technologies and team-based models. Medical schools and residency sponsors have integrated problem-based methodologies and a whole-person well-being (social determinants of health) orientation to patient care to improve preparedness.
Modernization is also addressing workforce compensation—since labor constitutes 60% of operating costs in provider settings. Among hourly workers, the focus is on achieving a livable minimum wage. Among physicians, the focus is on reducing reimbursement cuts by Medicare that have fallen short of medical inflation for the last five years and increasing net compensation in primary care and behavioral health. And there’s growing sensitivity across the industry about executive compensation. In hospitals, for example, from 2023 to 2024, clinicians’ salaries fluctuated between -2.4% to +2.4%, while executives saw an increase of +3.6% to +8.3%, per Sullivan Cotter—the Chicago-based healthcare consulting firm.
And modernization has necessarily addressed stress and burnout among physicians and nurses. Over half of pharmacists, nurses, advanced practice nurses, physicians and administrative personnel have admitted to experiencing burnout symptoms, per the 2023 Well-Being Index. A correlation between burnout, staff effectiveness and patient safety and outcomes in acute and long-term care settings has been shown in academic studies, prompting individual organizations and professional societies to adopt interventions geared toward patient safety, but the issue remains largely unsolved.
Shortages of health professionals in behavioral health, infectious disease, optical services, respiratory therapy and home health in rural and underserved populations are more pronounced than in physician and nursing services. Modernization efforts have focused on funding for scholarships and signing bonuses, flexible work conditions, attractive wages and benefits, debt forgiveness, enhanced administrative support and more. But acute shortages remain in at least one-third of all U.S. counties, and modernization efforts addressing maldistribution have not been as effective as desired.
Here’s what leaders should consider in developing healthcare workforce modernization strategies. Healthcare workforce modernization is needed in every healthcare organization. Significant progress has been made in the areas previously mentioned, but next-generation strategies should consider three more:
Outsourcing partnerships: For many in the healthcare workforce, including the majority of workers in administrative functions, outsourcing to solution providers and/or centralization of administrative functions in multi-facility corporate hubs plays an increasingly important role. Often, applications of artificial intelligence and automation are the rationale for outsourcing partnerships. Consistency of strategy in modernization must necessarily include the policies, procedures, performance evaluation criteria and cultural underpinnings of outsource partners.
Expansion of workforce modernization to new workforce cohorts: A larger group of clinical, administrative and operational personnel should be included in modernization efforts, along with unpaid direct caregivers, practitioners in alternative and complementary health, school clinic operators and public health providers. Modernization focused on physicians and nurses alone is not enough.
Understanding the voice of the customer: Understanding consumer attitudes, complaints, misinformation and expectations is a critical element in workforce modernization. A culture in which patients, members and customers are respected, recognized and heard is vital to workforce stability and sense of purpose.
The healthcare industry is labor intense. Its workforce is being asked to do more with less. Modernization is not arbitrary. It should be the highest priority for every organization in healthcare.
Paul H. Keckley, PhD, is managing editor of The Keckley Report (pkeckley@paulkeckley.com).