The hospital labor market may have permanently turned a corner as wage growth slows while payrolls continue to rise, according to a Setp. 11 Fitch Ratings report.
Average hourly earnings growth for hospital and ambulatory healthcare services employees has slowed for three and four successive months, respectively, according to the report. While wage growth is slowing, payrolls have increased for 19 and 31 consecutive months, respectively.
"Recruitment and retention efforts are reducing job openings but with increased baseline staffing rates that have likely become the new normal," said Richard Park, director of the nonprofit healthcare department for Fitch. "Generally reduced seasonal cases of COVID, flu and RSV have helped to reduce the operational strain on the U.S. healthcare system that resulted from staffing shortages and competition for a limited supply of nurses."
Hospitals are likely to pull additional levers to bolster operations as wages in the acute care sector reset to a higher level, according to Fitch. If labor market improvements continue and COVID-19 hospitalizations do not cause a surge in demand for nurses or disruption of surgical volumes, health systems may be able to manage expense challenges and gradually improve profitability in the coming years.
Healthcare and social assistance job openings fell from a high of 9.3 percent in March 2022 to 7 percent in July 2023, according to the report. While still high, workers quitting healthcare and social assistance jobs fell from a peak of 2.9 percent in May 2023 to 2.3 percent as of July 2023.