The staffing crisis in health care reached a farcical extreme last week when ThedaCare, a health system in Wisconsin, filed for a temporary restraining order to block a number of its employees from leaving their jobs and moving to another nearby hospital.
The hospital argued that, because the pandemic had created a shortage of health care workers, it needed the court to block the employees from leaving at least until it was able to come up with a staffing plan.
As medical workers burn out, isolate due to Covid-19, and leave for other professions, the ensuing staffing shortage has gotten so severe that ThedaCare turned to the courts to try to fix it. It was a striking example of how the pandemic has turned the health care labor market upside down, putting nurses and doctors in higher demand than ever even as they must face the most grueling working conditions of their careers.
The workers and the hospital that hired them, Ascension Northeast Wisconsin, countered that ThedaCare could have matched the offers made by Ascension, but didn’t. By declining to match and then failing to come up with a plan before the workers were to set to leave, they argued ThedaCare was attempting to punish the workers for its own shortsightedness.
It appeared for a moment that ThedaCare’s gambit might work: A local judge granted the temporary injunction. But the judge changed course a few days and lifted the order, allowing the workers — members of an interventional radiology and cardiovascular team — to start work at their new employer.
It was all bizarre. I talked to several health care economists and none of them could remember a situation in which one hospital had sued another to prevent their employees from leaving. It runs counter to the way the US has set up its health care system, which largely treats medical workers as free agents, able to pick where they will work at will. If anything, before the pandemic, the opposite happened: Nurses had sued hospitals, arguing that they were colluding to depress wages.
But the pandemic has changed the dynamic. The demand for health care services has grown dramatically but the supply of labor is relatively stagnant. That has allowed health care workers to command better salaries, with many moving to traveling nurse agencies that place workers in high-demand areas for salaries much higher than they would normally make in standard full-time employment.
“What we have seen is a very rapid shift in the balance of power in hospital labor markets,” Hannah Neprash, a health economist at the University of Minnesota, told me. “This is a pretty extreme example of a health system acting out a bit in the face of this totally shaken-up labor market.”
Why the pandemic has turned the medical labor market upside down
On its face, there was nothing unusual about Ascension hiring seven members of ThedaCare’s interventional radiology and cardiovascular team. According to the workers, it was not even a case of poaching; one employee saw the job listing, applied and received an offer, and other members followed suit because the pay and benefits were better.
But even if they had been poached — hired all at once away from their prior employer — that is just how the game is played. Health systems will sometimes recruit entire teams because they have built a rapport with one another that is essential to good medicine. Hospitals will often market themselves as having good teams in a specific area of treatment — stroke care, for example — and they justify the claims based on the amount of experience the workers have together.
“That’s not new behavior in any way at all,” Joanne Spetz, a health economist at the University of California San Francisco, told me. “The poaching and recruitment of full teams happened pre-pandemic.”
But in the last two years, when Covid-19 cases soared, so did the demand for medical workers. In some areas, the number of jobs for certain specialties, such as ICU nurses, increased by more than 300 percent early in the pandemic, according to one study on the health care labor market during Covid-19.
Even with demand soaring, the supply of health care workers couldn’t keep up. In fact, there was some downward pressure on supply. Many medical workers left the profession in the pandemic, burned out by the most difficult working conditions of their lives. There were also new restrictions on medical workers migrating into the United States during the public health emergency, cutting off another source of new workers to meet the demand.
As a result, the market had to compensate as best it could. Hospitals facing the greatest strain were willing to pay the highest rates to meet their demand. Many hospitals resorted to traveling nursing agencies to fill their short-term needs. Because of this extraordinary demand, those positions were being paid salaries exponentially higher than the typical full-time employment salary.
“One way to accommodate that demand is temporary workers moving to where they’re needed at the moment. The wages for these temp workers has gone through the roof,” Joshua Gottlieb, a health care economist at the University of Chicago, told me. “That is normal supply and demand. In the short term, it’s hard for quantities of workers to adjust, so prices have to adjust.”
This effect has been felt most acutely in the practice areas most strained by Covid-19 itself: ICU workers, ER nurses, etc. As Gottlieb and his co-author Avi Zenilman noted in the paper on labor market elasticity, the pandemic had not had appreciable effect on, for example, the wages of labor and delivery nurses.
But the pandemic may have still indirectly contributed to the circumstances that led ThedaCare to make such an extraordinary gambit to try to block employees from leaving the interventional radiology and cardiovascular team, which focuses on minimally invasive procedures for heart- and blood-related conditions.
Hospitals have on the whole fared okay during the pandemic, Spetz told me. There was a dramatic drop in elective procedures in the spring of 2020, but hospitals have largely been able to keep those services operating during subsequent waves. The federal government also provided substantial financial relief to the industry. That is not universally true — some hospitals have been forced to close as a result of Covid-19, concentrated in rural areas that were already struggling before the pandemic — but taken as a whole, the industry has not been as battered as much as was originally feared.
“There are exceptions, but one does not look at the hospital industry and say this is an industry that’s in big trouble,” she said. “It’s doing just fine from a profitability standpoint.”
But the government relief has since run out and the omicron variant put new unexpected pressure on hospital systems, forcing some to cancel or postpone more lucrative lines of services once again. Hospitals might be feeling the financial squeeze now more than ever, unless Congress appropriates another round of financial support.
And this kind of care — interventional radiology — in particular tends to be a moneymaker for hospitals, Neprash pointed out to me.
“They are doing the stuff that is really lucrative,” she said. She wondered what would have happened if members of the labor and delivery or the inpatient psychiatric teams, two less lucrative areas, had walked out. “It would not have put the institution’s revenue on the line.”
The gambit failed. But that they attempted it at all is just a sign of the times for the US health system.