A depleted workforce and no end in sight: An inside look at America’s ailing health care industry

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America’s pandemic response has suffered from a well-publicized lack of PPE, of tests, of contact tracers. But ten months into the global pandemic, with COVID cases and hospitalizations reaching staggering new levels across the county, the most dire and difficult-to-address of shortages is only getting worse—that of the health care workers needed to tend to patients.

As CEO of AMN Healthcare, America’s largest health care staffing company, Susan Salka finds herself on both sides of this crisis, sending in AMN’s reinforcements to short-staffed facilities—the company has made more than 50,000 placements this year—while scrambling to find a supply of ready health care workers to fill the remaining gaps.

Susan Salka, CEO of AMN Healthcare.
Courtesy of AMN Healthcare

Salka, a 30-year veteran of the Texas-based company, which recorded $2.2 billion in revenue in 2019, spoke with Fortune last week about the current situation, the challenges of the pandemic, and the long-term outlook for the health care workforce. Spoiler alert: COVID vaccines won’t solve everything.

This interview has been edited for clarity and length.

Fortune: You run the largest health care staffing firm in the country. Can you tell us about AMN and its history?

Salka: I’ve been fortunate to be here over 30 years and when I started, it was a travel nurse company. That’s still the largest part of our business. That segment of the industry has grown, but back then it was just a cottage industry. There were a bunch of small companies that were traveling nurses around the country to where they were needed most based on shortages or seasonal needs. We grew to be the largest travel nurse company in the industry, but our clients were really wanting more from us, and we were seeing the need to be a more diversified and holistic health care staffing company. We either de novo invested in or acquired other healthcare disciplines such as physician staffing, allied staffing, pharmacists, healthcare leaders, billing, coding, revenue cycle, etc.

Right now, most companies of any size in our industry are diversified, but we were the first mover to move from being a single service-single product company into a multi-discipline, diversified healthcare staffing company. That certainly served us very well in the industry and further expanded our leadership position. In 2010, we launched into a journey of providing different workforce solutions and technology solutions to help [clients] be more efficient at how they contract their contingent staff and hire and manage their permanent staff—things like managed services programs and scheduling, predictive analytics, and then more recently, telehealth options that create a virtual workforce through things like remote language interpretation or remote speech therapy services to students in schools.

I think of our evolution as kind of going through these important step changes in response to the market but also in response to the practicality of you can’t have healthcare workers everywhere they’re needed physically. Wherever you can introduce technology and telehealth or just create efficiencies so that the precious staff that they have is most efficient, that’s what we’re trying to do.

What are workforce solutions—is that outsourcing?

Previously and still for some hospitals or systems, they’ll work with 50 or 100 different agencies that provide contingent staff. A managed services provider contract centralizes that function with an outsourced partner like AMN. We handle all of the procurement and billing and contracting and credentialing for all the contingent staff. We’ve got big clients like Kaiser and other large systems that just outsource all of their contingent staffing to us—primarily clinical—but we do partner with Randstad for the non-clinical part for what their needs might be. The hospital then has a sort of centralized way of ensuring that they’ve got good processes and consistency of the quality of clinicians that are coming through their doors, even if they have multiple settings, which of course, these days any decent sized system has hospitals, they have clinics, they have home health. Their workforce needs are much more diverse than they were maybe 20 years ago.

What has business been like during the pandemic?

When it all started to flare up in March or late February, I don’t think anyone expected it would be at the levels that we saw the in next few months or now. We took all the precautions you’d expect and transferred our own corporate employees to work from home. A little over 3,000 corporate employees moved to remote work, and that actually went fairly seamlessly.

As the country shut down, at non-COVID related healthcare settings we saw an immediate decline in all of our businesses, except for nursing and [a few specialties] because there just weren’t procedures going on, and if you weren’t a patient related to COVID, they don’t want you walking through the door for anything. We felt that impact, and some of our business declined as much as 20, 30, 40%. Nursing spiked up, and some areas like respiratory therapists and lab techs also spiked up a bit, but it wasn’t enough to fully make up for some of the declines in the other businesses.

We saw that first wave, and it was very concentrated in certain states like New York and Washington and certain areas, and then that quickly fell off, which was, of course, wonderful. We thought it was sort of behind us and that we might have a few little hot spots pop up. We were actually anticipating that our business would then start to recover in the third quarter slowly, but it would kind of return along with volumes coming back into the health care system. What happened was that, yes, the volume started to come back in non-acute settings and in more normal patient flows, but it was slow. On top of that, of course, the COVID spikes started to emerge across the country. What’s been very different between July through now versus the first wave, it that the first way was very concentrated in a few states. Now, it’s kind of everywhere.

What demand looks like now versus a year ago, versus what it looked like in the March, April, May timeframe? It’s considerably different. And that changes the dynamic a lot. First of all, the sheer numbers are enormous. In terms of the number of open positions that we have for nurses, they are roughly four times the levels that we saw during the first phase of the pandemic. Then it was pretty much all just ICU and COVID-related, now it’s that plus just normal positions that can’t get filled.

The other thing is that it’s regionally everywhere. I think there’s only three or four states that don’t have demand levels higher than the prior year. And in some areas, it’s twice as much as prior years. It’s very difficult to move that many people around the country that quickly. Our industry is doing a great job overall, but there’s just not enough clinicians. It’s very difficult to make sure that we’re just doing all that we can, but also realizing that we in our industry can’t possibly fill all the jobs out there.

Map shows growth in demand for traveling nurses

There were shortages of health care workers before the pandemic. Why is that?

We were already feeling the pains of what was expected to be the worst shortage the country has ever seen for nurses and really all health care professionals. It’s driven by the demand increasing for health care services because of an aging population. But also, the availability of professionals is not keeping up with that demand because you have an aging clinical workforce as well. This is one of those things that if you’re not in health care, you probably wouldn’t realize that the average age of nurses and physicians is going up.

We don’t have enough capacity in our schools and residency programs to bring more candidates through to graduate, so we’re hitting this point where demand was rising significantly, even pre-pandemic, and the supply of clinicians was starting to plateau and at some point would even be declining with an aging clinical population. The shortages were already very difficult. The pandemic accelerated that by many years because many existing nurses [have decided] to not return to the workforce during the pandemic, or maybe they just have to stay home, particularly women—over 90% of nurses are still women—to oversee childcare and online education and/or just not wanting to take the risk of getting exposed and having to quarantine or worse yet, get their family sick. They’re opting not to come back to work. And in fact, some of the older nurses, say in their 50s, are choosing to retire. The vacancy rates at hospitals right now is through the roof; they’re the highest that many of our clients have seen in some time because their existing nurses are burned out or they’re just not wanting to come back. As volumes are rising, even if they’re not at full capacity—this is the amazing thing, most hospitals aren’t at full capacity—they might be at 70% or 80% capacity, but even with that, their demand for health care workers is through the roof.

We’re going to have a lingering effect of this accelerated shortage for many years to come. It’s a big concern of nurse executives and educators that we’ve suddenly lost some portion of the health care workforce, nurses in particular, that won’t be returning. It is true for physicians, as well. We had made such great progress as a country in having more women going into medicine. We were at the point where about half the new residents coming into the workforce were women. Women were working less hours because they often had kids at home and wanted to work a part-time schedule, but this has just caused us to take many steps backwards in terms of women in medicine.

Do we have data yet on the numbers leaving the workforce?

I think it is it too early to know where it’s going to settle. Real time data is not really available. What I’m sharing with you is more anecdotal. It is why, for example, why our demand for travel nurses is the highest that we’ve ever seen historically. It’s significantly higher than when the pandemic started. It’s more than double what our demand was last year. That, I think, is an indicator of the severity because, again, most healthcare systems are saying they’re not full in terms of volumes, but they just can’t get the staff. They can’t get their own staff to come back.

How does travel nursing work?

Most of our clinicians are travelers. We do local staffing as well, but most of the time, the local nurses are already working with their local hospitals on a per diem basis or maybe they’re in their float pools. Our bigger business and value add is to bring clinicians in from outside the region, maybe across state lines. During the pandemic, one of the positive things that has happened is states have made [regulatory] changes in in terms of their willingness to accept a license from another state. Most people are surprised that licensure is still controlled at a state level. There isn’t a national licensure for nurses: If you’re a nurse from Nebraska, and you want to go work in Texas, you have to get a new license when you go to Texas. There is a state compact where they will reciprocate and recognize parts of their license or education, but you still usually have to go through a process and it takes weeks even if they are part of that compact. We needed to get the states to put in place new rules on a temporary basis, at least, that would allow you to just literally walk across state lines without having to go through multiple weeks of processing.  That has helped to move people around and mobilize them more quickly.

We have hundreds of thousands of clinicians in our database, and then we’re recruiting more every day. We have actually very high numbers of new applicants coming in, but still, you’ve got to have the right job in the right place, and some people sign up, and then they change their mind or something else changes in their life that causes them to not want to go. This year, we have made over 50,000 placements, some of those are duplicate people that maybe took a couple of assignments, but that gives you context of how many people we’re moving around. We place what we can, but for our managed services clients, we also subcontract with other companies. It’s part of the value proposition to the hospital that they don’t have to deal with 50 different agencies: They just deal with us, and then we deal with all of the subcontractors. We have an excellent network of affiliate vendors, essentially competitors who have sub-contracted with us. That makes it more streamlined for them to be able to just get the orders, recruit the clinicians, get them placed, and do what they do best in getting clinicians where they’re needed most. And they don’t have the client side of the equation we were handling that for them. We had a lot of help from our affiliate vendors this year in making sure that we’re doing all we can.

What type of person is a travel clinician? Do they tend to have a full-time job?

We’re always recruiting for candidates that might want to work now or down the road. Sometimes they want to work just one assignment. Sometimes they want to make it a full-time career of moving around and taking three-month assignments in different locations. Someone may have signed up with us two years ago and never traveled and took a job with us for some reason, but it doesn’t mean that they aren’t still a viable candidate. Most of them have some kind of full-time job.

If they’re signing up for a travel job, they’re either leaving a permanent job or they’re already traveling with another organization. In a few cases, they might have been retired and decided they want to jump back into the workforce. Some of the people that we have working now are what we call lapsed travelers, where they took an assignment with us previously, let’s say two or three years ago, and maybe they went into a permanent job and now, they’ve decided they want to take a travel assignment again. We are always re-recruiting people to some extent. You have your brand new, never traveled with us before, then you have your lapsed travelers, and then you have people that kind of make a career out of this.

Are you able to meet demand? What does that mean for the health care system? How bad is the situation?

We can’t meet all of the demand—it’s not just us, but as an industry. I don’t think every job is getting filled. We do better, I think, the best within the industry. We have that commitment to our clients—one of the things about being a managed service provider is we make guarantees around our fill rates and how much of the demand we think that we can meet and fill. That’s very challenged right now. We feel quite confident we have higher fill rates than our competitors, but for those that go unfilled, it depends on the position—either the hospital has to take the patients and spread them over fewer nurses, which is not ideal because at some point that just burns out the nurses that much more, or a hospital will have patients transferred to another facility if they don’t have proper staffing.

Just anecdotally, I was having dinner with a friend who’s a surgeon here in Dallas, and he was talking about a patient he had to do eye surgery on, and they had to call eight different hospitals before they could find a place where they had room not because a bed wasn’t available—but because they didn’t have staff to be able to open the bed. You can have a bed, and you can have equipment, but if you don’t have enough staff, then you have to route that patient to another facility.

Are you surprised by how this has played out and just how dire the staffing situation has become?

I could have never foreseen the pandemic and how severe it would be and all the havoc it would wreak within the health care system. However, it’s not surprising to me that the shortage is as severe as it is knowing what we know about how bad the shortage already was. Nurses in particular are those frontline health care heroes that are really put in the line of fire, as you might say, of the pandemic. And so, the burnout that’s creating and the stress that that’s creating on the workforce, I’m not surprised that it is creating such a severe shortage. It’s not going to end overnight.

We just actually had a discussion with a couple of large health care system leaders who are responsible for their staffing. They were asked the question about the vaccine and whether that will create some immediate relief for the workforce. They said no, they don’t believe it will, because their existing nurses who might get the vaccine are burned out, and they need to give them some time to recuperate. Not every clinician will want to come back. They think that this shortage environment will last well beyond 2021. And to some degree, there will be a permanent loss of the workforce.

Do you agree with that view?

I agree. I’ve heard this from other healthcare executives and leaders. Obviously, [COVID vaccines] are going to be incredibly helpful but as far as the clinical workforce, it’s not going to be a quick fix to all of the underlying issues.

At AMN, and I personally feel this way, we feel as if we’ve trained our whole careers for this moment. We just never knew it would come and, of course, wished it hadn’t. But the things that we’re doing now to help during the pandemic are the things that we’ve been training and improving and doing well for many, many years, and now is when it matters most. We feel honored, to be able to do our part. We’re helping get these clinicians to where they’re so desperately needed most, supporting them in every way that we can. Our work matters more now than it ever has before. And I can say that, with over 30 years in this business, this is the most important year for this company.

We’ve heard lots of stories of health care workers struggling to get adequate PPE and tests when they need them. What have you observed with your workforce? Is it the hospital’s responsibility, or AMN’s, to take care of these needs?

Regarding PPE, it really is the hospital’s primary responsibility. Of course, we’re communicating with them to make sure that if there’s anything that we can do to be helpful, we’re doing that, but hospitals usually want to and, in fact, insist on providing their own PPE. They might have particular types of equipment that they want people to use; they don’t necessarily want clinicians to always be bringing in their own PPE. So we’re, we’re generally just trying to be in a supportive position. Obviously, if we can be helpful in getting them PPE—we’ve sent masks and gowns and goggles to clients trying to make sure they have what they need. We’ve sent some items to our clinicians directly, as well. But the primary responsibility really does reside with the facility to make sure that their workers have the appropriate PPE.

We do communicate with our clinicians on situations when they might have been exposed, and they need to get tested. We have a clinical care team that interfaces with them, and we have our own nurses on staff at a corporate level that then become a care team to communicate with those clinicians about what they need to do to quarantine, to get tested, getting them the resources they need quickly, but also providing emotional support, and if needed, referring them to mental health professionals. It can be an extraordinarily stressful time for clinicians as they are quarantining, and they’re worried about their own health, but they’re also wanting to be at the hospital caring for patients. There’s a pretty big network of mental health resources that we’ve created to try to ensure that our nurses and clinicians are getting the support they need. For nurses that are on that front line, many of them have referred to having essentially PTSD, and we want to make sure that we’re giving them the resources to get through the situation, but then even afterwards, that we’re being supportive.

You’ve spoken about various challenges, what issues are you most concerned with now?

First is making sure that we are supporting our clinicians, and for that matter, all clinicians out in the field to ensure that they can do their best work and that we’re doing everything we can to get them there quickly, efficiently. It includes simple things like expressing gratitude and appreciation for them at every turn. Second, we’re very focused on our own corporate team members as well. While they’re not on the front lines, it’s still very stressful and a lot of hours and a lot of emotional toll that gets taken through the work that we do because we so desperately want to get every job filled and every clinician to where they’re needed. We’re supporting clinicians that are in difficult situations themselves.

We end up being the partner—if you’re a recruiter, you’re on that journey right along with your clinician. We’re making sure that we’re supporting our own corporate team members: how to handle mental health at work during the pandemic. We’re very mindful of that, and all of our team members are still working remotely, which they want to be, and we’re supportive of that, but we have to make sure that our leaders are learning how to lead in a remote environment. We’re very proud of the culture at AMN. It’s been one of our strengths and, I think, a big part of our success. And now that culture is remote. So how do we ensure that all of our team members feel appreciated, supported, and have access to the resources that they need? I think we’re doing very well, but we’re going to be in this for quite some time. We’ve made the decision not to go back to offices until at least July of next year, other than maybe a pilot—I quite honestly think it’s going to be longer than that. We’re going to be feeling the challenges of the pandemic far past the summer.

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