How to Win the Healthcare Talent Wars, Part 1

Nov 14, 2002

From 1997 to 2000, a war for talent was being waged in the high-tech field. With a growing need for software, an Internet-fueled economy, and declining enrollment in BSCS programs, the demand for IT professionals far outstripped the supply. While the high-tech juggernaut has hit a few speed bumps, a bigger recruiting challenge now exists in the healthcare industry, with no end in sight. Despite the obvious differences in the backgrounds and skill sets of IT and healthcare talent, there are some eerie similarities between the old talent wars and the new. By looking at the lessons learned the last time around, healthcare recruiting teams can identify what might lie ahead and what they can do to come out on top. Part 1 of this series will focus on some of the similarities and differences between the two labor shortages. Part 2 will cover the lessons learned from the IT talent wars and how they can be applied to the challenges facing the healthcare industry. The Similarities Between the IT and Healthcare Labor Shortages The statistics being churned out are very similar to what we heard not so long ago in the IT industry. Here’s a sampling of just a few. 1. A decreasing supply, and an increasing demand. IT:

  • In 1999, 10% of all IT positions, or 346,000, were unfilled. (Source: The National Science Foundation and the National Research Council)
  • In the midst of this demand, enrollment in BSCS programs actually went down for five straight years by two percent per year. (Source: National Center for Education Statistics)


  • Nursing, which makes up 75% of all open healthcare positions, currently has a 13% vacancy rate. One in seven hospitals report a nursing vacancy rate of over 20%. (Source: American Hospital Association)
  • After six straight years of declining enrollment, nursing enrollment edged up by 3.7% in 2001. Since 1995, however, nursing enrollment is down over 17,000. (Source: American Association of Colleges of Nursing)

2. Education initiatives by government and private industry. IT:

  • Organizations like the Technology Workforce Coalition (TWC) were formed to lobby for federal and state legislation to provide technology training tax credits to individuals and businesses to eliminate the technology skills shortage.
  • Microsoft launched a program called Skills2000 to provide low interest rate loans to individuals enrolling in IT courses.


  • The Nurse Reinvestment Act was passed by Congress in December of 2001, with the goals of addressing the nursing shortage through scholarships, student loan repayments, residencies and public service announcements.

3. “Coopetition.” IT:

  • Several major competitors joined the TWC, including Microsoft, Intel, Novell, and IBM.


  • In an effort to improve the image of the nursing profession and encourage more individuals to enroll in nursing programs, competing nursing associations and organizations have joined together on several initiatives. One example is the Georgia Hospital Association (, which combines the resources of over 100 hospitals statewide to promote careers in healthcare.

4. Staffing firms’ high growth. IT:

  • IT staffing firms made a killing in the mid to late 1990s. I know, I was in one. We literally couldn’t keep up with the number of job orders we had. It seemed like more high-tech staffing firms were created in the IT industry in the 1990s than existed previously.


  • The average healthcare organization I encounter is literally spending millions of dollars per year on outsourced and contingent staffing services. The greatest portions of these expenses lie with traveling nurse agencies and nurse registries. For those of you not in the healthcare field, traveling nurses are like contingent staffing with a twist: the traditional 15% bump in hourly pay with full benefits, housing allowances, bonuses, guaranteed hours and more. Some nurses relocate, but many stay in the same area and receive all of the above benefits. Nurse registries fill in for nurses from shift to shift and can be available with two hours notice.

The list of similarities goes on: large sign-on bonuses, outrageous benefits being offered, increasing pay scales, a litany of government reports, extremely long hours by employees already in the field, and more. That said, there are several differences between this labor shortage and the last that will give the healthcare labor shortage considerably more staying power. Unique Challenges Faced by the Healthcare Industry 1. Openings that are really critical. The IT labor shortage was critical in terms of stalling several e-business initiatives and slowing the growth of our economy. But in healthcare, the vacancy rate has dramatic effects on patient care. A recent statistic in Time magazine showed that, when nurses have six patients instead of four, the odds of a patient dying after surgery increase by 14%. On my next visit to the hospital, I know that the first question I ask will be about its nurse-to-patient ratio! 2. Retention is a much bigger problem. While technology companies could lure candidates with stock options worth millions of dollars on paper (and not the green kind of paper), there are no get-rich-quick schemes in healthcare. When someone in healthcare can’t handle the long hours, weekend shifts, and lack of vacation time, they either switch to a different career path (LPNs, for example, can often find work with more regular hours), or leave the field altogether. The average RN turnover rate in acute care hospitals in 2002 was 21.3%, according to a study from the American Organization of Nurse Executives, while the Federation of Nurses and Health Professionals reported that one in five nurses are thinking of leaving the field altogether for reasons other than retirement. 3. An aging workforce and population. Ready for even more statistics? Last ones, I promise. According to the National Sample Survey of Registered Nurses, the average age of the working RN population was 43.3 in March 2000, up from 42.3 in 1996. Even more recent statistics show an average age of 45.2. The RN population under the age of 30 dropped from 25.1% of the nursing population in 1980 to 9.1% in 2000. What this means is that the nursing shortage is here to stay, with many nurses nearing retirement age and no pipeline of young workers to fill the void. The need for healthcare services is also expected to increase dramatically in the near future, as Baby Boomers will all be over 60 by 2005. By 2020, the number of people over 65 will increase by 53% over today’s numbers, compared to a 12% total increase in population. 4. A less technical bent of the workforce. With the IT labor shortage, technology became a primary driver in lowering recruiting costs. Even before the Internet went mainstream, it was possible to recruit qualified IT professionals using Usenet discussion groups and the new breed of job boards. Today, almost all recruitment advertising for IT workers can be done on the Web. Nurses, however, typically don’t have Internet access at work, nor are all of them online. The newspaper classifieds have been a primary beneficiary of the healthcare talent wars to date, as healthcare organizations are not often ready to take a leap of faith and invest heavily in technology. One look at the Sunday classifieds’ or trade journals’ healthcare sections and you’ll see something that is reminiscent of IT recruiting circa 1995: large display ads, highly detailed job descriptions, and mailing addresses and fax numbers as primary or secondary response mechanisms. In the next installment, I’ll discuss what the recruiting industry learned the first time around, and what lessons can be applied to the new talent wars in the healthcare field.

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