States Seek to Remedy Shortage of Professional Nurses

Published December 1, 2008

Several states are offering aid to universities in an effort to address the current shortage of professional nurses.

Experts say the shortage is being caused by a combination of retirement, stressful working conditions, low wages, and a lack of capacity at nursing schools.

The most important factor, they note, is that government licensing and low payments to providers are big impediments to efforts to recruit more people into the profession.

Shortage Growing

Hospitals across the country need a total of 116,000 more registered nurses to fill their vacant positions, according to the American Hospital Association. The shortage is expected to reach 1 million by 2020, according to the federal Health Resources and Services Administration.

Working conditions play a big role in nurses’ decision to leave the profession, according to Mark Pauly, Ph.D., a health care economist at the University of Pennsylvania’s Wharton School.

“There are always shortages of things at low prices, be it a steak dinner for $2, a Mercedes Benz for $5,000, and a nurse at a low wage rate,” said Pauly. “However, it does seem that many hospital administrators are unaware that they could attract and retain more nurses if they could change the conditions of work; that might be less costly than just raising wages.”

Expanding Nursing Education

Another cause of the shortage is a lack of capacity at nursing schools. In 2007 and 2008, nursing schools “turned away 40,285 qualified applicants … primarily due to lack of faculty,” according to the American Association of Colleges of Nursing.

In an effort to address that part of the problem, nearly 40 states have allocated additional funds for nursing programs in the past five years, sending more money to universities to increase the number of faculty and offering students more money for scholarships and loan-forgiveness programs, a move praised by experts.

“Nurses are highly trained professionals,” said Devon Herrick, Ph.D., a senior fellow at the National Center for Policy Analysis. “The shortage in the nursing profession results in part from barriers to entry. States that truly want to train more nurses are going in the right direction by allocating more funds to universities for instructors.”

Barriers to Entry

A faculty shortfall isn’t the only issue, says Michael Cannon, director of health policy studies at the Cato Institute.

“State governments restrict the supply of nurses through licensing laws that continuously increase barriers to entry,” Cannon said. “Meanwhile, Medicare, Medicaid, and other government programs set [low] prices for nursing services, which contributes to the problem.

“The solution is not more government, but less,” Cannon concluded. “States should repeal licensing laws and other barriers to entry for nurses, and Congress should let markets set prices for nursing services.”

Simply increasing nurse staffing may help a little, said Pauly, but imposing regulations requiring hospitals to increase their nursing staff without an offsetting increase in funds will just cause the hospital to respond by cutting other staff. That will result in even more overworked nurses and lower quality of patient care, he noted.

Over-Regulation Is the Problem

“The key is for hospitals to find ways to use nurses to improve quality, and then hire and pay at levels appropriate for that improved quality,” Pauly said. “The shortage of nurses is only an intermediate problem; the real problem is inadequate knowledge about how to improve hospital quality and how much nurses can contribute to that.”

Hospitals’ ability to better utilize nurses is hindered by severe government over-regulation of the health care system, said Greg Scandlen, director of Consumers for Health Care Choices at The Heartland Institute.

“In a normal market, staffing shortages are easy to take care of,” Scandlen said. “If there is a shortage of some profession, pay more and you will get more people entering the profession. You may have to raise your price to cover the added cost. But the added price will slightly reduce demand, so it works out.

“Unfortunately, health care is far from a functioning market, mostly due to the presence of Medicare,” Scandlen added. “Hospitals may want to pay more to attract more nurses. However, they can’t raise their prices to cover the cost because Medicare dictates what it will pay regardless of the underlying cost. So we get shortages, just as we always do when government controls the price.”

More Trouble Looming

The problem “will get much worse before it gets better,” Scandlen warns, because of the impending retirement of the Baby Boom generation.

“More and more of the population will be covered under the prices dictated by Medicare,” Scandlen said, “and as the Baby Boomers age they will have greater need for hospital services. Hospitals will not be able to raise their prices, so they will not be able to pay more for nurses.

“Young people will continue to shun nursing as a profession because they can make more doing something else,” Scandlen noted. “Hospital care will deteriorate until the Baby Boomers get irate and demand better care—but Medicare is already facing a $34 trillion shortfall. There is no money.”

Dr. Sanjit Bagchi ([email protected]) writes from India.

For more information …

“Addressing the Nursing Shortage: A Focus on Nurse Faculty,” American Association of Colleges of Nursing, 2008: