Biweekly Briefing Articles

As Budget Season Gets into Full Swing, Workforce Challenges Can’t Be Ignored 

At the Capitol in downtown Sacramento, and at the County Administration Center in downtown San Diego, budget season is in full swing. Gov. Newsom released his May Revision last week — and while the $300 billion budget contains a number of new proposals affecting hospitals, health systems, and the patients they serve, it does not address your hospitals’ inflationary challenges.  

And closer to home, San Diego County’s proposed budget ($2.7 billion for the Health and Human Services Agency) is currently taking shape. Over the next several weeks the county will hold community meetings and public hearings, and hear group presentations. Behavioral health services takes up the largest share of funding, followed by self-sufficiency services. The county is also proposing to hire more staff (approximately 559 employees) to build and support capacity through the agency. Some of the HHSA’s budget priorities include implementing the framework for ending homelessness, advancing innovations in Medicaid, and increasing affordable housing. 

But throughout the state, and here in San Diego, there’s another pressing need that must be addressed: the health care workforce in particular. As many of you know all too well, the pandemic has severely disrupted the workforce and created what will likely be a long-term problem for employers, not just in health care, but across many fields. With only so much of the labor force to go around, hospitals are finding themselves competing with non-hospital employers who can aggressively pursue hourly staff. Many of these companies have the luxury of passing along wage increases to consumers in the form of higher prices — health care organizations do not have that option.  

And that’s if you can even find the employees to hire, as many health care workers have left the profession altogether, and hospitals now face the worst staffing shortage in memory. From the end of 2019 to the second quarter of 2021, the staff vacancy rate at California hospitals jumped 98%, and 78% of hospitals report an increase in staff turnover. Nationally, more health care and social assistance workers have left their jobs than at any point in the last 20 years. All told, California needs to add 500,000 new allied health care professionals by 2024 in order to provide needed care.  

At the same time the size of the health care workforce is shrinking, hospital labor expenses are on the rise. According to a new report from Kaufman Hall:  

  • Nationally, hospital labor expenses increased by more than one-third from pre-pandemic levels on a per-adjusted discharge basis (2019: $4,009 vs. 2022: $5,494).   
  • Expense increases were largest in the west (+43%), which also has the highest expense levels ($7,300 per adjusted discharge). 
  • Hospital margins in March, including any Coronavirus Aid, Relief, and Economic Security Act funding were -1.4%. 

Although Gov. Newsom’s proposed budget does include workforce funding — with some adjustments, the $1.7 billion that would expand the health care workforce remains intact, and CHA continues to support this proposal — there is no quick fix for this problem. It will take years, along with some flexibility and creative thinking, in order to right this ship. At both the regional and statewide levels, advocacy has never been more important, as costs will continue to rise while we struggle to rebuild our health care workforce.