Jacob Wolf

Cassandra Zirbel

Jenny Svobodny

March 19th, 2015

Nursing Market in the United States

Agenda:

Who are the nurses?

Registered nurses

Gender, Race, Age, Education, Place of employment

Wages

Nurse Shortage

Monopsony Model

Other causes

Nurse Quality

Main types of Nurses

Certified Nursing Assistant (CNA)

Help provide basic care

Long-term care facility work

Licensed Practical Nurse (LPN)

Basic medical care

Blood pressure, bandages, bathe, etc.

Registered Nurse

Provide and coordinate care

Educate public and patients

Nurse Practitioner

Diagnose, test, prescribe

May order, preform, administer, and interpret tests

Main difference: educationBureau of Labor Statistics

Gender

Gender 2001

MaleFemale

94.6%

5.4%

Gender 2011

MaleFemale

90.4%

9.6%

• Dominated by females (90.4%)• 1970- Males (2.7%)• Males increasing (5.4% 9.6%)

• Highest proportion of males: nurse anesthetists 41%

• Men are paid higher wages• Women get 91 cents on the dollar

U.S. Census Bureau 2011

Race• Predominately white (75%)• Getting Increasingly diverse• Blacks (7% 13%)• Hispanic (4% 7%)• Asian (3% 4%)

American Association Study 2001

Age• Aging workforce• Average age at

graduation: 31• Average age: 46

HRSA 2010

2010

2010

Education Options:

Bachelor’s, Associate’s, or Diploma Program

Bachelor’s of Science

Four-year university program

Slow steady growth

Associate’s

Two-year program

Rapid growth

Diploma Program

One-year program

Almost non-existent

HRSA 2010

Education

Highest Degree held by RNS, Census Data

Bachelor'sGraduateAssociate'sRN Diploma

2011

Bachelor’s: 40.8%Associate’s: 38%Diploma: 12.3%Graduate: 8%

U.S. Census Bureau, HRSA 2010

2010

Place of Employment

• Nurses working in hospitals (58% 62.2%)• Rotating shifts to cover 24 hour day• 20% Part time

HRSA 2010

Nursing Monopsony Overview

Registered Nurse Wages

Nursing Shortage

Monopsony Model Overview

Monopsony In the Nursing Market, Empirical Evidence

Other Nursing Shortage Explanations

Registered Nursing Wages

Median Annual Wage $65,470

10% 50% 90%

$65,470 $94,720$45,040

Bureau of Labor Statistics, 2012

Registered Nurse Wages

Source: Payscale Inc

Factors:

Geography, Experience, Education, Title

< 1 Year 1 to 4 Years 5 to 9 Years 10 to 19 Years 20 Years or More

$53,201

$61,962

$68,899 $75,027

$77,855

RN Median Salary with BSN by Years of Experience, 2014

Nursing Shortage Overview

Emerged in 1930’s (Whelan)

Nursing shortage expected to grow to 260,00 RN’s by 2025.

Twice as large since the mid 1960’s (Bernhaus, 2009)

May 2011, 121,000 new job ads for RN’s, up 46% from May 2010 (Wanted Analytics)

Persistent Shortages have attracted many economists’ attention to search for possible explanations

Monopsony Model - Overview

Epc

S= AC

MFC

MRPL

Em

Wages

Quantity of Labor

Wm

Wpc

• Hospital has market power, single buyer

• MFC > S

• Implications: For each additional nurse hired you must pay that nurse more and ALL the nurses more

• Finding Equilibriums

• Elasticity of SupplySupply horizontal (Perfectly elastic) facing firm in competitive markets

Shortage

Empirical Evidence on Monopsony

2 methods Finding the elasticity of a supply curve

Inelastic labor supply indicative of monopsony power

Investigate whether nurses’ wages vary significantly in regards to workers mobility and hospital concentration Herfindahl index measures the concentration of hospitals in a geographic

region

Perfectly competitive market, Herfindahl index approaches 0

Studies in support of monopsonyResearcher

Year Result/ Elasticity

Staiger 2010 Legislated wage change VA Hospitals0.1 Short Run Elasticity

Sullivan 1989 0.79 Elasticity over One Year Changes0.26 Elasticity over Three Year Changes

Askildsen 2003 0.2 Elasticity over 5 year span (1993-1998) in Norway

Link & Landon (1975) Double hospital concentration $400 less in annual

beginning salaries

Robinson (1988) More competitive markets’ hospitals average 86

more employees than did otherwise comparable hospitals

Studies Against Monopsony

Hansen (1992)

Supply elasticity in CA 29 to 56 from 1980 to 1987

Hirsch & Schumacher (2005)

Nurses have higher comparable wages and more mobility than the control group of similarly educated females

Mukharjee (2011)

Used same data as Hirsch & Schumacher but instead used semiparametric regression instead of linear regression concentration has no impact on wages

Hirsch & Schumacher (1995)

No correlation between RN wages and hospital density

Relative wages were not found to be higher in metro areas

Adamache & Sloan (1982)

Hospital concentration has no effect on entry level compensation

Other Nursing Shortage Explanations

Limited faculty

> 75,000 qualified applicants turned away from nursing school each year (Gyurko, 2013)

Pay Equity and Job Conditions

Paid less than other occupations requiring similar levels of skill and responsibility (Sullivan, 1989)

Nights and weekends, 12 hour shifts, can be forced longer (HRSA 2010)

Insufficient staffing levels increase stress, impacting job satisfaction

Other Nursing Shortage Explanations

Aging workforce

Significant segment nearing retirement

Changing Demographics

Increasing demand as baby boomers age and require more healthcare

High Nurse Turnover

28% of respondents of a 2013 survey said an educational paradigm change needed

Clinical apprenticeship model

Fails to incorporate non-traditional settings and health care technology proficiency (Gyurko 2013)

Nursing Quality

Outline:• Patient to Nurse

Ratio• Education• Working

Conditions

Patient to Nurse RatioTime Spent With Patient

Additional Nurses:• +1 patient per nurse probability of mortality by

7% (Aiken 2002)

• Works both ways

Additional Hours: • Additional 1 HPPD reduced adverse conditions 2%-

10% (Needleman 2002)

• Additional 1 HPPD also decreased length of stay by 5% (Needleman 2002) (American Nurses Association 2000) (Shamian 1994)

• Downside: +6 min/patient = additional part time nurse (Arndt and Crane 1997)

Education

High School, Hospital, and Associates Degree Few quality differences noticed between nurses who

have not obtained a Bachelors Degree. (Young 2007)

Nurses without a Bachelors Degree performed poorly and were disciplined at a higher rate Associate students less professional (Green 1996)

9x likely to make medication errors(Fagin 2001)

High School educated CNA’s do not affect adverse outcomes (Needleman 2002)

High School, Hospital Degree, Associates, or Bachelors

Education

WAI Questionnaire – Low ability rating 37% for nurses without college education, 30% for those with degree (Golubic 2009)

Bachelors degree rated workplace stressors lower than those without an education

Bachelors Degree = more difficult tasks (Young 2007)

High School, Hospital Degree, Associates, or Bachelors

Education

Bachelors Degree (Advanced Degree) An increase in advanced degree nurses results

in… Advanced degree >30%, - below average PTN ratio (5.5

vs 5.7 (Aiken 2003)

71% of CNO’s noticed better critical thinking and leadership skills (Goode 2001)

advanced degree >30% - mortality rate below average of 2% (Aiken 2003)

Additional 10% advanced degree nurses – decrease FTR by 5% (Aiken 2003)

High School, Hospital Degree, Associates, or Bachelors

Working Conditions

Burnout: Each additional patient

decreases job outlook by 15% (Aiken 2002)

Affects Turnover (Aiken 2002)

Turnover in excess of 30% affects quality of care (Castle 2007)

Overworking: Overworked nurses suffer

in accountability, responsiveness, and assurance (Teng 2010)

Overworking/Burnout

Working Conditions

Nursing autonomy, control, and relationships with physicians important (Kramer and Hafner 1989)(Aiken and Smith 1994) (Wunderlich 1996)

Magnet Hospitals (Aiken and Smith 1994)

4.6% decrease in mortality

Job Satisfaction/Magnet Hospitals

Conclusion

Higher Education not only develops procedural skills, but also professional skills.

Bachelors Degree makes a difference

in nursing hours = in adverse conditions, length of stay and mortality rates

Burnout Turnover Lower Quality

Working Conditions keep the good nurses around lower mortality

Questions?

Discussion Question

Why do you think the evidence of monopsony in the nursing labor market is so mixed?