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Moody’s: nursing shortage will persist into the near future
U.S. hospitals are experiencing an extreme nursing shortage, and the added expense pressure and personnel issues will negatively affect hospital margins for at least the next three to four years, Moody's Investors Service says in a new report.

The Bureau of Labor Statistics predicts this nursing imbalance will persist until 2025. The shortage is largely due to a growing demand for nurses and a lack of supply. Hospitals have implemented strategies to attract and retain nursing talent, including increased compensation, sign-on bonuses, and attractive fringe benefits. However, these incentives are increasing already increasing expenses.

"An aging population, increased incidence of chronic disease and alternative employment options, such as nurse staffing and traveler agencies, drive increased demand. Although the supply of nurses is expected to improve with the expanded nurse training programs and increase in the number of eligible nurse educators, it will still take three to four years for the supply to meet expected demand," Moody's Analyst Safat Hannan says.

Another tactic to reduce the need for expensive contract labor is the creation of an internal nursing pool. However, this can have drawbacks, as it requires the hospital to manage those resources, which can lead to an increase in labor costs. While nursing pools can reduce expensive contract labor, it may lead to higher attrition and lower productivity if nurses are not effectively trained across service lines.

"Labor is the largest hospital expense and is increasing faster than total expense growth while outpacing revenue growth," Hannan says. "The lack of qualified nurses will compound these expense pressures and negatively affect hospital margins."

The nursing shortage will also impact the southern and western U.S. more heavily than the rest of the country. A growing and aging population and low numbers of nurses entering the workforce are characteristic of Florida, Georgia, Texas, and California.

Moody’s says the shortage of nurses will most adversely affect rural hospitals since large urban hospitals benefit from advantages such as their proximity to nursing schools, the ability to pay competitive wages, and greater job opportunities for spouses.

Some hospitals are so desperate for nurses they are offering five-figure signing bonuses, free housing, and college tuition for employees and their children, according to a story by CNN.

UCHealth, which operates nine acute-care hospitals and more than 100 clinics across Colorado, Wyoming, and Nebraska, currently has 330 openings for registered nurses. The health system has offered relocation allowances and signing bonuses of up to $10,000. Additionally, it provides nurses with up to $4,000 a year to invest in continuing education, and it offers the Traveler RN program, which allows nurses to do a 13-week rotation at different UCHealth facilities.

In the same vein, Inova Health System in Washington, D.C. is offering nurses who have at least two years of critical care experience and live more than 50 miles from one of its six Washington, D.C.-area hospitals a $20,000 sign-on bonus and up to $20,000 in reimbursable relocation costs, Nurses who live within 50 miles of one of Inova's hiring hospitals are offered a $10,000 signing bonus.

CNN also reports that starting in 2018, West Virginia's WVU Medicine, which operates eight hospitals in the state, will start offering tuition reimbursement for employees and their children. The offer is restricted to nurses who have been employed at the health center for at least five years. The health center will pay full college tuition for nurses’ children who attend West Virginia University or partially cover tuition if they attend college elsewhere.