Registered Nurses: The Curious Case of a Persistent Shortage

Purpose: To better understand the apparent persistent shortage of registered nurses (RNs), including both aggregate trends and cyclical responses. Design: We examine the employment of RNs over variations in economic activity, employing national aggregate and unique micro-population data on nurses in Arizona. Methods: These data, including our unique, ongoing survey of nurses in Arizona, enable a systematic examination of the cyclical demand for hospital care and institutional responses to that demand in the nursing market by employing multivariate regressions. Findings: Demand for hospital nursing care increases rapidly during the early years of recessions, moderating as the economy improves. Hospitals initially employ more temporary nurses, then reduce temporary hires by shifting employed RNs from part time to full time while also adding RNs not previously employed in hospitals. The substitution of regularly employed RNs for temporary nurses reflects the need to reduce staffing costs to offset increases in uncompensated care. Conclusions: The increased supply of nurses came from delayed retirements, higher relative hospital wages (inducing nurses in other sectors to return to hospitals), and added-worker effects. Additional nursing hours were drawn from a pool of RNs who were not employed in health care. Clinical Relevance: These results strongly suggest that correctly aligned incentives could reduce RN shortages without waiting for another recession.