Recent survey with Benjamin Friedrich of Northwestern University’s Kellogg School of Management and Martin Hackmann of UCLA illustrate these important points. Using data from Denmark, they estimate that for every day a nursing home is short a nurse, more than a day of an elderly patient’s life is lost. When nursing homes are short-handed, their residents die earlier.
As Friedrich explains:
Conversely, when hospitals and nursing homes can adjust to supply-demand imbalances by easily recruiting and retaining nurses, it saves lives.
Unfortunately, adapting in this way has not been easy for Danish healthcare facilities. Friedrich and Hackmann document how various constraints meant that hospitals and nursing homes could not respond to nurse shortages by offering to pay them more or by attracting them from other areas. So when a nurse was out, facilities had little way to avoid being understaffed. And when a parental leave program was introduced across the Danish economy, it led to fewer nurses and lower quality care in hospitals, with large increases in readmission rates for heart attack patients. Worse, nursing staff levels in nursing homes fell by around ten percent, leading to thousands of premature deaths. Rigid labor markets were literally killing people, and they were doing so at an astonishing rate.
COVID has devastated nursing homes around the world, including in the U.S. Over the past year, we have mourned the consequences of policy decisions that have led thousands of nursing home residents to premature deaths. But one smart thing many state governments have done is relax regulatory restrictions to allow hospitals, nursing homes and other health care facilities to hire and retain nurses in response to surges in demand due to COVID. For example, states have allowed nurses licensed in one state to practice in other states. This allowed nurses to practice where they are most needed and probably saved many lives.
However, many of these policies are temporary and governments will be under pressure to re-introduce regulations that make the market for nurses less flexible. This would once again prevent single nursing homes and hospitals from hiring nurses that their patients need. Instead of rolling back regulations, states should enact policies that make labor markets for nurses more flexible, including agreeing to reciprocity with respect to licensure requirements. Flexible labor markets for nurses are vital for nursing homes, hospitals and their patients—not only during COVID but also after the pandemic subsides.