By Hailey Mensik

Some healthcare occupations will face major shifts in supply and demand, spurring workforce shortages in the next five years that systems will have to tackle, a report out Wednesday on the U.S. healthcare labor market found.

If current trends persist, 29 states won't be able to meet demands for nursing talent in the next five years, and 24 other states will also face significant shortages, according to the report. At the same time, some states could have surpluses of nursing talent, especially in the South and Southwest.

Other predictions include that primary care will increasingly be provided by non-physicians, like physician assistants and nurse practitioners, and that demand for mental health providers will rise more than 10% in the next five years.

The pandemic spurred massive workforce disruptions across all industries, especially in healthcare. Those workers, many of whom are unable to work from home, have witnessed the toll of the virus first-hand and are grappling with burnout that has some rethinking their careers. It also gave rise to changes in healthcare delivery, namely virtual care and home healthcare services.

In the next five years, the supply of certain healthcare workers and demand for others will shift, especially across local markets, according to a Mercer report. Hospitals and other providers tend to serve specific local markets, and unlike industries such as technology and manufacturing, they're limited in moving clinical work outside their markets.

That comes as expenses are rising for health systems that are scrambling to find enough workers amid the COVID-19 pandemic.

Hospitals throughout the crisis have seen their labor expenses rise, either through contract labor or offering more pay to attract staff amid shortages. In some regions systems have offered sign-on bonuses of up to $30,000 for nurses who commit to work for them for at least two years.

A September report from Kaufman Hall found total expenses per adjusted discharge, which approximates how much hospitals spend per patient, are up 15% nationwide compared to before the pandemic.

The largest occupation in the healthcare sector — nursing — is expected to see demand rise at least 5% across the country over the next five years, while an estimated 900,000 nurses will leave the profession, according to the report.

Pennsylvania, North Carolina, Colorado, Illinois and Massachusetts are expected to see the worst nursing shortages. But in Southern states like Georgia, Texas and South Carolina, new entrants in the workforce could start to outpace demand, the report found.

Mental health workers will also be in high demand and short supply in some states in the coming years.

Demand for those workers will rise more than 10% in the next five years, leaving employers to fill more than 500,000 vacancies by then. Workers are rapidly leaving the profession in Massachusetts, Illinois, Pennsylvania, California and Colorado, and those states are expected to have the worst shortages.

Washington, Texas, Ohio, Florida and Georgia are expected to build up surpluses of mental health workers with a steady flow of new entrants, according to the report.

The pandemic also gave rise to home healthcare services, many of which employ lower-wage workers. The need for medical and nursing assistants and home health aides will grow from 9.7 million to around 10.7 million in the next five years, the report found. While more than 6.5 million workers will permanently leave those jobs, only 1.9 million are expected to take their place, leaving a 3.2 million worker shortfall.

Another shift is expected to occur in primary care, where about 12% of family medicine, pediatric, obstetrics and gynecology physicians are currently 65 years of age or older. By 2026, that figure will grow to more than 21%, the report found.

Accelerated retirements will happen as demand for primary care physicians grows 4% over the next five years, and younger physician assistants and nurse practitioners are expected to fill in those roles.

Each year, about 40,000 new PAs and NPs enter the workforce, "providing a steady stream of new entrants who are qualified and ready to fill the extra demand resulting from retiring physicians," the report said.

Mercer recommends health systems adapt to these changes first by digitizing and automating their recruitment and onboarding processes, as they will struggle to maintain pace with the volume of hiring and onboarding, along with greater turnover.

Systems also need to take a hard look at their workplace culture and figure out what may be contributing to recruiting challenges, as people "base career choice and job decisions on more than just pay and perks," the report said.