What Healthcare Administrators Need to Know About the Nursing Shortage

The United States has a nursing shortage. Or does it? Depending on who you ask and which data you read, the answer is genuinely complicated. The Bureau of Labor Statistics (2026) projects about 189,100 openings for registered nurses each year between 2024 and 2034, driven by an aging population, rising rates of chronic disease, and steady workforce turnover. At the same time, nursing school enrollment is growing, applications are up, and graduates are entering the field in strong numbers. So why do hospital floors across the country feel perpetually shorthanded?

The answer, it turns out, is that the “nursing shortage” is not one problem. It is several problems layered on top of each other, each with its own causes and its own levers. There is a retention problem concentrated in hospitals. There is a geographic distribution problem, with some states and regions lagging far behind others. There is a financial pressure problem, with anticipated Medicaid cuts already reshaping how health systems are hiring right now. And there is a workforce culture problem, in which hospitals expect experienced nurses to materialize without doing the work of developing them.

For healthcare administrators, understanding the difference between these problems is not just academic. The financial stakes are significant. According to the 2026 NSI National Health Care Retention and RN Staffing Report, the average cost of losing a single bedside RN is $60,090, with the typical hospital losing somewhere between $4.2 million and $6.2 million annually to RN turnover. The national RN vacancy rate currently stands at 8.6 percent, with one in three hospitals reporting a vacancy rate of 10 percent or higher.

Not everyone agrees on how bad the shortage actually is. Workforce projections vary depending on the assumptions behind them, and the national picture looks different depending on which sector and which geography you examine. “In general, most of the projections are coming in a little bit short or a little bit surplus, but they’re kind of coming in within a relatively tight band,” says Joanne Spetz, PhD, director of the Philip R. Lee Institute for Health Policy Studies at the University of California, San Francisco. “Which, when you’re thinking about a 15-year projection, means it’s pretty much a wash.”

Dr. Spetz says the data does not support the idea that not enough people are going into nursing. “There’s growth in applications. There’s growth in graduates. People continue to be interested in nursing. That in general tells me there’s not a generalized pipeline problem.”

What there is, she says, is a set of structural and financial realities that administrators need to understand clearly, because the decisions they make in the next few years will shape their organizations for a long time. Read on to learn what the data actually shows about the nursing workforce, and what administrators can do about it.

Dr. Joanne Spetz is the director of the Philip R. Lee Institute for Health Policy Studies at the University of California, San Francisco, where she holds the Brenda and Jeffrey L. Kang Presidential Chair in Health Care Financing and serves as the Claire D. and Ralph G. Brindis Endowed Professor in Health Policy Studies. She builds nursing workforce supply and demand models for California’s Board of Registered Nursing and has spent her career studying the factors that drive nurse labor markets at the state and national level.

Dr. Spetz’s research focuses on the economics of the healthcare workforce, with particular attention to how policy, payment structures, and education capacity shape the supply of nurses over time. She is widely published and regularly consulted by policymakers seeking to understand what workforce projections actually mean and where the real pressure points in the nursing labor market lie.

For decades, the nursing shortage has been framed as a pipeline problem. Not enough people going into nursing, not enough graduates coming out the other side, and not enough slots in schools to meet demand. That framing made sense decades ago when the shortage that dominated national headlines was, in fact, driven by a real gap in education capacity. Schools across the country simply did not have enough room to train the nurses the system needed.

“In 2001, when that nursing shortage exploded as a major national issue. When you looked at the numbers, it was very clear that we were not graduating enough people in this country,” Dr. Spetz says. “What happened, fortunately, is the system responded, and nursing education capacity basically doubled nationally, and there were enough applicants to fill all the slots. Previously, the issue was not people applying to nursing school. The issue was that the schools just didn’t have enough slots to accept people into.”

The pandemic briefly interrupted that trajectory, with some schools struggling to pivot to online learning and some students taking time off. But that dip has resolved. “There’s growth in applications. There’s growth in graduates. People continue to be interested in nursing,” Dr. Spetz says. “That in general tells me there’s not a generalized pipeline problem.”

If the pipeline isn’t broken, why do hospital floors feel chronically short-staffed? The answer has more to do with where nurses choose to work than with how many nurses there are. Hospitals employ roughly 60 percent of the nursing workforce, making them by far the largest employer in the field. They are also where nearly all the complaints about shortages originate.

“When we hear about shortages, it’s almost always from hospitals,” Dr. Spetz says. “I am not really hearing the primary care clinics or the GI lab or the endoscopy center or a cardiac rehab center saying we can’t find a nurse. It’s really from hospitals. So that might tell you what’s going on with that sector.”

Nurses are leaving bedside hospital work for settings that offer more predictable schedules and a different relationship with patients. It isn’t necessarily about pay. “It’s not likely that people are leaving to go to ambulatory care clinics to make more money,” Dr. Spetz says. “They’re going to get a more stable schedule and have a different relationship with their patients.”

Even in states where overall graduation numbers look healthy, the distribution of nurses is deeply uneven. A state can be producing enough nurses on paper while leaving entire regions without adequate staffing. It is a problem that is easy to identify and genuinely hard to fix.

“Just because we’re graduating enough nurses in California or Boston doesn’t mean there are enough in Western Massachusetts or in the Central Valley of California,” Dr. Spetz says. “Even within the state, you’ve got variation in supply. And that is the hardest problem to try to solve.”

Some states present a more acute version of this problem. Dr. Spetz points to Missouri as an example where graduation capacity doesn’t appear to match the size and growth of the population, even in major cities. The geographic imbalance is expected to worsen over time.

According to the Bureau of Health Workforce’s Nurse Workforce Projections report, non-metro areas are projected to face a 24 percent RN shortage rate by 2028, compared to just 5 percent in metro areas. “How are you going to tackle that?” Dr. Spetz asks. “Do you try to grow public programs, and if what your problem is is rural, you’re probably focusing on community colleges. Or do you try to let the private sector take it on?”

Hospitals are the largest employer of nurses in the country, and right now they are under significant financial pressure. “Medicaid enrollments are expected to drop, and that will mean that hospital utilization is going to drop,” Dr. Spetz says. “People are not re-enrolling in Affordable Care Act plans because of the subsidy changes. So hospitals are going to have fewer people with insurance coming through the doors, and the people who do come through the doors might be popping up in the emergency department without insurance.”

Health systems are already adjusting their hiring in response. “Every health system I know is watching that,” Dr. Spetz says. “They’ve forecasted what it’s going to do to them. They’ve got a range of scenarios, and they are currently changing their investments and their hiring in order to accommodate what they think is coming down the line nine months from now.”

The fee-for-service payment model compounds the problem. When reimbursement is tied to volume rather than outcomes, there is little financial incentive to invest in nursing staff as a long-term strategy. “If you’re doing fee-for-service and there’s no quality value component to what you do, you’re essentially getting the same amount of money for providing adequate care as providing great care,” Dr. Spetz says. “There’s just not the incentive to think about expanding your nursing workforce as an investment strategy.”

The financial pressures are real, but Dr. Spetz argues that administrators who take a short-term view of nursing investment are making a costly mistake. Turnover is expensive. Constantly backfilling positions drains budgets, disrupts care teams, and puts pressure on the nurses who stay. “Hiring nurses now and retaining your nurses better can save you money in the long term,” Dr. Spetz says. “It saves you all of this hiring and turnover costs, which can be substantial.”

That includes hiring new graduates rather than waiting for experienced nurses to materialize. “If you are hiring new grads and really investing in them well, and giving them a sense of loyalty to their workplace and the sense that they are listened to and respected, then that is going to pay off for you,” she says.

“Go back to your return on investment lectures, and don’t think about returns on investment as a short-term thing,” Dr. Spetz advises. “Think about it in the long term. What you need to do is ensure that you have long-term stability in your nursing team because that is your largest labor cost. And so if that is not managed well, and you are constantly chasing high rates of turnover and constantly chasing these gaps, then you are going to constantly have this financial drain that you might be able to avoid with some wise investments up front.”