Why Shake Up the Status Quo in Healthcare Labor?

Tuesday, May 23, 2017

Every healthcare professional knows that even the status quo carries risk. Otherwise, why spend millions on preventive care measures every year? Identifying issues before they reach a crisis point can save billions of dollars as well as lives. The same could be said for the state of labor in healthcare. Despite the many advances in medicine and the sophistication of healthcare practice, the industry’s approach to labor is, in many healthcare facilities, much more traditional. With growing skills shortages, unrelenting cost pressures and rising demand for services, the economics of the industry have shifted from volume to value, replacing fee-for-service with outcome-based models. All of this has led to an overwhelming need to explore ways to deliver care more effectively and efficiently. And that means exploring new ways to manage the healthcare workforce.

An Overwhelming Focus on Cost

In nearly every survey of healthcare leaders, financial issues surface as a top concern. In the American College of Healthcare Executives’ 2016 survey of top issues confronting hospitals, financial challenges took the top spot. Further, 60 percent of respondents called out increasing staffing costs as a major concern. Another 55 percent noted a need to reduce operating costs. In PwC’s 20th CEO Survey, nearly 70 percent of healthcare leaders cited cost reduction as a critical activity in the coming year to drive growth and profitability. With labor constituting 50 percent or more of healthcare system costs, you would expect it to be a subject of intense scrutiny. The focus of that scrutiny tends to revolve around increasing productivity levels and reducing current expenditures for supplemental staffing and overtime, rather than finding completely new approaches to labor acquisition and management. It’s a little bit like treating the symptoms rather than eradicating the disease. Julia Abell, System Director, Talent Acquisition at Mercy Health in Kentucky, echoes this focus on cost: “We review agency use with our partner agencies and talk about usage as well as reasons for usage. Behind the scenes, HR works on strategies to eliminate or reduce the use.”

Doing the Job Sometimes Gets in the Way of Doing the Job Better

We know that acute shortages impact healthcare institutions nearly everywhere. When needed labor is in short supply, healthcare managers are often forced into a reactive mode, doing whatever it takes in an attempt to ensure patient care is not compromised. That can mean budget-busting cost overruns for staff overtime and higher costs for supplemental labor. It can lead to rushed credentialing, poor cultural fit, a lack of engagement, staff stress and even burnout, greater turnover, and a higher incidence of mistakes that, at a minimum, can impact patient experience, and worst case, the quality of patient outcomes. Kimberly Redus, Director of Talent Acquisition at Barnes-Jewish Hospital in St. Louis, underscores the importance of the patient: “Healthcare has a responsibility to a patient and patient outcomes. Patient census and acuity are not easily predicted and being cost efficient does not always equal quality patient care. Hospitals have to be agile to achieve both labor efficiency and quality outcomes.” Taking a proactive approach to labor management and workforce planning offers a means to meet both needs, without sacrificing either.

Leverage the Learnings of Early Adopters

Skills shortages can lead to higher costs and greater risk in any business enterprise. Mounting skills shortages in the commercial business sector led to the development of innovative technology and workforce management solutions. Now, most large employers and a growing number of mid-sized commercial businesses partner with managed services providers (MSP) to optimize labor programs in ways that deliver greater process efficiencies, significant cost savings, lower risk and high-quality talent. Hospitals and hospital systems have not historically leveraged MSP models, but this strategy is gaining ground as a means to lower costs, reduce compliance risks and more efficiently manage talent pools. Advanced procurement strategies can provide healthcare employers with insightful data and analytics tools to source talent more effectively, easing the administrative burden of working with multiple talent suppliers and freeing leaders to focus instead on other critical success factors, such as workplace culture, employee engagement and retention. Another bonus in terms of timing: While MSP adoption in the healthcare industry has been significantly slower than in the commercial sector, the advantage of adopting these strategies today is that solutions have matured. Not only has the technology that supports strategic workforce management measurably advanced, practices and procedures have been tested and refined, continuously improving both the solution execution and the results.

Time for the Status Quo to Change for the Better

When asked about improvements in contingent labor models, Maureen Swick, AONE CEO and SVP and Chief Nursing Officer of American Hospital Association, said: “I would like to see workforce planning on every hospital and health system strategic plan.”

Kimberly Redus said: “I would like to see efficient, effective and flexible contingent labor models. Staff must be able to work multiple areas, and there must be a diverse contingent pool that can meet the need of the current patient census and acuity. This means RNs, PCTs, as well as discharge and admission teams.”

Healthcare workforce management can be improved substantially by applying advanced talent acquisition strategies and technology tools and systems designed to more effectively attract, engage and retain talent. For nearly two decades, employers in other industries have gained a clear competitive advantage via advanced talent procurement strategies. With Staffing Industry Analysts reporting that MSP adoption is now greatest in the healthcare sector – triple the rate of all other industry sectors – it appears the status quo in healthcare labor is finally changing.

For additional insights, download our in-depth report, A Perspective on the Healthcare Industry Workforce.

Sean DeAvila is a vice president of strategic solutions at Workforce Logiq with over 20 years of experience building strategies that help to improve contingent workforce management program efficiencies and reduce costs.

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