What is the first thing that comes to mind when you hear the word “healthcare”? Is it an image of an industry dedicated to patient health? Or do visions of budget cuts and federal mandates dance in your head? My bet is on the latter.
Whether you’re a healthcare employee or not (and whether you like it or not), you’re still a part of the healthcare industry. And we can all probably attest to associating “healthcare” with an industry encumbered by increased demands and limited resources, instead of one that is focused on the health and wellness of patients.
Whatever your political and personal stance, I think we can all agree that patient care should be at the forefront of the industry’s focus. But with increased demands and a tightening resource base, how can this be accomplished?
It’s a basic economics principle – the only way to do more with less is to change the way things are being done. This means challenging the traditional approach. One CIO article went as far as to compare healthcare to Blockbuster, suggesting that the industry is in need of a “Netflix-type” level of disruption. Unfortunately, trying to compare the model intricacies of healthcare delivery with video rentals is like comparing the complexities of the human body with that of a VHS tape (one is a little more complicated).
However, I think we knew where the article was going with this analogy, and that the takeaway is the need for a new approach. But with a multitude of different interventions and efforts currently intertwined and underway, the question is, “Where does one start?” For an industry in need of determining which piece of the puzzle to focus on, it would make sense to consider where the largest investment lies. For healthcare? That’s staffing.
Hospitals invest millions annually in financial and clinical IT systems, but tend to spend much less on "the people side of the business.” Staffing expenses currently make up over 54.2% of a hospital’s overhead costs, and staff-related expenses can cost upwards of 70% of an organization's total costs – easily the largest expense line item on the books. Furthermore, healthcare employment is projected to grow 29% by the year 2022 according to the Bureau of Labor Statistics. That’s twice as fast as the expected overall employment growth!
Perhaps the most important reason to focus on staffing practices is that they have been shown to have a direct impact on patient satisfaction and outcomes, with considerable amounts of research linking staffing variables to patient outcomes. In other words, happy workers equal happy patients equal happy profits.
Fortunately, what we’ve learned through the development of our analytics platform, Blueprint, is that it does not take a whole lot of complex workforce data to begin measuring staffing areas that are directly tied to quality of care and cost management. Below is an example of some of the strategic areas on which Blueprint focuses. Give these data-driven efforts the attention and resources they deserve, and you’ll be moving towards better clinical and financial outcomes.
- Turnover Calculations - Replacing a valued healthcare employee can cost up to 250% of the employee’s salary. According to an NSI study, 83.9% of healthcare respondents don’t record the costs of employee loss. With the report finding that the vacancy rate for nurses is expected to grow, hospitals need to do all they can to keep retention high to avoid a lapse in patient care quality and a need to increase clinical workloads even more.
- Retention and New Hires - Mentioned above, retention can provide the continuity of care that plays a large role in clinical care and patient satisfaction. Furthermore, employees with less than one year of tenure make up nearly 25% of all healthcare turnover nationally(!)
Try tracking turnover in groups by tenure such as 0-3 months, 3-6 months, 6-12 months, >1 year, etc. Reporting the data in cohorts will make it easier to pinpoint where in the lifecycle the attrition is occurring.
- Managerial Span of Control - According to studies, smaller spans of control are linked to higher rates of employee retention – and the alternative being true with wider spans of control.
Use supervisor/employee data to compare the number of direct reports by hierarchy level. Spans of control should be similar for supervisors in the same hierarchical level, with the exception of differences in direct report skill level, experience, and tasks performed.
- Staffing Ratios - Staffing ratios define the relationship between your revenue-producing employees and the staff needed to support them. According to the Agency for Health Research and Quality (AHRQ), the risk of nurse burnout increases by 23% and dissatisfaction by 15% for each additional patient. However, when hospitals have accurate staffing, nurse burnout and dissatisfaction can drop significantly. Studies suggest that the higher the ratio of support staff per FTE physician, the greater the percentage of medical revenue after operating cost. Health systems with higher nurse employment had a 25% lower chance of receiving penalizations for readmissions through HRRP than those that had lower nurse staffing levels.
- Leverage Your Internal Resource Pool - With an enterprise view of your staffing needs, it’s easier to make strategic staffing decisions for the entire organization, enabling you to find that sweet spot between optimal care delivery and labor cost management.
Begin by analyzing data that represents staffing by facility, specialty, and department, while considering patient needs and the corresponding staffing data across the organization. Monitor staffing distribution and find opportunities for reallocation (as opposed to hiring/terming) with staffing surpluses and shortages.
- Strategic Staff Allocations - Employ known enterprise concepts, such as economies of scale by identifying opportunities where you have a concentration of facilities in a given geographic area. Also, back-office, phone clinical roles and administrative functions, such as billing and purchasing, can be streamlined with centralization efforts that leverage economies of scale.
When faced with healthcare’s “do more with less” dilemma, it is an opportune time to rethink how we approach labor cost containment and quality of care improvement strategies.
In the midst of healthcare reform and quality care initiatives, healthcare systems have an opportunity to place patient care back in the forefront of the healthcare delivery model. By recognizing that the missing link between quality of care and cost containment is the healthcare workforce, they will be doing just this. After all, people are at the heartbeat of healthcare -- patients and staff.
Let us help you keep your finger on the pulse of your organization and visualize your data in way like never before. Interested in learning more about a one-stop-shop for workforce analytics? Send us a message to get a preview of Blueprint.