Drive strategic growth with smarter workforce planning

Increasingly, hospitals and health systems are augmenting the power of enterprise resource planning with human capital management.  

Like many hospitals nationwide, The Johns Hopkins Hospital in Baltimore is laser-focused on strategic growth through new and expanded clinical services. Naturally, this growth spurs added labor costs — something that Katina Williams, MBA, vice president of finance and CFO, is mindful of as the organization simultaneously strives to manage the bottom line. 

“Growing doesn’t always mean that incrementally more resources are needed,” she said. “It could mean you redeploy people or that you work differently. We have a fiscal responsibility to make sure we’re working efficiently.” 

Balancing organizational operations, people and payroll is important not only during times of growth, but also in day-to-day operations — as are the systems used to support this work. While enterprise resource planning (ERP) systems serve as the backbone for organizational operations, managing transactional and finance-centric processes, human capital management (HCM) systems focus on the employee lifecycle, helping to build trust, boost productivity and empower talent.  

For example, managers must ensure sufficient staff — and the right mix of skill sets — based on patient volume and acuity. Understaffing could compromise care quality and drive staff burnout, while overstaffing could result in nonproductive time and unnecessary costs. Maintaining this balance requires careful and ongoing oversight to avoid significant negative financial and/or clinical repercussions.  

Typically, the data-driven insight needed goes beyond the capabilities of a one-size-fits-all ERP solution. That’s why organizations are increasingly exploring best-of-breed HCM solutions that combine workforce management functionalities like scheduling and time collection to gain deeper insight into productivity, including use of overtime hours and shift workers.  

“It’s creating transparency across the organization,” said Robin Damschroder, MHSA, FACHE, CPA, president, value-based enterprise, and CFO for Henry Ford Health in Detroit. 

“Everybody gets focused on the timekeeping aspects of scheduling, because that’s how people get paid. But really, when you think about managing your workforce and the total cost of labor — which, for us, comprises 50% of our total expenses, taking into account those we employ and those who work for us on outsourced arrangements — the planning aspect is really important,” she said.  

Recognizing current-day workforce management challenges 

Experts agree that managing human capital has grown increasingly difficult. Many organizations continue to face recruitment and retention challenges against the backdrop of an aging patient population with increasingly complex clinical needs that require even more staff time and attention.  

“I’ve been spending a lot of time partnering with our human resources and clinical teams on different staffing models and thinking about, ‘How can we redesign our benefit program for recruitment and retention to try to address some of those staffing challenges that we’ve been experiencing?’” said Kirsten Largent, CFO, OSF HealthCare in Peoria, Illinois. “Labor management is probably not new to the CFO, but it certainly becomes more important as our staffing challenges have been more enhanced.” 

Access to advanced capabilities around data analytics positions hospitals and health systems to predict and respond to staffing needs with greater agility. 

“The more precise we can be in determining where our vacancies are and where our needs will be, the more effective we can be in deploying our staff, whether that be on a permanent basis, on a per diem basis or on a temporary basis,” said B.J. Krech, associate vice president, talent strategy, human resources for Rush University System for Health. “Leveraging technology enables us to deliver on our workforce strategy to be efficient and precise — not overstaffed or understaffed. It also allows us to create more flexibility for staff, increasing their engagement and productivity. 

“I’d love for us to be able to get to a point where we’re leveraging technology to predict staffing vacancies based on more than historical data and seasonality — where we are more accurately anticipating staffing demands to align with projected recruitment pipelines months in advance,” he said. “We’re on that journey now.” 

One challenge hospitals and health systems typically encounter in generating a detailed data view occurs when disparate HCM and workforce management systems are used.  

Many organizations use an ERP system for basic workforce management along with multiple standalone systems, talent acquisition, employee development, scheduling, labor and productivity, compliance and other human resource processes. However, with these disparate systems comes added maintenance costs as well as multiple sources of truth, necessitating frequent data reconciliation. In addition, manual calculations and forecasting remain prevalent, resulting in challenges and inefficiencies when extracting essential information. This makes it difficult and time-consuming to analyze labor costs and predict future labor needs. 

It’s one reason why leading organizations are exploring the use of a modern, full-suite, AI-powered HCM solution to meet the industry’s complex needs in managing a diverse workforce. 

Tapping into the power of workforce data 

At The Johns Hopkins Hospital, the organization’s multi-year journey, tentatively set to conclude in 2027, will begin with implementation of a new ERP system followed by integration of a single, unified HCM system powered by people-first AI and analytics.  

“We need to be able to accurately assess, in a very timely way, not just what’s happening now, but our future needs as well,” Williams said. “To the extent that an integrated system will allow us to do that with very little manipulation and human intervention, all the better. The goal is to remove that human touch that is transactional in nature.” 

Williams believes projecting future resource needs will help support the hospital’s strategic goals in the most comprehensive yet economically prudent way possible. For example, using historical data and predictive analytics, the organization will be able to immediately leverage intel about the number of clinical, ancillary and administrative staff necessary to accommodate growth in its clinical programs. Even when coupled with various workforce add-on solutions, its current ERP system does not — and cannot — provide this level of insight, she adds. 

“Creating a comprehensive business plan is critically important now, but it will be even more important as healthcare continues to evolve,” Williams said.  

At Henry Ford Health, the health system is working toward implementing a standardized workforce management platform across the organization as part of its joint venture with Ascension Michigan. Damschroder anticipates these efforts will accelerate following the organization’s move to a single EHR, set for late spring. 

“This will help us see more broadly across our integrated organization and really start to understand, ‘This is what we planned for. This is what actually happened. Why did that happen, and how can we get to the next best action?’” she said.  

“The next avenue in workforce planning is around the predictive analytics tied to capacity management and what’s happening in scheduling for procedures and capacity management in the hospital,” she said. “This is where analytics is really going to take us. It’s part of why we want to quickly integrate our scheduling platform and then move further upstream to improve the planning process.” 

Later this year, Henry Ford Health is contemplating deploying a mobile scheduling app — connected to its workforce management platform — that enables employees to easily sign up for shifts and for managers to let them know what’s available. Ultimately, timing will depend on the pace of other integration activities. 

“There will be some great wins for managers and employees with this mobile app,” Damschroder said. “It will allow for a lot more transparency for employees who work at multiple sites to be able to pick up shifts. It also has other capabilities and features that make it easier for managers to manage on the go, rather than being tethered to their desk.” 

Rush, meanwhile, is amid an ERP implementation that will integrate ERP and HCM capabilities. 

“Having all of our facilities on one system that interweaves HR, finance, payroll and more will give us a lot more visibility and systemization,” Krech said. “We’re very excited to see what the other side of that implementation will look like.” 

Reaping the rewards of integration 

As The Johns Hopkins Hospital moves forward with ERP-HCM integration, Williams said she anticipates the organization will experience the following benefits: 

• Enhanced benchmarking capabilities. Williams believes more detailed workforce data will help the hospital perform external benchmarking. “The easier it is to extract information, the more quickly we can move toward industry best standards,” she said. 
• Improved data integrity. With a single source of truth, users can rely on data with greater confidence. When errors are detected, it’s also easier to fix them immediately.  
• Nimbler decision-making. In the absence of manual calculations, users can access the data they need to make informed business decisions more quickly.  

“With projects like this, it’s not just about generating new revenue,” Williams said. “You need to also look at it in terms of efficiencies gained and cost avoidance. Increasing efficiency and promoting better planning are promises we believe will come to fruition once we get everything fully integrated and up and running.” (See the sidebar on previous page for additional benefits of ERP-HCM integration.) 

5 lessons learned  

Although The Johns Hopkins Hospital is relatively early on in its journey toward ERP-HCM integration, Williams says several learnings have already emerged. Here are five of them. 

Lesson 1: Executive support for ERP-HCM integration is paramount. “Our leaders do a really good job of leading with the ‘why.’ Why is this important to our organization, and how will it position us to do things better and more efficiently?” Williams said. 

Lesson 2: Don’t underestimate change management. “You need change agents in place to get over the hurdles of execution for everyone who will interact with the new system,” Williams said.  

Lesson 3: Involve the right stakeholders. “You need the right folks at the table to drive implementation,” she said. “By this, I mean diversity of thought. You need to appreciate different perspectives to find the right solution. It’s not just a nursing tool or a finance tool. It’s an enterprise tool, and all voices must be heard.” 

Lesson 4: Transparency is key. This includes answering questions such as: What is the overall project timeline? What are the project milestones and who or what department is responsible for meeting them? What are the capabilities of the new system, and how will the organization use it?  An organizational chart depicting implementation teams, steering committees and executive sponsors is critical to ensure clarity and information dissemination. 

Lesson 5: Collaborate, collaborate, collaborate. “The nature of going through this integration and moving to a different platform is causing us to collaborate across teams,” Williams said. “This collaboration has always been there, but attention and resources are often pulled in different directions as priorities change. Now, we are really focusing on prioritizing what’s important so we can ensure a successful implementation.” 

For example, one of the hospital’s work groups, which includes representation from business analytics, human resources, finance, information technology and nursing, is focused on establishing consistent labor and productivity metrics to promote visibility, comparability and control needed to balance cost, quality and workforce well-being. 

At Henry Ford Health, simply starting the journey toward integrating workforce management systems during a time of change — even as the health system pauses this process amid its EHR integration — has provided multiple benefits. This includes supporting higher levels of transparency for managers and leaders. 

“This will help us see more broadly across our integrated organization and really start to understand, ‘This is what we planned for. This is what actually happened. Why did that happen, and how can we get to the next best action?’” Damschroder said.  

“The next avenue in workforce planning is around the predictive analytics tied to capacity management and what’s happening in scheduling for procedures and capacity management in the hospital,” Damschroder said. “This is where analytics is really going to take us. It’s part of why we want to quickly integrate our scheduling platform and then move further upstream to improve the planning process.” 

Meeting strategic goals: ERP alone is not enough 

While ERP systems excel at financial/operational management, they are insufficient for modern workforce needs. That’s because many ERP systems: 

• Are inherently complex and non-user friendly, leading to underutilized analytics and other features as they are typically used by specific functions, whereas HCM systems are used by all employees 

• Fail to provide adequate customer support, necessitating external consultants 

• Lack the depth of people data needed to make informed and timely decisions, including details like roles, skills and performance history 

• Require third-party integration for point solutions, resulting in hidden costs associated with data migration 

Instead, supplementing the ERP system with an HCM system supports a holistic approach that aligns an organization’s people strategy with its business strategy. Following are several benefits of this supplementation and integration: 

• Compliance and risk mitigation. Automate updates for complex healthcare-specific labor law requirements and provide audit trails and documentation for risk management.  

• Employee retention. Attract and retain top talent through tools that support employee development, growth and engagement.  

• Operational efficiency. Streamline HR processes and reduce administrative burden with integrated payroll, timekeeping and financial systems. Also eliminate the need for costly, time-consuming data migration and integration. 

• Workforce insights and real-time visibility. Leverage advanced analytics on turnover, productivity and labor costs and enable better decision-making through real-time, data-driven workforce planning.  

10 questions to consider when evaluating HCM systems 

Organizations should evaluate their ERP-HCM integration strategy to stay competitive and future-ready. Here are 10 questions to consider when evaluating an HCM system to ensure that implementation of a strategic workforce platform that unifies HR, pay and workforce management around real-time, data-driven decision-making: 

1. Does the HCM system cover end-to-end employee lifecycle management? 

2. Does the HCM system integrate seamlessly (e.g., natively or via API) with the ERP and EHR systems already in place? For example, does the scheduling module support acuity-based staffing and real-time census data feeds from the EHR? Can it manage multiple pay scales, union contracts and labor rules typical in healthcare? 

3. Does the HCM system support predictive analytics (e.g., forecasting staffing gaps, identifying burnout risk)? 

4. How does the HCM system manage role-based access controls and audit trails for sensitive data? 

5. How will we be able to reduce our technology footprint after implementing the HCM system? 

6. Does the HCM have pre-built integrations and API to allow for seamless data flow between the systems?  

7. Is the interface intuitive for both HR administrators, front office and front-line staff? And does the vendor offer training, change management and onboarding support for staff? 

8. Can the HCM vendor clearly show where labor inefficiencies and avoidable costs exist today, and quantify the financial impact of fixing them?  

9. What is the total cost of ownership of the HCM system? How can — and should —we measure ROI? 

10. What standard reports and dashboards are included in the HCM system? Can we create custom KPIs and benchmarks? 

By the numbers 

For a 7,000-employee organization with an average overtime hourly rate of $93.88, an overtime decrease of 0.5% yields a savings of $3 million per year — achievable through visibility within a workforce management platform.  

_{Source: UKG Data-Driven Healthcare Labor Assessment} 

Looking ahead 

Experts agree that regardless of an organization’s approach to human and workforce management, data plays a critical role.  

ERP-HCM integration gives organizations a competitive advantage because it creates a complete organizational platform that strengthens business operations and workforce management. 

Williams cites the power of consistent metrics in helping her pinpoint costs more accurately for anticipated labor needs across settings. For example, with consistent metrics, she can determine whether she’ll likely need nurses in the ICU, operating room or clinic in the months ahead — and what those labor needs will translate to in terms of cost.  

“If numbers fluctuate drastically, so will cost,” she said. “And the going rate for certain types of nurses is higher. I need to know if my agency costs will be twice that of what I’m experiencing now.” 

Damschroder, meanwhile, points to the value of workforce management system standardization in supporting higher levels of efficiency, productivity and employee engagement. “You really want to have better clarity of your staffing demand across the system so that you can pre-plan and schedule your folks for the right procedures, the right acuity,” she said. “You can’t control everything, but looking for ways to create agility and flexibility in scheduling that provide a level of stability creates employee satisfaction.” 

About UKG

UKG is the Workforce Operating Platform that puts workforce understanding to work. With the world’s largest collection of workforce insights and people-first AI, our ability to reveal unseen ways to build trust, amplify productivity, and empower talent is unmatched. It’s this expertise that equips our customers with the intelligence to solve any challenge in any industry — because great organizations know their workforce is their competitive edge.

_{This published piece is provided solely for informational purposes. HFMA does not endorse the published material or warrant or guarantee its accuracy. The statements and opinions by participants are those of the participants and not those of HFMA. References to commercial manufacturers, vendors, products, or services that may appear do not constitute endorsements by HFMA.}