In this business profile, Richard Lopez, vice president of advisory services, and David Osborn, senior vice president of strategic accounts and advisory services at HealthTrust, talk about strategies for better managing the hospital and health system workforce.
What drivers are pushing organizations to optimize their workforce?
Although healthcare organizations have always strived to deliver the highest quality care, there is mounting pressure to maintain top performance amid flattening revenue and rising costs. Payments are shrinking or remaining unchanged while the costs of new technology, supplies, pharmaceuticals, and other items are all on the rise. At the same time, organizations must comply with ever-changing state and federal regulations, and these efforts have their own price tags. Taken together, these drivers are creating a perfect storm in which organizations are being pressured from a cost perspective with no relief in sight on the revenue side.
One area that is ripe for improvement is workforce management. Labor is the largest expense for hospitals and health systems, accounting for between 40 percent and 55 percent of an organization’s total operating costs. Compare this to supply chain, which is about 10 percent to 18 percent of operating expenditures, and one can quickly see the impact that optimizing the workforce could have.
Remarkably, workforce management has not received as much attention in the past 20 years as some other cost control areas. In general, organizations have focused more on managing supply, pharmacy, and medical device costs, as well as capital expenditures. Although there have been opportunities to better manage labor and productivity for a long time, this area is just starting to receive the attention it warrants.
What hurdles do organizations face when engaging in this work?
To successfully manage a healthcare organization, leaders must keep numerous plates spinning at one time. They must deliver high quality care; stay abreast of the latest technological developments; keep staff, physicians, patients, and families happy; and be dedicated financial stewards of scarce labor resources. These diverse priorities are pulling leaders in different directions, making it hard to zero in on one area and realize the level of improvements needed to make meaningful differences in the bottom line.
Unlike other major expense categories—supplies, pharmacy, and facilities, for example—most hospitals and health systems don’t have a dedicated senior leader who takes responsibility for the labor expense across the organization. Although human resources departments assume responsibility for staff sourcing, recruiting, onboarding, and training, this function is not usually involved in managing labor costs per se. That responsibility is shared by multiple senior leaders, managers, and supervisors throughout the enterprise.
Moreover, many healthcare organizations don’t use standard metrics for managing labor cost and productivity, with various departments and managers monitoring productivity in different ways, if at all. This makes it hard to get a handle on current performance, identify improvement opportunities, and make swift and meaningful changes.
The upshot is that when a large group of people is trying to manage a complex entity like the organization’s workforce, there generally is a lot of variability in the way it’s done, and progress toward goals isn’t made as quickly or effectively as anyone would like.
How does your service offering(s) address these needs?
Fundamentally, there are two ways in which HealthTrust can be of help. First, we offer a comprehensive assessment of an organization’s labor management processes, from staff scheduling to managing overall staff productivity. Our goal with this service is to delve into the organization’s work processes and current state to determine whether it is spending the appropriate amount of dollars on labor resources. We spend time meeting with organization leaders, from senior executives through middle managers, collecting a variety of workload and workforce information. This lets us understand how the organization works and what its opportunities and risk points are. We then benchmark the organization against other high-performing entities to illustrate how it compares to peers. This outward view also allows the hospital or health system to see how others are implementing leading practices that yield higher productivity at a lower cost.
Next, we provide a range of technology that facilitates effective labor management. This includes but is not limited to staff scheduling, patient volume forecasting, and daily productivity monitoring solutions. All functions are integrated such that the various systems share information. For instance, the scheduling software “talks” with the forecasting system to optimize scheduling given projected staffing requirements. These two solutions then share information with the productivity tool to analyze and provide insight regarding overall efficiency across a department, facility, and enterprise.
What are some considerations for healthcare leaders when choosing this type of service? Are there key features that people should know about?
A significant differentiator with our products is they were born out of the needs of an actual health system—HCA Healthcare—which has many acute care facilities spread across the country. As such, there is real operator experience hardwired into all our offerings. The tools were developed to meet real-world problems faced by real-world organizations, and they have had a substantial effect on the productivity, labor, and cost metrics of those organizations. Our solutions strike a balance between delivering a structured and consistent approach to managing labor productivity and acknowledging that certain departments need some degree of flexibility in how they tackle workforce management. HealthTrust Workforce tools have been tried and tested in multiple settings, and they have proved to be effective across diverse environments.
What advice would you give healthcare leaders when choosing among vendors?
In addition to looking for tools based on operator experience, it is beneficial to partner with a vendor committed to continuously enhancing its offerings. Health care is in a constant state of flux and having stagnant solutions won’t realize long-term goals. At HealthTrust Workforce, we are committed to evolving our services and solutions to keep abreast of changing times. End-user input is key in our product enhancement strategy.
With regard to assessments, an organization should be sure the people coming to review its current operations have deep experience in labor management, particularly in the areas targeted for improvement. For example, if changes are being considered in the Emergency Department, guidance should come from people who have robust knowledge of that area and can suggest options and implement initiatives. Do they understand what kinds of staff are needed and what the labor challenges are? Do they know how to address productivity while still managing the patient experience, clinical outcomes, and other big picture items? Managing labor costs in today’s hospital environment with competing priorities and multiple stakeholders is incredibly tough. When a healthcare organization seeks help from a vendor in this regard, the organization must be confident that the vendor’s people know what they’re doing.
As healthcare organizations implement use of your products and services into their day-to-day operations, what advice would you offer so they can best set themselves up for success?
As mentioned earlier, it can be extremely valuable to designate a point person to be responsible for the labor expense across the organization. Often called the chief staffing officer, this job function may fall to the organization’s COO, CFO, or Chief Nursing Officer. This individual can serve as a single point of contact and have the ultimate responsibility for managing labor in the organization.
It’s also important to have ways to measure both the results being obtained and whether the labor management tools and resources are being effectively and consistently utilized. We’ve seen health systems put in a labor management tool and not see the desired increase in performance. It likely wasn’t because the tool was flawed, but more that the solution was never fully integrated into the organization. Hospitals and health systems should establish metrics upfront that show whether changes were made and what the impact of those changes has been. Remember, the tools themselves don’t change anything. It’s their ongoing, active, and appropriate implementation and long-term, reliable use by organization leaders that moves the needle.
Are there any educational materials you can share to help healthcare providers in these efforts?
For more information about HealthTrust and how it approaches workforce management, download our most recent case study at https://go.healthtrustpg.com/wfs-casestudy.
HealthTrust (HealthTrust Purchasing Group, L.P.) is committed to strengthening provider performance and clinical excellence through an aligned membership model and the delivery of total spend management advisory solutions that leverage our operator experience, scale, and innovation. Headquartered in Nashville, Tennessee, HealthTrust serves approximately 1,600 acute care facilities and members in more than 26,000 other locations, including ambulatory surgery centers, physician practices, long-term care and alternate care sites. On Twitter @healthtrustpg.