The shift to a value-based purchasing model requires more efficient delivery of services to patients as well as reductions in unnecessary or avoidable expenditures. Healthcare organizations have strict standards to meet when seeking reimbursements for services or federal financial incentives, forcing leaders to reevaluate how money is spent across departments, and where cuts can be made to improve financial performance. Payroll software solutions help healthcare leaders keep track of money paid out to employees, and measure salary growth and overtime costs to pinpoint areas of wasteful spending.
Overtime costs are impacting the bottom line
When healthcare organizations experience reduced staffing levels or sharp increases in census, workers may find themselves staying at the hospital past their scheduled shift, racking up overtime hours in the process. While some overtime work is unavoidable, industry leaders encourage organizations to prevent overtime whenever possible, as the cost of paying workers to stay beyond their scheduled shift can add up over time.
According to national studies, over 50% of full-time nurses work overtime, averaging seven hours per nurse, per week1. For many hospitals, nurse overtime accounts for 7-10% of total hours worked2. Unmanaged overtime in the 10% range is costly, roughly $3 million for a 300 bed hospital. By reducing nurse overtime from 7.5% of total hours to 2.5%, this same hospital can save north of $1.2 million annually3.
Workforce management solutions can help managers keep better track of overtime hours to help determine what departments may need more regular staff or help from contingent staff to meet patient demands more effectively and reduce overtime hours.
Discrepancies in staff salaries
Healthcare organizations can leverage payroll and human resources software to monitor employee-related costs by comparing the salaries of workers on the same level to ensure biases are not impacting payouts. While healthcare leaders may not intentionally be paying workers inconsistently across departments or skill set, certain hiring habits may be overlooked and negatively impact profit margins.
The Medical Group Management Association’s report4 on healthcare compensation looking at 2013 data revealed inconsistencies in salary figures for CRNAs, physician assistants and nurse practitioners. CRNAs made $43,750 more in median compensation than nurse practitioners. The media salary for CRNAs was $ 154,214, $94,446 for physician assistants and $110,460 for nurse practitioners.
Similarly, data from the U.S. Census Bureau5 revealed male registered nurses are earning more money than their female counterparts despite the field historically being dominated by women. Since 1970, the percentage of male RNs has increased from 2.7 percent of total RN population to 9.6 percent in 2011. Now, 330,000 male RNs work alongside 3.2 million female RNs. The data showed male nurse salaries averaged $60,7000 per year, a 19 percent jump over the $51,100 average for female RNs.
Payroll solutions offer decision makers reporting capabilities to breakdown compensation practices by department and worker demographic to track activities and identify problem areas. When payroll solutions are fully optimized, healthcare organizations may find ways to free up capital for other areas of operations or to offer competitive salaries to incoming professionals when expanding facilities or services.
1 Bae, Sung-Heui. “Nursing Overtime: Why, How Much, and Under What Working Conditions?” Nursing Economics, 30, no. 2 (March/April 2012): 60-71.
2 The Advisory Board Company. “Data and Analytics Nursing Productivity Benchmark Generator.” Accessed July 2, 2014. http://fac.advisory.com/2014_B_NUBI_BGFramework/Main/GetSession/?var=917910FF-D016-4149-BB43-DD6666801BC0
3 Sage Growth Partners Analysis.
Nowadays, you are hard pressed to go even one day without reading an article, hearing a conversation or thinking about the future of healthcare. What will it look like? Will our organization remain intact? Do we have the right people to drive our strategy? Is our culture one that supports transformation? How will changes in reimbursement impact us? All of these questions most likely move in and out of your mind constantly. At least they do in mine. Now the most important question is: What are we doing to understand and ensure our organization is prepared for the future?
We know that we are facing extreme pressure to provide better care at lower costs. Healthcare reimbursement is uncertain and there is great emphasis on achieving consistent, high quality and exceptional patient satisfaction like never before. We also know that the labor market is tightening and there is increased competition for talent.
The Importance of Analytics
During this time of uncertainty, talent analytics are critical in order to understand our current workforce and assess our readiness to meet current and future workforce challenges. To me, talent analytics provide an organization with workforce intelligence and insight for their leadership teams as they increase their capacity to lead from the future as it emerges.
Most healthcare organizations have a culture focused on patient satisfaction, quality metrics and financial benchmarking. Typically, workforce analytics are last to appear as a key priority. Does this mean that organizations do not believe their workforce is their most important asset? No. I believe that there hasn’t been the right climate or environment within the healthcare industry before now where organizations understand the true importance of investing in the systems, software and data mining for talent. Why? Hospitals have been like the Field of Dreams-if you build it, they will come. For decades the healthcare industry has been the ‘place to be’ the place to work and we had an overabundance of potential candidates.
What has changed? Our competitive landscape has changed, the demand for top talent (yes, top talent not just talent) has increased and it is a buyer’s market. Candidates have many choices available to them and various incentives to join organizations. Supply is going down on candidates and demand is going up. And when I speak of supply I am speaking of top talent. We have applicants for open positions; however, we no longer recruit talent we select the right fit. We understand the impact of hiring a top performer versus a warm body and our leaders understand that hiring is the most important decision they make. Why? Talent drives patient satisfaction, quality scores and how well we perform and what level of care we can provide to our community. Without talent we just have a strategy sitting on a shelf.
Where to Start
So let me go back to the notion of talent analytics. You have probably heard the saying that without data you are just another person with an opinion. The same thing holds true for the function of Human Resources. We are here with a focus of providing solutions, strategic support and guidance to our organization to effectively run the business. How do we do that without data? Without data we are only providing our opinion on what we ‘feel’ and what we ‘think’. To me, that is HR of yesterday. The role of HR today is to provide data, metrics and analytics that tell a story and provide insight for our leaders to understand the makeup of their workforce and to know where to focus for the future.
When I speak of the makeup of the workforce, I am referring to key information that would include the following:
- Of persons in key positions
- Of persons in key positions
- Of RN workforce
- Of key providers
- In key positions such as RN, providers, leadership, IT
- A comparison of how the diversity of the workforce relates to the diversity of the patient population your organization serves
- Percentage of BSN prepared RNs
- Labor compensation ratio
- Vacancy rates for key positions
- Average turnover
- Average retention rate
- Retirement eligibility
- Within 1 year
- Within 5 years
- Within 10 years
If you need a starting point within your organization to understand how to develop a plan, refer to the American Hospital Association’s reference titled, Developing an Effective Health Care Workforce Planning Model. This will provide you with a framework to understand how to create a plan as well as what data you need to begin to mine on a regular basis.
So when we look ahead to the future of healthcare we can either do so with trepidation or excitement. I firmly believe if you have the data and analytics to prepare your organization for the uncertainty that you will look ahead with excitement.
Lakeland Health’s Journey Begins
Within our organization we are preparing in a number of ways. We are assessing our current capacity within our HR team in order to assess our own readiness and competencies to data mine and analyze metrics. Over the past year we have been experimenting with a leadership dashboard to provide each unit within the healthcare system with quarterly metrics on their own workforce. This dashboard will be rolling out in the next few weeks and we know this is just the start. AND it is exciting to start! Why? We know that there is great value in providing our leaders with data at their fingertips and creating an awareness into their leader response times for open positions, engagement within their teams, their manager effectiveness, turnover, retention, injuries and illnesses.
We are also in the process of finalizing a workforce report which will provide an in depth look into our workforce, ongoing development and most importantly what our plan is over the next 3-5 years to prepare our organization for the future. This effort is a collaborative effort between HR, Training and Development and Physician Services.
For the last four years we have created an Annual Report with key accomplishments, insight into what is happening around Lakeland related to our workforce as well as key metrics to our Board of Directors. We have also provided data to our leaders when they have inquired. The change is that we are going to push the data out to our organization instead of leaders having to ‘pull’ or ask for it. We know that this shift is critical as we continue to increase awareness into the true importance of understanding our workforce, assessing key data on a regular basis and utilizing data to drive our people strategy.
Stay tuned for the next blog which will speak about how technology is hindering or helping prepare you for the future!
Lakeland Health has been rewarded for participation in this blog and is an active participant in the API Healthcare STAR client reference program that rewards clients for sharing their outcomes, expertise and opinions.