Category Archives: Labor Spend Management

Labor shortages will strain hospital budgets through 2022, Moody’s says

Posted on by • Posted in Budget, Coronavirus, Coronavirus Delta Variant, Coronavirus Mutation, Deferred Healthcare, Financially Distressed, Health System, Hospital, Hospital Industry, Labor Shortages, Labor Spend Management, Net Income, Operating Expenses, Operating Income, Operating Margin, Operating Metrics, Operating Performance, Operating Revenue • Leave a comment

https://www.healthcaredive.com/news/labor-shortages-pressure-hospital-budgets-expenses/607759/

Dive Brief:

  • The delta variant of the coronavirus continues to pile on staffing challenges for hospitals as they spend more resources on recruiting and retaining employees, jack up benefit options and offer steep sign-on bonuses, according to a Tuesday report from Moody’s Investors Service.
  • Those expenses will strain hospital profitability at a time when lucrative non-emergency procedures are on hold in some areas to handle incoming COVID-19 inpatients. Moody’s expects the weight on hospital budgets to continue through next year.
  • Although demand for temporary nursing staff dipped last week, it is still well beyond pre-pandemic levels, according to data gathered by Jefferies analysts. Crisis jobs — those that are rapid response or bill more than $100 an hour — represent more than three quarters of staffing firm Aya Healthcare’s openings, the third highest percentage Jefferies has recorded.

Dive Insight:

The highly contagious delta variant is wreaking havoc on the U.S. healthcare system as mostly unvaccinated people are filling ICUs more than a year and half into the pandemic. Clinicians who have throughout that time been stressed working long and difficult hours are reporting intense burnout as some mull leaving the profession altogether.

Meanwhile, vaccine mandates have gone into effect for many hospitals. Although they report that the vast majority of employees are complying, even the small losses of those who refuse can take a hit to staffing resources.
This need has driven increases to the salaries nurses can command, as well as to benefit packages, sign-on bonuses and the offer of services like child care, Moody’s said.

The report also noted that the current shortage — unlike previous ones — also includes nonclinical staff such as dietary and environmental services workers.

While Moody’s focuses on nonprofit operators, expense challenges will be an important metric to watch during the upcoming earnings season. Although all major for-profit hospital operators beat Wall Street expectations on earnings and revenue in Q2 and most posted profit increases, expenses were a rising line item.

Hospital labor expenses rise

For-profit health systems’ labor costs year over yearhttps://datawrapper.dwcdn.net/G7DCw/2/

And consultancy Kaufman Hall has warned U.S. hospitals will lose about $54 billion in net income this year, while an earlier Moody’s report predicted impacts to the country’s health system from COVID-19 will last for decades.

As the Biden administration works to encourage more vaccinations through a combination of carrots and sticks, it remains unclear when delta may peak and what future variants could bring. Even after hospitals are on more stable ground in terms of capacity, further challenges will remain as patients return for care they deferred earlier.

And there are more long-term concerns as well. “Even after the pandemic, competition for labor is likely to continue as the population ages — a key social risk — and demand for services increases,” according to the Moody’s report.

Jefferies analysts agreed, saying the demand for temp nurses will go down but remain elevated. “Additionally, the fundamental demand drivers for nurses that existed even before COVID (i.e., nurse population demographics) have been boosted by the lingering effects of the pandemic on the profession and are likely to boost demand for temp staffing post-2022,” they wrote in the Wednesday note.

‘A triple whammy’: Why hospitals are struggling financially amid the delta surge

Posted on by • Posted in Coronavirus, Coronavirus Delta Variant, Coronavirus Mutation, Deferred Healthcare, Financially Distressed, Health System, Hospital, Hospital Industry, Labor Spend Management, Net Income, Nonoperating Income, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Metrics, Operating Performance, Operating Revenue, Pandemic, Public Health, Public Opinion, Public Perception, Public Safety, Public Schools, Public Trust, Recruiting, Talent Identification, Talent Imperative, Talent Management, Unvaccinated, Vaccination, Vaccine, Vaccine Efficacy, Vaccine Hesitancy Rate, Vaccine Safety, Vaccine Skepticism, Vaccine Supply • Leave a comment
https://www.advisory.com/daily-briefing/2021/10/07/hospital-struggles?utm_source=public_db&utm_medium=email&utm_campaign=2021oct07&utm_content=public_headline_public_x_x_x_x&elq_cid=4778863&x_id=
Hospitals were struggling before the pandemic. Now they face financial disaster (opinion) - CNN

n addition to treating an influx of Covid-19 patients, many hospitals are struggling with what one administrator calls a “triple whammy” of financial burdens—stemming from plummeting revenue, higher labor costs, and reduced relief funds, Christopher Rowland reports for the Washington Post.

Hospitals in less-vaccinated areas face spiking labor costs

In areas with low vaccination rates, particularly in southern and rural communities, hospitals have been overwhelmed with Covid-19 patients, exacerbating labor shortages as workers burn out or leave for more lucrative positions, Rowland reports.

“The workforce issue is just dire,” Stacey Hughes, EVP of government relations and policy for the American Hospital Association (AHA), said. “The delta variant has wreaked significant havoc on hospitals and health systems.”

In Louisiana, Mary Ellen Pratt, CEO of St. James Parish Hospital, said many nurses quit due to the grueling conditions as Covid-19 cases spiked. “I didn’t have any extra money to incentivize my staff to pick up additional shifts,” she said. “This is coming out of bottom-line money I don’t have.”

Separately, Lisa Smithgall, SVP and chief nursing executive at Ballad Health, said the health system—which has 21 hospitals in eastern Tennessee and southwestern Virginia—has faced similar problems retaining staff amid Covid-19 surges.

“We knew we were at risk in our region because of where we live and because of our vaccination rate being so poor,” Smithgall said. “At one point, we were seeing four or five nurse resignations per week. They couldn’t do it again; they emotionally didn’t have it. They were so upset with our community.”

To fill in these growing gaps in their workforce, many hospitals have had to turn to costly contract workers, Rowland reports—a significant financial burden that further strains hospitals’ resources.

For example, Ballad Health went from hiring fewer than 75 contract nurses before the pandemic to 150 in August 2020 and 450 in August 2021. Moreover, according to Smithgall, contract nurses previously made double or triple what permanent staff nurses made, but now Ballad sometimes has to pay up to seven times as much for contract nurses as hospitals compete for workers to fill shifts.

Delayed elective surgeries deepen hospitals’ financial struggles

Many hospitals, including those in areas with high vaccination rates, have delayed elective surgeries, a crucial source of revenue, amid nationwide surges in Covid-19 cases, Rowland reports—further compounding financial struggles for many organizations.

On Aug. 26, Ballad Health postponed a long list of elective surgeries—including hernia repair, cardiac and interventional radiology procedures, joint replacements, and nonessential spine surgery—to preserve space in its hospitals and conserve workers. Ballad is now allowing elective surgeries again, but only for a limited number of procedures that do not require overnight stays.

Similarly, St. Charles Health System in Oregon postponed elective surgeries in August “while we responded to a surge that was significantly greater and much more sudden than the surge in 2020,” Matt Swafford, the health system’s VP and CFO, said.

According to Swafford, the health system lost $5 million a week through August and September, around $1 million of which was repayment of emergency advances on Medicare reimbursements from last year.

“I don’t think anybody saw this level of surge coming in 2021 after what we saw in 2020,” he said. “We’re just not equipped to be able to simultaneously respond to the urgent needs of the community [for more typical surgeries and care] at the same time that a third of our beds are occupied by highly infective Covid patients.”

Many hospitals likely to end the year at a deficit

Further compounding the issue, according to Moody’s Investors Service, is that the provider relief funds that previously made up 43% of operating cash flow at nonprofit and government-run hospitals in the United States are now dwindling down.

In addition, the latest portion of provider relief funds to be distributed must be based on expenses incurred by hospitals before March 31, 2021, which don’t account for months of the delta surge, Rowland reports.

Premier, a group purchasing and technology company serving more than 4,000 hospitals and health systems, analyzed payroll data of 650 hospitals and found that U.S. hospitals have spent a total of $24 billion a year during the pandemic to cover excess labor costs, primarily for overtime and contract nurses. This was an increase of 63% from October 2019 to July 2021, Rowland reports, with hospitals in the Upper Midwest and across the South seeing the largest increases.

“It’s going to leave them huge deficits that they are going to have to work out of for years to come,” Michael Alkire, Premier’s CEO, said.

Kaiser Permanente union in California nearing strike

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https://www.healthcaredive.com/news/kaiser-permanente-union-in-california-nearing-strike/606840/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202021-09-20%20Healthcare%20Dive%20%5Bissue:36805%5D&utm_term=Healthcare%20Dive

Dive Brief:

  • A union representing 24,000 Kaiser Permanente clinicians in California has put a pause on its 24-year partnership with management, the group said Friday.
  • Leadership of the union voted last week to move forward with a membership vote that would authorize the bargaining team to call a strike.
  • The United Nurses Associations of California/Union of Health Care Professionals said in a press release Kaiser Permanente is planning “hefty cuts” to nurse wages and benefits despite the ongoing COVID-19 pandemic and high levels of burnout among nurses.

Dive Insight:

Union activity at hospitals has been ramping up since the onset of the pandemic, as front-line healthcare workers have been stretched to the brink with full ICUs, worries of infection and sick coworkers.

Now, Kaiser Permanente nurses in California are saying they’re not being appreciated for their efforts.

“How do you tell caregivers in one breath you’re our heroes, we’re invested in you, I want to protect you, but in the next say I want to take away your wages and benefits? Even say you’re a drag on our bottom line,” Charmaine Morales, executive vice president of the union, said in a press release. “For the first time in 26 years, we could be facing a strike.”

The most recent bargaining session between the health system and the union was Sept. 10. Another one hasn’t been scheduled, despite most contracts being set to expire at the end of the month, the union said.

The labor management partnership started in the 1990s as an attempt for the union and management to share information and decision-making, the union said.

But they also said company leaders have not been invested in the agreement recently.

“Kaiser Permanente has stepped back from the principles of partnership for some time now, and they have violated the letter of our partnership agreement in the lead up to our present negotiations,” union president Denise Duncan said in the press release. “Despite that, we are here and ready to collaborate again if KP leaders find their way back to the path — where patient care is the true north in our value compass, and everything else falls in line behind that principle. Patient care is Kaiser Permanente’s core business, or at least we thought so.”

The press release cites Kaiser’s profitability, as the system’s net income was nearly $3 billion in the second quarter of this year. However, that was a decrease of more than a third from the prior-year period.

It also noted multiple lawsuits alleging Kaiser tried to game the Medicare Advantage program by submitting inaccurate diagnosis codes. The Department of Justice has joined six of those lawsuits.

Kaiser Permanente did not respond to a request for comment by time of publication.

Labor Shortage extends beyond Nursing, beyond Hospitals

Posted on by • Posted in Health System, Healthcare Industry, Healthcare Providers, Hospital, Hospital Industry, Labor Shortages, Labor Spend Management, Recruiting, Talent Identification, Talent Imperative, Talent Management, Value Proposition • Leave a comment

https://mailchi.mp/60a059924012/the-weekly-gist-september-10-2021?e=d1e747d2d8

How Could You Be Affected by the Healthcare Labor Shortage? - Right Way Medical

The typical media coverage of the healthcare workforce crisis often focuses on the acute shortage of hospital-based nurses. For instance, the hospital forced to close a unit as nurses, burned out after 18 months of extra shifts taking care of COVID patients, leave for lower-stress, more predictable jobs in outpatient facilities or doctors’ offices.

But we’re hearing about a reverse trend in recent conversations with health system leaders. Instead of outpatient settings benefiting from an influx of nursing talent, ambulatory leaders report that nurses are now leaving for hospital or travel nursing positions that offer higher salaries and large sign-on bonuses. That’s forcing non-hospital settings to reduce operating room and endoscopy capacity.

Nor are shortages just in the nursing workforce. One system executive lamented that they had to cancel several non-emergent cardiac surgeries, not due to nurse staffing challenges; rather, they were short on surgical technicians. “Surgical techs aren’t leaving because of COVID,” the executive shared, “they’re leaving because the labor market is so strong, and they can make the same money doing something entirely different.” 

For lower-wage workers in particular, the old value proposition of working for a health system, centered around good benefits, continuing education, and a long-term career path, isn’t providing the boost it used to. Workers are willing to trade those for improved work-life balance, predictability, and the perception of a “safer” workplace.

Stabilizing the healthcare workforce will ultimately require providers to rethink job design, the allocation of talent across settings of care, and the integration of technology in workflow. And it will require re-anchoring the work in the mission of serving the community.

But in the short term, many health systems will find themselves having to pay more to retain key workers, including but not limited to hospital nurses, to maintain patient access to care. 
 

CFOs working around cost pressures, labor availability

Posted on by • Posted in CFO, Cost Management, Cost Reduction, Economic Indicators, Economic Outlook, Labor Shortages, Labor Spend Management, Market Outlook, Market Trends, Market Uncertainty, Recruiting, Talent, Talent Identification, Talent Imperative, Talent Management • Leave a comment
https://www.cfodive.com/news/cfos-working-around-cost-pressures-labor-availability/603566/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202021-07-20%20CFO%20Dive%20%5Bissue:35550%5D&utm_term=CFO%20Dive
Labor Shortage, Rising Costs, Supply-Chain Hiccups Hit Manufacturers - Bloomberg

Dive Brief:

  • While CFOs, on the whole, remain optimistic about an economic rebound this year, they’re concerned about labor availability and accompanying cost pressures, according to a quarterly survey by Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta.
  • Over 75% of CFOs included in the survey said their companies faced challenges in finding workers. More than half of that group also said worker shortage reduced their revenue—especially for small businesses. The survey panel includes 969 CFOs across the U.S.
  • “CFOs expect revenue and employment to rise notably through the rest of 2021,” Sonya Ravindranath Waddell, VP and economist at the Federal Reserve Bank of Richmond said. “[But] over a third of firms anticipated worker shortages to reduce revenue potential in the year.”

Dive Insight:

As many companies struggle to find employees and meet renewed product demand, it’s unsurprising CFOs anticipate both cost and price increases, Waddell said.

About four out of five CFO respondents reported larger-than-normal cost increases at their firms, which they expect will last for several more months. They anticipate the bulk of these cost increases will be passed along to the consumer, translating into higher-priced services.

Despite labor concerns, CFOs are reporting higher optimism than last quarter, ranking their optimism at 74.9 on a scale of zero to 100, a 1.7 jump. They rated their optimism towards the overall U.S. economy at an average of 69 out of 100, a 1.3 increase over last quarter. 

For many CFOs, revenue has dipped below 2019 levels due to worker shortage, and in some cases, material shortages, Waddell told Fortune last week. Even so, spending is on the rise, which respondents chalked up to a reopening economy.

“Our calculations indicate that, if we extrapolate from the CFO survey results, the labor shortage has reduced revenues across the country by 2.1%,” Waddell added. “In 2019, we didn’t face [the] conundrum of nine million vacancies combined with nine million unemployed workers.”

Consumer prices have jumped 5.4% over the past year, a U.S. Department of Labor report from last week found; a Fortune report found that to be the largest 12-month inflation spike since the Great Recession in 2008. 

To reduce the need for labor amid the shortage, many companies will be “surviving with just some compressed margins for a while, or turning to automation,” Waddell said.

How would “Medicare at 60” impact health system margins?

Posted on by • Posted in Cost Management, Cost Reduction, Health Policy, Health System, Hospice, Hospital Industry, Labor Spend Management, Market Consolidation, Market Power, Market Share, Market Trends, Market Uncertainty, Medicare, Medicare for All, Strategic Alignment, Strategic Imperative, Strategic Leadership, Strategic Plan, Strategy • Leave a comment

https://mailchi.mp/26f8e4c5cc02/the-weekly-gist-july-16-2021?e=d1e747d2d8

An estimate from the Partnership for America’s Healthcare Future predicts that nearly four out of five 60- to 64-year-olds would enroll in Medicare, with two-thirds transitioning from existing commercial plans, if “Medicare at 60” becomes a reality.

In the graphic above, we’ve modeled the financial impact this shift would have on a “typical” five-hospital health system, with $1B in revenue and an industry-average two percent operating margin. 

If just over half of commercially insured 60- to 64-year-olds switch to Medicare, the health system would see a $61M loss in commercial revenue.

There would be some revenue gains, especially from patients who switch from Medicaid, but the net result of the payer mix shift among the 60 to 64 population would be a loss of $30M, or three percent of annual revenue, large enough to push operating margin into the red, assuming no changes in cost structure. (Our analysis assumed a conservative estimate for commercial payment rates at 240 percent of Medicare—systems with more generous commercial payment would take a larger hit.)

Coming out of the pandemic, hospitals face rising labor costs and unpredictable volume in a more competitive marketplace. While “Medicare at 60” could provide access to lower-cost coverage for a large segment of consumers, it would force a financial reckoning for many hospitals, especially standalone hospitals and smaller systems.

Are recent labor actions getting nursing unions what they want?

Posted on by • Posted in Employee Benefits, Employee Compensation, Employee Morale, Employee Protections, Employee Satisfaction, Health System, Hospital, Hospital Industry, Labor Spend Management, Labor Strike, Labor Union, Labor Union Grievance, Nurse Staffing, Nurses, Nurses Compensation, Nurses Union, Nursing Home • Leave a comment
https://www.healthcaredive.com/news/are-recent-labor-actions-getting-nursing-unions-what-they-want/602900/?utm_source=Sailthru&utm_medium=email&utm_campaign=Newsletter%20Weekly%20Roundup:%20Healthcare%20Dive:%20Daily%20Dive%2007-10-2021&utm_term=Healthcare%20Dive%20Weekender
While nurses in Cook County, Illinois, struck a deal in recent days, those on a three-month-plus strike against a Tenet hospital in Massachusetts plan a protest at the chain’s Dallas headquarters.

Thousands of healthcare workers have waged strikes this summer to demand better staffing levels as the pandemic brought greater attention to what happens when a nurse must take care of more patients than they can reasonably handle.

In New York, a report from the attorney general that found nursing homes with low staffing ratings had higher fatality rates during the worst COVID-19 surges last spring helped spur legislators to pass a safe staffing law long-advocated for by the New York State Nurses Association.

While unions elsewhere face a steeper climb to win the success found in New York, through strikes and other actions, they’re attempting to get new staffing rules outlined in their employment contracts.

Most nursing strikes include demands for ratios, or limits on the number of patients a nurse can be required to care for, Rebecca Givan, associate professor in the School of Management and Labor Relations at Rutgers University, said.

“And employers are very anxious about that because it threatens their bottom line, so often when a compromise is found, it’s something that approaches a ratio but maybe has a bit more flexibility,” Givan said.

Some have been successful, like the 1,000 Chicago-area nurses at Stroger Hospital, Provident Hospital and Cook County Jail who waged a one-day strike on June 24 after negotiating with the county over a new contract for nearly eight months.

They reached a tentative agreement shortly after the strike, stipulating the hiring of 300 nurses, including 125 newly added positions throughout the system within the next 18 months.

The deal also includes wage increases to help retain staff, ranging from 12% to 31% over the contract’s four-year term, according to National Nurses United.

Meanwhile, 700 nurses at Tenet’s St. Vincent Hospital in Worcester, Massachusetts, have been on strike for over 100 days over staffing levels. Nurses represented by the Massachusetts Nurses Association have been trying to get an actual nurse-to-patient ratio outlined for specific units in their next contract.

The two sides haven’t come close to reaching a deal yet, and some nurses will travel to Tenet’s headquarters in Dallas on Wednesday in an attempt to appeal to corporate executives, according to MNA.

At the same time, federal lawmakers wrote to Tenet CEO Ron Rittenmeyer seeking details on the chain’s use of federal coronavirus relief funds amid the strike and alongside record profits it turned last year.

The hospital denied lawmakers’ claims in the letter that Tenet used federal funds to enrich executives and shareholders rather than meet patient and staff needs, saying in a statement it strongly objects to the “mischaracterization of the facts and false allegations of noncompliance with any federal program.”

The strike is currently the longest among nurses nationally in a decade, according to the union.

A number of other major hospital chains have contracts covering their nurses expiring this summer, including for-profit HCA Healthcare and nonprofit Sutter Health.

Unionized nurses at 10 HCA hospitals in Florida have reached a deal on a new collective bargaining agreement, though members still need to ratify it, according to National Nurses United. The details are still unclear.

And after joining NNU just last year, 2,000 nurses at HCA’s Mission Hospital in Asheville, North Carolina, ratified their first contract Saturday, which includes wage increases and the formation of a nurse-led staffing committee.

Newly-formed unions take an average of 409 days to win a first contract, according to an analysis from Bloomberg Law. In the healthcare industry, new unions take an average of 528 days to win a first contract, the longest among all sectors examined.

Across the country at Sutter’s California hospitals, disputes haven’t been so easily resolved. Healthcare workers at eight Sutter hospitals planned protests throughout July “to expose the threat to workers and patients caused by understaffing, long patient wait times and worker safety issues at Sutter facilities,” according to Service Employees International Union United Healthcare Workers West, which represents the workers.

Similar to the ongoing Tenet hospital strike, SEIU is highlighting Sutter’s profits so far this year and the federal relief funds it received.

A “perfect storm” is brewing in the healthcare workforce

Posted on by • Posted in Cost Management, Cost Reduction, Disruption, Employee, Employee Benefits, Employee Burnout, Employee Compensation, Health System, Hospital, Hospital Industry, Labor Spend Management, Work Life Balance, Workforce Development, Workforce Issues, Workforce Shortages, Workforce Strategy • Leave a comment

https://mailchi.mp/bade80e9bbb7/the-weekly-gist-june-18-2021?e=d1e747d2d8

Plastic Possibilities: Resin Production Meets the Perfect Storm | plasticstoday.com

A topic that’s come up in almost every discussion we’ve had with health system executive teams and boards recently is workforce strategy. Beyond the immediate political debate about whether temporary unemployment benefits are exacerbating a shortage of workers, there’s a growing recognition that the healthcare workforce is approaching something that looks like a “perfect storm”.

The workforce is mentally and physically exhausted from the pandemic, which has taken a toll both professionally and personally. Many workers are rethinking their work-life balance equations in the wake of a difficult year, during which working conditions and family responsibilities shifted dramatically. That, along with broader economic inflation, is driving demands for higher wages and a more robust set of benefits.

Meanwhile, many health systems are shifting into cost-cutting mode, due to COVID-related shifts in demand patterns and continued downward pressure on reimbursement rates, forcing a renewed focus on workforce productivity.

These combined forces threaten to create a negative spiral, which could lead to even worse shortages and deteriorating workplace engagement. It’s striking how quickly the “hero” narrative has shifted to a “crisis” narrative, and we agree completely with one health system board member who told us recently that workforce strategy is now the number one issue on his agenda.

No easy answers here, but we’ll continue to report on innovative approaches to addressing these difficult challenges.