Category Archives: Retention

Healthcare Finance Trends for 2023: Multiple Intersecting Challenges

Posted on by • Posted in Buy Now Pay Later (BNPL), Capacity Constraint, Commitment, Consumer Experience, Consumer Preferences, Consumerism, Cost Management, Cost Reduction, Cybersecurity, Digital Front Door, Earned Wage Access (EWA), Growth Strategies, Healthcare Finance Trends, Hospital at Home (HaH), Investment, Investments, Mobile Payments, Outpatient Care, Outpatient Surgery, Patient Financial Experience, Patient Financing, Price Transparency, Real-time Payments (RTP), Recruiting, Reimbursement Gaps, Retention, Rising Acuity Levels, Service Line Rationalization, Telemedicine, Trust, Trust Building, Virtual Care Strategy, Workforce Challenges • Leave a comment

https://www.commercehealthcare.com/trends-insights/2023/healthcare-finance-trends-for-2023

This annual look at high-impact trends affecting healthcare in the coming year is based on evaluation of current industry research data. Healthcare Finance Trends for 2023 (Trends) explores eight themes identified by CommerceHealthcare® ranging across four areas:

  • Financial. Providers enter the year contending with multiple financial stress points. They will also seek growth in technology-enabled remote care.
  • Patient financial experience. The need to drive not only improvement but also personalization of the financial experience is paramount. A central role will be played by patient financing programs which will see growing demand in 2023.
  • Trust. Building trust with all constituencies is explored as a linchpin for long-term provider success. The latest findings on cybersecurity show that this contributor to trust will continue to consume leadership attention.
  • Digital transformation. Pursuit of digital-first operations is accelerating, with the finance area an important focus. Emerging payment modes are finding a home in healthcare’s digital finance landscape.

This report’s consistent message is that these trends intersect in ways that compound both the challenges and the upside potential of strategies that address them.

1. Multiple Financial Stress Points Will Constrain Options

Healthcare’s financial predicament for the next 12–18 months is being described in strong terms. Citing $450 billion of EBITDA that could be in jeopardy, more than half of the industry’s project profit pool by 2027, one analyst suggests “a gathering storm.” Another perceives “broad and serious threats” as “elevated expenses” erode margins and exact “a profound financial toll.” Fitch Ratings issued a “deteriorating” outlook for nonprofit health systems.

These financial headwinds are upending healthcare’s traditional status as “recession-proof.” It is helpful to probe the multiple forces in play, the urgent workforce management challenge, and the varied solution set.

Multiple stress factors at work

Observing that margins will be down 37% in 2022 relative to pre-pandemic, a recent stark assessment concluded, “U.S. hospitals are likely to face billions of dollars in losses — which would result in the most difficult year for hospitals and health systems since the beginning of the pandemic.”

A confluence of factors is exacerbating the stress for 2023:

  • Rising acuity levels. Over two-thirds of surveyed C-suite executives said patient health has worsened from pandemic-induced delayed care. The upshot, stated by 27% of CFOs, is rising expenses due to higher acuity. Inpatient days are projected to increase at an 8% rate over the coming decade.
  • Reimbursement gaps and inflation. Commercial and government reimbursement rates are not keeping pace with rising costs. Surging inflation is widening this gap. Hospitals are also reporting substantial insurer payment delays and denials.
  • Investment declines. Stock and bond market declines have removed a cushion for operating weakness. Market uncertainty will complicate 2023 portfolio management.

Persistent workforce concerns remain center stage

Burnout and shortages have disrupted the clinical workforce. Nearly 60% of physician, advanced practice provider and nurse survey respondents said their teams are not adequately staffed, and 40% lack resources to operate at full potential. Many providers face extreme to moderate shortages of allied health professionals.

The problem extends beyond the clinical. A survey saw 48% of respondents experiencing severe labor deficiencies in revenue cycle management (RCM) and billing, and one in four finance leaders must fill over 20 positions to be fully staffed.

An executive outlook highlighted demonstrable impact on financial performance and growth from these workforce problems, citing reductions in profitability, capacity and service (Figure 1).1

What impact will staffing challenges have on your hospital?

View PDF of Figure 1 chart[PDF]

Several studies detail negative outcomes:

  • Expenses. Hospital employee expense is expected to increase $57 billion from 2021 to 2022, with contract labor ballooning another $29 billion. Average weekly earnings are up 21.1% since early 2022. Half of medical practices budgeted higher staff cost-of-living increases in 2022. Shortages plague post-acute facilities as well. Their reduced capability to accept discharged patients is lengthening many hospitals’ patient stays.
  • Capacity constraint. Two-thirds of healthcare leaders identify “ability to meet demand” as their top workforce concern, suggesting a “looming capacity gap between future demand and labor supply.”

Range of measures being deployed

Health systems, hospitals and practices will vigorously pursue at least four direct actions to overcome the financial and staffing hurdles:

  • Cost cutting. Expense control will be paramount and “hospitals will be forced to take aggressive cost-cutting measures.” McKinsey estimates total industry administrative savings of $1 trillion through multiple aggressive changes.
  • Service line rationalization. Providers are rethinking how they deliver services to optimize efficiency. One path is utilizing “lower level” healthcare professionals in ways that free RNs and LPAs for more complex work suited to their top skills. Integrating remote care into the mix is another core element of the strategy.
  • Recruitment and retention programs. Attracting and retaining talent is crucial. Compensation is one avenue. Over two-thirds of organizations are offering signing bonuses for allied health professionals. Some are instituting value-based payments for physicians, offering salary floors to protect from drops in patient volume. CFOs and CNOs are joining forces to invest in nurse retention strategies. 
  • Staffing management. An increasingly popular tool to reduce labor cost and optimize staff resources is outsourcing. Figure 2 shows that RCM is leading the way among those using the solution.
Outsourcing solutions being pursued

View PDF of Figure 2 chart[PDF]

2. Growth Strategies Favor Outpatient, Virtual, Acute Home Care

Pursuing top line growth in tandem with reining in expenses is essential. Inpatient volume growth has been tepid for several years ─ essentially flat in the 2016–20 period (Figure 3).

Inpatient visit volumes 2016-2020

View PDF of Figure 3 chart[PDF]

Leaders have been pivoting to outpatient and virtual care to diversify revenue streams. Two high-potential 2023 growth tracks in this sector merit deeper assessment.

Telehealth

Considerable evidence attests to strong commitment to telehealth and remote care. Sixty-three percent of physicians worldwide expect most consultations to be performed remotely within 10 years. Approximately 40% of health centers are using remote patient monitoring today. Consumers are also positive: 94% definitely or probably will use telehealth again, 57% prefer it for regular mental health visits and 61% use it for convenient care.

Telehealth is still in early stages of maturity. Only 4% of surveyed top executives consider their organization proficient at implementing remote care. Healthcare is also recognizing that a full telehealth ecosystem must be constructed. A physician leader explained that the industry’s early telehealth incarnations failed to build “virtual-only environments or really drive e-consults as a way of doing things.” A vital ecosystem demands alterations to current contracts, coding, collections, patient financing, staff training and other business practices.

Hospital-at-Home (HaH)

Health systems see particularly promising growth in the provision of acute care in patients’ home settings, including post-surgical and cancer treatment. The federal government has already allowed waivers to 114 systems and 256 hospitals to obtain inpatient-level reimbursement for acute care at home. However, these waivers were prompted by the pandemic and are slated to end in early 2023. The renewal uncertainty has stymied some activity and represents an overhang on the opportunity. However, enthusiasm appears strong, and 33% of hospitals in a recent poll said they would be prone to continue HaH even without renewal.

The forecasts are encouraging. Over half of hospitals believe it likely they will utilize HaH for at least half of their chronically ill patients over the next several years (Figure 4).

Hospital-at-home expansion

View PDF of Figure 4 chart[PDF]

HaH exists within a broader matrix of home care, and solid growth is anticipated across the range of home procedures (Figure 5).

Home procedure 5-year forecast

View PDF of Figure 5 chart[PDF]

Harvesting the HaH potential will require implementation of current and emerging enabling technologies in remote monitoring, high-speed networks and artificial intelligence that generates algorithmic guidance for caregivers and patients alike.

3. Strong Drive to Improve and Personalize the Patient Financial Experience

Today’s healthcare market dynamics place a premium on positive patient experiences. The goal is to deliver “an empathetic relationship between customers and brands built on what the customer wants and how they want to be treated.” It is a complex undertaking, with numerous touchpoints as captured in HFMA’s Consumerism Maturity Model (Figure 6).

Consumerism maturity model

View PDF of Figure 6 chart[PDF]

An array of studies underscores the value proposition for intense provider focus on patient financial experience:

  • Sixty-one percent of consumers said that ease of making payments is very or somewhat important in decisions to continue seeing a doctor. Over half of patients also said text message reminders make them very or somewhat more likely to pay a bill faster than usual.
  • Thirty-five percent of respondents “have changed or would change healthcare providers to get a better digital patient administrative experience.”
  • A quality financial experience encompasses “simplified explanations, consolidated bills that match one’s health plan benefits, clear language displaying patient liability and payment options.”35

Significantly improving the financial experience requires a unified strategy, not just a collection of individual initiatives. Three threads to such a strategy will be prominent in 2023.

Using a Digital Front Door

Organizations have been moving swiftly to channel many patient financial transactions through an integrated Digital Front Door (DFD). This approach offers patients a singular online point of access and intelligent navigation to needed services.
Growth is accelerating. A DFD is their patients’ first contact point for 55% of responding organizations, according to one technology survey.  A leading forecaster sees 65% of patients engaging services via digital front doors by 2023.

Expanding price transparency

Mandates for full price transparency and “no surprises” billing are in effect, but estimates of compliance are mixed. An analysis of 2,000 hospitals determined that only 16% met the requirement to post an online “machine readable” file displaying clear charges for 300 “shoppable services.” Another assessment showed a more substantial 76% of hospitals had posted files, and 55% were deemed “complete.” One provision of interest to practices is the “good faith estimate” of expected charges required to be given to uninsured and self-pay individuals when they schedule visits.
CommerceHealthcare® has worked with clients to enhance the patient financial experience by complementing their website pricing data with clear information on patient financing options and enrollment access. Bill pay information can also be added for one-stop guidance.

Personalizing the experience

Beyond choice and convenience, the deeper objective is truly personalized experiences throughout the care journey. The words of leading analysts best define the drive to personalize:

  • “Tomorrow’s healthcare experience will be built by patients tailoring their own experience.”
  • “By 2024, 30% of chronic care patients will truly own and openly leverage their personal health information to advocate for, secure, and realize better personalized care.”

Opportunities abound to personalize the patient financial experience. Automating manual processes establishes a foundation. Patient financing with no- or low-interest credit lines and flexible terms can produce monthly payment schedules tailored to each patient’s needs. Refunds can be made through multiple payment modes to meet varying patient preferences.

4. Evidence Underscores Growing Demand for Patient Financing

Emphasizing patient financing as part of the overall experience is powerful. Patients continue to struggle paying for care. Recent granular data details three related forces at work.

Meeting care costs difficult for many patients

Commonwealth Fund found that 42% of individuals had problems paying medical bills or were paying off medical debt during the past year, while 49% were unable to pay an unexpected
$1,000 medical bill.42 Health costs trigger reduction in a range of personal expenditures, led by deferring or avoiding care and drugs (Figure 7).

Cutting back on household spending due to rising healthcare prices

View PDF of Figure 7 chart[PDF]

Twenty-eight percent of Americans now describe themselves as less prepared than last year to pay for routine or unanticipated care.

Patient obligation for care costs still rising

Patient obligation continues its upward march. Insurance premiums have climbed steadily for both the insured and their employers, and employees now pay over $6,000 annually on average for family coverage (Figure 8).45

Average annual worker and employer premium contributions for family coverage

View PDF of Figure 8 chart[PDF]

High deductible health plans (HDHP) also place substantial burden on the patient. Through 2021, 28% of workers were enrolled in an HDHP with an average family deductible of $4,705. Employer satisfaction with these plans is high, auguring further expansion.

Providers feeling the financial effects

Patient payment difficulties are clearly impacting provider financials. A recent in-depth analysis uncovered substantial self-pay issues:

  • Self-pay accounts represented 60% of 2021 patient bad debt, up from 11% in 2018.
  • Nearly 18% of patient balances were over $7,500 and 17% over $14,000. Collections were noticeably lower at these balances.

Multiple chronic conditions add to the problem. A recent extensive analysis concluded: “Among individuals with medical debt in collections, the estimated amount increased with the number of chronic conditions ($784 for individuals with no conditions to $1,252 for individuals with 7–13).”

For their part, providers will be encouraged to broaden patient financing programs. Patients are certainly interested. When asked, 62% of consumers indicated they would use financing options or creative payment plans if available for large bill amounts. Many health systems, hospitals and practices will turn to outside help to satisfy the demand. A recent analysis recommended that health systems “consider keeping shorter-term payment plans in-house and extended term plans through external partnerships.”

Organizations will also need to step up their communications. A survey revealed that 64% of patients were unaware that their doctors and hospitals offered payment plans or financial help.

5. Building Trust Becoming a Critical Success Factor

Trust has emerged as a paramount issue today for most organizations as they encounter an “imperative to build trust and transparency among different stakeholder groups — employees, customers, suppliers, regulators and the communities in which they operate.” Healthcare is no exception, and the trust issue is growing in both complexity and urgency.

Healthcare’s trust gap

Trust in healthcare took a hit from the COVID-19 experience. A spring 2022 HFMA survey recorded 44% of finance leaders saying they perceived decreased patient trust. Between April 2020 and December 2021, the percentage of Americans who trusted information from doctors “a great deal” declined by 23%, from hospitals 21%, and from nurses 16%. The patient financial experience also faces “drivers of mistrust,” according to surveyed leaders who cited general payment confusion (58%), surprise billing (39%), high prices of commodity items (28%) and lack of price transparency (26%). Building trust reaps dividends. People who trust their providers are five times more likely to stay with them than those who are neutral or distrustful.

Strategies for building trust

Industry experts promote several approaches to galvanize trust among all constituencies:

  • Commitment. Embedding trust deeply in the organization requires full support from senior leadership.
  • Data transparency and governance. IDC predicts that “by end of 2023, 20% of expenses on care integration solutions will be centered around ‘trust’ to protect data, workflows and transactions.” 
  • Reliance on fewer business partners. Many health systems, hospitals and practices are reducing their number of vendors in order to focus on a set of trusted long-term partners. For example, almost two-thirds of surveyed providers said they were seeking to streamline the number of software solutions over the next year. 

The bank partner advantage

A provider’s banking relationship can yield valuable collaboration in the trust-building endeavor. Banks enjoy solid trust among consumers. As an example, 53.4% of consumers rated banks as most trusted to provide payment “super apps” and financial digital front doors ─ exceeding the next closest source by 10 points.

6. Cybersecurity in 2023: No Rest for the Weary

Cybersecurity is part of the trust calculus and has become an evergreen topic in healthcare. Compromised data and ransomware attacks are ongoing and leaders must continually refine their understanding in at least three areas: the overall security landscape, particular financially related considerations and contemporary security defenses.

The current landscape

The latest statistics quantify the cyber assault on healthcare:

  • Incidence. 89% of organizations suffered at least one attack in the past 12 months with the average number at 43.
  • Cost. A provider’s most serious attack costs an average of $4.4 million. IBM calculated healthcare’s average total cost of a breach at $10.1 million, up 42% since 2020.
  • Attack Characteristics. Healthcare data types most commonly compromised are personal (58%), medical (46%), and credentials (29%). Organizations have an exposure to an average of over 26,000 network-connected devices. A disturbing finding is that those healthcare institutions that paid ransom got back only 65% of their data in 2021.

Specific financial considerations

Finance leaders will also need awareness of the following:

  • Cyberattacks could affect credit ratings and are often a component of Environmental, Social and Governance assessments.
  • Financial outsourcing requires monitoring. A recent news story chronicled an accounts receivable firm’s breach that exposed individual information, account balances and payments.
  • Cyber insurance premiums are likely to increase substantially.

Responses/tools

Beyond a host of management and monitoring tools being deployed, a strategic philosophy is rapidly gaining ground. The “zero trust” model sounds counter to the trust-building mindset described earlier, but it has become essential. It “denies access to applications and data by default,” and 58% of hospitals and health systems have a zero trust initiative in place. Another 37% intend to implement one within 12–18 months.

Cybersecurity investment will challenge CFOs in 2023, especially in areas such as talent. Cybersecurity worker availability is estimated to satisfy only 68% of open positions. Banking partners will also be expected to play an important role. Over the years, major banks have become “leaders in enhancing cyber strategy and investing in cyber defenses, processes and talent.”

7. Digital Transformation of Finance In Focus

Digital transformation is fundamental to healthcare’s business and care delivery model changes. IBM’s website succinctly captures the goal, “Digital transformation means adopting digital-first customer, business partner, and employee experiences.” A leading forecaster believes 70% of healthcare organizations will rely on digital-first strategies by 2027.

Transformation efforts need to accelerate. One study showed that “digital, technology and analytics strategies exist for nearly all organizations, yet only 30% have begun to execute on those plans.”

One functional segment ramping up digital transformation is finance. According to a recent survey, 94% of CFOs and senior leaders stated that such efforts will be at the forefront of financial operations and strategy for 2023–2024, and 79% described it as an “absolute need” for “commercial stabilization and long-term survival of their healthcare organization.”

Advanced technology is gaining traction. Many see optimization in combining robotic process automation (RPA), artificial intelligence and machine learning to create “intelligent automation.” Together, these technologies create algorithms to automate decisions that guide “robotic” software to perform financial actions and thereby reduce manual labor.

Getting to digital-first in finance and across the enterprise has several critical success factors. These include sustained commitment, a platform-centric mindset and effective governance.

Commitment

Some assert that few healthcare executives have “created digital strategies that look far enough into the future.” Speed of change is also important. Health systems, hospitals and practices exhibit varying risk appetites and change rates. When asked to self-identify “transformation personas,” a little over half regarded themselves as being on the innovative “early mover” end of the spectrum, while the remainder will adapt as technologies prove themselves (Figure 9). Slower organizations will likely need to increase the pace.

Organizational transformation personas

View PDF of Figure 9 chart[PDF]

Platforms, not point solutions

Implementing enterprise platforms rather than proliferating “point solutions” is obligatory. Organizations must be “prepared to compete in the platform economy as platform-based business models have changed the way we live, work and receive care.”

There are still too many tools and applications. A survey of top decision-makers at health systems found that 60% use over 50 software solutions just in operations (24% have over 150). System integration is one answer. Use of application programming interfaces (API) helps this effort substantially. API-first is fast becoming the norm among solution providers, with global API investment expected to nearly triple by 2030 (Figure 10)

Healthcare API market size

View PDF of Figure 10 chart[PDF]

Governance

Effective governance is vital to constructing a platform-based transformative model and to ensuring wide user adoption. Healthcare has seen the rise of new senior roles such as Chief Digital Officer and Chief Transformation Officer, positions focusing on initiatives like ownership of technology success at the department level and devising user incentives.

8. Digital Payments on the Horizon for Healthcare

A variety of emerging digital payment modes will further the transformation of finance. These payments are expected to grow almost 23% annually in healthcare. ACH payments have been on a strong upward trajectory in healthcare for several years, especially for business transactions. In 2021, ACH tallied a yearly increase of 18% in volume and 5% in dollars.

Notable technologies and payment rails to watch for expected crossover from consumer markets to healthcare include:

  • Mobile payments. The market for mobile payment technologies has been growing at a 16% compound annual clip and should reach $90 billion in 2023, powered by wide smartphone use, 5G networks and convenience. This category encompasses technologies such as e-wallets, forecasted to grow 23% annually worldwide through 2030.
  • Real-time payments (RTP). These digital transactions are settled nearly instantaneously through platforms such as The Clearing House. One forecast sees 30.4% compound RTP growth in the U.S. from 2022 to 2030.
  • Buy Now Pay Later (BNPL). This growing mode offers consumers short-term financing to stretch payments over several installments. A recent survey established that 23% of American adult respondents have used a BNPL service. BNPL is just entering healthcare and is currently regarded as an option for certain elective or cosmetic procedures or for specific individual credit scenarios.  
  • Earned Wage Access (EWA). Using an RTP approach, employers are beginning to offer on-demand pay which enables “instant access to earned wages right after the work is performed, at the end of the shift, or upon completion of a project.” It is not a loan or advance pay. A 2021 poll conducted by Harris found that 83% of U.S. workers feel they should be able to access earned wages at the end of each day. Millennials were particularly interested: 80% would like daily automatic pay streaming to their bank accounts, and 78% said free EWA would boost loyalty to their employer. Given its pressing workforce concerns, healthcare is likely to find EWA a tool to promote retention.

Seeking the right use cases for these payment technologies offers many potential provider benefits.

Conclusion

The connected forces discussed and quantified here create major challenges to address in 2023. The strategic agenda calls for balancing tight cost control with investment in growth opportunities, significantly enhancing patient financial experience by meeting growing patient financial need, shoring up trusted relationships and cybersecurity, and accelerating the digital transformation of finance.

Hospitals still struggling to retain talent

Posted on by • Posted in Cost Management, Cost Reduction, Health System, Hospital, Hospital Industry, Labor Spend Management, Nurse Retention, Nurse Vacancy Rates, Nurses Compensation, Nurses Leadership, Nurses Shortage, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Recruiting, Retention, Retirement, Talent Management, Talent Pipelines, Turnover Rates • Leave a comment

https://mailchi.mp/c02a553c7cf6/the-weekly-gist-july-28-2023?e=d1e747d2d8

Of all the pandemic’s impacts still felt today, disruptions to the healthcare workforce and rising labor costs may be most impactful to current health system operations.

Over the next three editions of the Weekly Gist, we’ll be exploring the lingering effects of this workforce crisis, with a focus on nurse staffing and recruitment.


In this week’s graphic, we use data from the 2023 NSI National Health Care Retention Report to show how hospital turnover and vacancy rates have changed over the past several years. 

While wage increases helped reduce hospital registered nurse (RN) turnover rates from 27 percent in 2021 to 23 percent in 2022, nurses—along with hospital employees in general—are still changing jobs at higher rates than before the pandemic.

Over half of all hospitals still face nurse vacancy rates above 15 percent, a slight improvement from 2022 but still far more than before the pandemic.

While the worst of nursing turnover appears to have passed, the “rebasing” of wages (for nursing, 27 percent higher compared to 2019) will provide ongoing pressure to strained hospital margins.

California system’s 10.2% operating margin bucks national trend

Posted on by • Posted in Credit Quality, Credit Ratings, Credit Upgrade, Financial Reserves, Financial Stewardship, Financial Strength, Financial Viability, Health System, Hospital, Hospital Industry, Labor Spend Management, Nurse Agency Staffing, Nurse Retention, Nurses Compensation, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Metrics, Operating Performance, Operating Revenue, Retention, Talent Management • Leave a comment
https://www.beckershospitalreview.com/finance/california-system-s-10-2-operating-margin-bucks-national-trend.html?utm_campaign=bhr&utm_source=website&utm_content=latestarticles

Mountain View, Calif.-based El Camino Health ended the first quarter with an impressive operating margin of 10.2 percent when many health systems saw their margins hover above zero or fall into the red. The system’s revenue for the quarter totaled $131,290. 

For the nine months ended March 31, the two-hospital system posted an operating gain of $141.4 million on revenue of just over $1 billion. 

However, like most health systems, El Camino’s expenses are substantially higher than the same period last year, increasing 10.6 percent year over year for the nine months ending March 31, 2023, to $881.9 million. 

The system is making a conscious effort to march down labor costs while also placing a significant emphasis on retention. In June, El Camino agreed a deal to increase pay for nurses by 16 percent over three years.

“Like nearly all hospitals, our nursing staff comprises the largest part of our workforce. With the recruitment of a single nurse estimated to be nearly $60,000, our primary strategy to reduce labor costs is to focus on decreasing turnover,” El Camino CEO Dan Woods told Becker’s.

“Our turnover rate for nurses is just about 8 percent while the turnover rate nationally is still running at 22 percent.”

In March, the system also received a credit rating upgrade from Moody’s, which noted the system’s “superlative cash metrics and operating performance.” Fitch Ratings also revised El Camino’s outlook to positive in February, noting that the system has a history of generating double-digit operating EBITDA margins, driven by a solid market position that features strong demographics and a very healthy payer mix.

Hospital CEOs get serious about cutting labor costs

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https://www.beckershospitalreview.com/finance/hospital-ceos-get-serious-about-cutting-labor-costs.html?origin=CFOE&utm_source=CFOE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G

Labor costs have spun out of control in the last few years as inflation set in and hospitals relied on contracted travel nurses to combat nationwide workforce shortages.

The secret to lowering labor costs now, hospital CEOs say, is putting a modern spin on a tried-and-true strategy: retention.

Dan Woods, CEO of El Camino Health in Mountain View, Calif., estimates the cost of recruiting a single nurse as being nearly $60,000, which drove his team’s decision to focus on reducing labor costs by decreasing turnover. The nurse turnover rate is around 22 percent nationally, but El Camino has achieved just 8 percent nurse turnover rate through a variety of retention efforts.

“We continue to chip away at our turnover rate by fostering a positive practice environment for our nurses,” said Mr. Woods. “We achieve this by creating structures and enabling processes so our staff are engaged in assisting with making changes within their practice environments. Also, our staffing and scheduling processes promote efficiency while meeting the needs of our staff, which is essential for retention.”

El Camino does have guardrails to ensure nurses don’t self-schedule overtime or other premium pay. Mr. Woods also mentioned positive labor relations as a retention tool.

“We just completed a new three-year agreement with our nursing union prior to the existing contract expiring and without strikes or the acrimony often associated with labor relations,” he said.

David Callendar, MD, president and CEO of Memorial Hermann Health System in Houston also recently told Becker’s the system is relying less on contract labor and increasing retention through its Well Together employee experience model, which allows employees to personalize programs and benefits to meet their individual needs.

“At Memorial Hermann, we believe that investing in our workforce is the most effective approach to managing labor costs,” said Dr. Callendar. “We accomplish this in three ways: one, creating a workplace where all feel valued and welcomed, and diversity is celebrated; two, investing in employee health and wellness programs; and three, providing professional development and career growth opportunities.”

Rochester (N.Y.) Regional Health is transforming its operating model and workforce strategy to offer more flexibility and build a culture valuing team members for retention.

“We’ve created a new in-house agency to significantly reduce our reliance on third-party contracts and improve staff integration within the health system to foster a more robust culture of collaboration, interdependency, alignment and system-ness,” said Richard Davis, PhD, CEO Of Rochester Regional.

Jeffrey P. Gold, chancellor of the University of Nebraska Medical Center in Omaha, said the academic medical center is focused on reducing the cost per unit of labor and lowering the number of units. The hospital is considering several tactics including additional training and mentorship, evaluating its benefits program and productivity across the organization.

The University of Nebraska Medical Center is also evaluating fixed labor cost departments and roles, and slowing or eliminating full-time employee growth to force innovation, organizational redesign, use of technology and productivity gains with staff retained.

Many hospitals are seeing wages increase within their markets, and increasing pay for existing team members is often less expensive than recruiting and onboarding new ones.

“Obviously, compensation is a key element of staffing, and we are working diligently to ensure that we are competitive within our market,” said R. Kyle Cramer, CEO of Day Kimball Health in Putnam, Conn. “Concurrently, we are evaluating how we staff our clinical areas and the mix of professionals we utilize to create a stronger level of team support and patient engagement. Ultimately we see stabilizing our workforce and reducing turnover through retaining strong members of our clinical and operational team as the key to effectively managing labor costs in this new era.”

Paula Ellis, DNP, interim CEO of F.W. Huston Medical Center in Winchester, Kan., said the critical access hospital has salaries in line with competitors but found benefits lagging. The hospital increased 401K match, provided better health insurance rates, improved tuition assistance and added competitive scholarships to keep employees engaged. The hospital also combined four positions into two.

“Staff were willing and able to take on new duties in exchange for a better schedule,” said Dr. Ellis. “We believe the best method to manage labor costs is to retain staff.”

UPMC adds regional option to in-house travel program

Posted on by • Posted in Health System, Hospital, Hospital Industry, Labor Shortages, Labor Spend Management, Nurse Agency Staffing, Nurse Retention, Nurse Staffing, Nurse Travelers, Nurses Compensation, Nurses Shortage, Retention, Talent Management • Leave a comment
https://www.beckershospitalreview.com/workforce/upmc-adds-regional-option-to-in-house-travel-program.html?origin=BHRE&utm_source=BHRE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G

More than a year after launching an in-house travel staffing agency, UPMC is adding a new regional approach to the effort.

Maribeth McLaughlin, MPM, BSN, RN, chief nursing executive for the Pittsburgh-based health system, told Becker’s the approach provides a new option for nurses and surgical technologists who desire to travel. 

“Our overall travel program, when you travel for us, you travel across our hospitals in New York, Maryland and Pennsylvania,” she said. “And now we are launching a regional travel strategy where some staff can choose to travel only within certain regions.”

UPMC initially announced in December 2021 that it had created UPMC Travel Staffing, a new in-house travel staffing agency to address a nursing shortage and to attract and retain workers. 

Through the agency, nurses and surgical technologists earn $85 an hour and $63 an hour, respectively, in addition to a $2,880 stipend at the beginning of each six-week assignment.

Ms. McLaughlin said the rate is lower — about $60 an hour — for those who opt for the regional approach.

As of June 1, UPMC has hired more than 700 staff into the in-house travel staffing agency, with 60 percent of those workers being external hires, according to Ms. McLaughlin. And there have been fewer workers leaving UPMC to go to other travel agencies. 

“One of my goals since I’ve taken this role is to really look at building in as many flexible programs as I could for staff,” said Ms. McLaughlin, who has served in her current role since August 2022. “I think as we came out of the pandemic, it’s clear to me that work-life harmony means something different to staff today than it maybe meant when I was a young staff nurse years ago, and that we need to have as much flexibility and as many different programs as we can.”

She said UPMC Travel Staffing has delivered this flexibility and allowed the health system to cancel about 90 contracts with external travel agencies. Additionally, some external travelers have now moved into UPMC’s in-house agency. Ms. McLaughlin expects more to join the in-house agency now that UPMC has launched the regional approach. 

“We’re launching a win-back program where we’re going out and trying to see some of the people who we know we lost and see if they’re interested in coming back closer to home and traveling closer to home,” she explained.

Still, she acknowledged some of the challenges along the way.

“Our IT department built us an app to be able to manage all of this because, as you can imagine, we have external travel, internal travelers, core staff and at times it could get a little confusing,” said Ms. McLaughlin. “So we’ve been able to build that to be able to figure out the best ways to assign the staff where the greatest needs are.”

Another challenge she noted is that shifts for workers from external travel agencies are often 12 weeks, while shifts with UPMC Travel Staffing are six weeks. She said this is a purposeful move because those in UPMC Travel Staffing receive benefits and are considered UPMC employees, rather than receiving an hourly rate.

“Overall, it’s been a really successful program for us because it’s allowed us to look at things in a different way,” said Ms. McLaughlin. “It’s a central function. It’s not something we did and farmed out to every hospital to administer themselves. We did it as a system and as a core, which I also think is important.”

Now, she said she’s excited about the new regional approach and the opportunities it presents for recruiting and retention. 

“We’re growing our own students, we’re bringing in all these students, and we’re not saying, ‘You have to just work here.’ We’re saying, ‘You can work for us at UPMC, and here are all the options. You can even be a traveler with us,'” she said.

Pennsylvania unions file antitrust complaint against UPMC

Posted on by • Posted in Antitrust, Dept of Justice (DOJ), Federal Trade Commission (FTC), Health System, Hospital, Hospital Industry, Labor Spend Management, Labor Union, Labor Union Grievance, Market Consolidation, Market Power, Monopoly, Monopoly Behavior, Retention, Staffing Ratios, Staffing Shortages, Talent Management • Leave a comment

https://www.healthcaredive.com/news/upmc-unions-antitrust-complaint-doj-workers/650739/

Dive Brief:

  • Pennsylvania unions have filed a complaint with the Department of Justice alleging integrated hospital giant UPMC is abusing its dominant market position to suppress wages and retain workers.
  • On Thursday, SEIU Healthcare Pennsylvania and a coalition of labor unions filed a 55-page complaint against UPMC, the largest private employer in the state, saying the hospital system’s size has allowed it to stamp out wage growth, “drastically increase” workload and keep workers from departing to other jobs.
  • The unions are asking federal regulators to investigate UPMC for antitrust violations, citing its dominance of the healthcare market in select regions of Pennsylvania. UPMC denied allegations of wage suppression.

Dive Insight:

The Pittsburgh-based system has seen a rise in labor complaints, according to the unions, as the system has grown into its 41-hospital footprint through a series of mergers and acquisitions. UPMC, which also operates 800 doctors offices and clinics and a handful of health insurance offerings, reported $26 billion in operating revenue last year.

Attempts in the last decade to organize UPMC’s hourly workers have been unsuccessful, according to SEIU.

Matt Yarnell, president of SEIU Healthcare Pennsylvania, called the complaints groundbreaking on a Thursday call with reporters, saying that no entity has ever filed a complaint arguing that mobility restrictions and labor violations are anticompetitive, and in violation of antitrust law.

The complaint alleges that, for every 10% increase in market share, the wages of UPMC workers falls 30 to 57 cents an hour on average. UPMC hospital workers face an average 2% wage gap compared to non-UPMC facilities, according to a study cited in the complaint.

In addition, the labor groups allege that UPMC’s staffing ratios have fallen over the past decade, resulting in its staffing ratios being 19% lower on average compared with non-UPMC care sites as of 2020.

The unions are going after UPMC for being a “monopsony,” or a company that controls buying in a given marketplace, including controlling a large number of jobs. UPMC has some 92,000 workers, according to the complaint, and has cut off avenues of competition through non-compete agreements, in addition to preventing employees from unionizing.

“If, as we believe, UPMC is insulated from competitive market pressures, it will be able to keep workers’ wages and benefits — and patient quality — below competitive levels, while at the same time continually imposing further restraints and abuses on workers to maintain its market dominance,” the complaint states. “Because we believe this conduct is contrary to Section 2 of the Sherman Act, we respectfully urge the Department of Justice to investigate UPMC and take action to halt this conduct.”

In response to the allegations, UPMC said it has the highest entry-level pay of any provider in the state, and offers “above-industry” employee benefits. UPMC’s average wage is more than $78,000, Paul Wood, UPMC’s chief communications officer, told Healthcare Dive in a statement.

“There are no other employers of size and scope in the regions UPMC serves that provide good paying jobs at every level and an average wage of this magnitude,” Wood said.

Healthcare workers are increasingly pushing for better working conditions and pay amid the COVID-19 pandemic, as hospitals grapple with recruitment and retention issues driven by burnout and heightened labor costs.

The silent killer — toxic ambiguity

Posted on by • Posted in Ambiguity, Clarity, Fuzzy Accountability, Fuzzy Communications, Fuzzy Feedback, Fuzzy Strategy, Fuzzy Thinking, Leadership, Management, Retention, Silent Killer, Talent Management, Toxic Ambiguity, Uncertainty • Leave a comment
https://www.axios.com/newsletters/axios-finish-line-29cbbb9f-9dd8-4241-ab65-da179b8a6736.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosfinishline&stream=top

One of the most overlooked, yet lethal forms of organizational rot is toxic ambiguity. Basically, killing people with fog, Jim VandeHei writes.

Why it matters: 

Think of all the time wasted, relationships ruined, budgets missed and moods fouled by leaders or managers offering hazy direction.

  • Ambiguity is a silent killer — like a slow natural-gas leak. You don’t realize until it’s too late that you have a massive, spreading issue.

Gallup developed a workplace survey system for companies to track engagement and performance. We use it at Axios to spot pockets of emerging staff issues.

  • We often score lower than I’d like on the first question — whether “I know what is expected of me at work.” This drives me nuts: How can any person at any level not know what their damn job is?
  • Turns out, this is common. Many people feel foggy, even if leaders feel they’re being crystal clear.

The toxicity comes when the ambiguity is so thick others can exploit the cloudiness, or suffer from it. Here are some common manifestations to watch for:

  1. Fuzzy strategy. In an ideal world, any person under you should be able to jump out of bed at a moment’s notice and recite the three most important things you’re doing as a company or organization. If they can’t, how can they guide others or prioritize? The only remedy for this is constant, clear repetition of what matters most.
  2. Fuzzy thinking. If you’re a leader and you can’t articulate those three things with precision and certainty, you’re screwed. It means you didn’t sharpen your own thinking before trying to sharpen the thinking of others. This is why I constantly write down what matters most so I can stress-test my own clarity.
  3. Fuzzy communications. You might have strong, concrete thoughts — but not explain them clearly. That’s akin to having the perfect, delicious recipe, but not following it — and then wondering why people don’t love your dish. Your ideas might be brilliant. But if you don’t find strong, memorable words to express them, they will be lost.
  4. Fuzzy accountability. This one often trips me up. People don’t know they own something unless explicitly told and empowered. And others don’t know whom to listen to unless you make it clear who’s the decider. Little gets done right without clear accountability, dictated and announced in advance.
  5. Fuzzy feedback. Few things cripple individuals, teams and companies more than foggy feedback. Many managers are afraid to be direct, and hide what they mean by over-talking or over-complimenting. This leaves people confused about their standing and what they need to do better.

💡 What you can do: If you’re unsure what’s expected of you, that’s on you!

  • Ask your boss: “What’s the No. 1 thing I’ll be judged on?” or “What is Job 1 for me — the biggest specific thing I need to do for the team?”
  • If you get a foggy response, push for clarity. It’s tough to crush a performance review if you don’t know what’ll be reviewed.

The big picture: 

Clarity and candor are tough but essential — especially in anxious or uncertain times.

National Hospital Flash Report: April 2023

Posted on by • Posted in Advance Practice Nurse, Advanced Practice Providers (APP), Critical Workforce, Health System, Hospital, Hospital Industry, Labor Spend Management, Nurse Practitioners, Operating Expenses, Operating Income, Operating Margin, Operating Metrics, Operating Performance, Physician Assistant, Physician Associate, Recruiting, Retention, Talent Acquisition Strategy, Talent Competition, Talent Management, Workforce • Leave a comment

https://www.kaufmanhall.com/insights/research-report/national-hospital-flash-report-april-2023

Hospital margins continued to stabilize in March with a slight improvement over February, according to data from Kaufman Hall’s National Hospital Flash Report. However, margins remain below pre-pandemic levels, leaving hospitals in a vulnerable position should a recession or a new public health emergency materialize.

For provider practices, physician productivity increased but the increased revenues could not keep pace expenses, according to the quarterly Physician Flash Report. 

While things appear relatively calm at the moment, there remain significant challenges—specifically labor shortages and diminished margins—that could quickly reach the surface if hospitals and health systems are faced with another crisis. 

Kaufman Hall experts are seeing increased reliance on advanced practice providers (APPs)—e.g. Nurse Practitioners and Physician Associates—and note that those that hire, retain and deploy this critical workforce most effectively will see more success in the long term.

Improved earnings not enough to solve healthcare worker shortage

Posted on by • Posted in Employee Compensation, Employee Retention, Employee Satisfaction, Employee Staffing Shortage, Inflation, Labor Shortages, Labor Spend Management, Retention, Talent Management • Leave a comment

https://mailchi.mp/a44243cd0759/the-weekly-gist-february-3-2023?e=d1e747d2d8

The healthcare sector has been navigating an intransigent staffing crisis since the widespread layoffs during the first few months of COVID. The graphic above uses Bureau of Labor Statistics data to illustrate the impact of this labor shock on both total employment and employee compensation. 

Across key healthcare settings, workplaces with the slowest recovery of total workers have seen the largest increases in employee earnings. Hospital employment largely tracked with the rest of the private sector; however, hospitals raised employee compensation by two percent more than the private sector, while recovering two percent fewer jobs.

It is important to note that the relationship between employment levels and employee compensation is not causal, as evidenced by the ongoing labor shortages in nursing facilities, despite boosting average pay over 20 percent. Rather, the data suggest that, for as long as the tight labor market persists, pay raises alone are not sufficient to recruit and retain talent. Plus, while inflation may be abating, it has still outpaced earnings growth since December 2021. 

Given that many healthcare workers saw pay bumps early in the pandemic, some are left still feeling underpaid, even if their compensation over the past three years has more than kept pace with inflation.