Category Archives: Talent Competition

The dawn of the interim CFO

Posted on by • Posted in Interim CEO, Interim CFO, Interim Executives, Interim Resources, Leadership, Leadership Skill Sets, Leadership Transition, Recruiting, Succession Planning, Talent Competition, Talent Identification, Talent Imperative, Talent Pipelines • Leave a comment
https://www.cfodive.com/news/dawn-interim-cfo-leadership-finance-executive-search/649975/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202023-05-17%20CFO%20Dive%20%5Bissue:50544%5D&utm_term=CFO%20Dive

With companies fighting for financial know-how, a spotlight is beginning to shine on leaders who can bring the skill sets and expertise firms need in the moment.

Demand for interim leaders shot up significantly during the past 12 months, a report by Business Talent Group, a Heidrick & Struggles company, found, rising 116% year-over-year. Requests for on-demand finance chiefs in particular saw a considerable spike, increasing by 103% YoY, boosted by both continued economic uncertainty and the growing complexities of the CFO role. 

The rising demand for interim CFOs is also partly due to growing awareness of the availability of such short-term expertise, said Sandra Pinnavaia, Chief Innovation Officer for BTG.

“Companies, as they get more comfortable and aware of the fact that there is this on-demand talent world, it allows them to contemplate different kinds of changes and uses than before,” Pinnavaia said. “So I do think there’s an underlying driver here, that is in a sense, supply creates demand.”

The interim CFO’s appeal

For companies, interims can help firms navigate through tricky periods or transitions. Requests for interim CFOs made up half of all interim C-suite requests, according to the BTG report. Companies are specifically searching for financial leadership skilled in financial controls, accounting and audit. Demand for such expertise rose 76% YoY.

For finance leaders, the higher demand coincides with gains in the compensation and benefits that accompany the role, said Jack McCullough, President of the CFO Leadership Council.

There’s better money available for CFOs who do this type of contract or interim work, leading to more executives interested in these types of jobs, McCullough said in an interview. For example, some part-time CFOs have begun to receive stock options, he said, referring to a CFO who received the benefit at three startups.

Taking an interim role can also be a refreshing change for finance leaders who want to apply their skills in new areas, according to Diane Buckley, managing partner of Forte Financial Consulting LLC. Buckley, a veteran of Big Four accounting firm Ernst & Young, was drawn to interim and fractional CFO work because it afforded her the option to share her skills with growing companies and “really be impactful day one,” she said.

“It was like, ‘I can bring value to smaller companies that may not at this point in their growth warrant a full-time CFO, but I can bring that skill set to them,’” she said in an interview.

On the supply side, shifting workforce trends may be prompting more companies to take a second look at what they need from their leadership.

Talent shortages across the accounting and finance space mean companies may be facing a year-long period to find a qualified CFO, making it more necessary to put in an interim “even if it’s not the ideal person,” McCullough said.  

Meanwhile, the pandemic has also left a lasting mark: BTG clients have tapped more interims because “they have been forced over the last few years, to redefine their whole way of working,” Pinnavaia said.

“Now obviously we have a huge spectrum — there are companies that are back full-time, in-person every day, and there are companies that have really changed their business model and they’re not in-person at all,” she said. “But I think that has loosened up the aperture for what would be an acceptable solution” when it comes to leadership, she said.

The right talent at the right time

Hiring on-demand talent also allows companies to find a leader who can meet their needs in the moment — and since many interims come into a company to solve a particular problem or meet a specific goal, one’s skills are “kind of by definition matched to what the issues are,” said Reed Malleck, CFO of Ratio Therapeutics.

CFOs often need to operate in “four dimensions,” he said in an interview, including accounting, operational skills, investor relations and the ability to participate in the execution of strategy for the business.

“If you’re a permanent CFO, you have to cover all of those, even though you might be really good at only one of them,” according to Malleck, an experienced interim executive who took on several such roles as an engagement partner with executive talent firm Tatum, a Randstad company.  “But as an interim person, it’s more targeted, like, ‘we need a guy who’s really good at operations. We need this thing to be fixed.’”

Being able to slot one’s skills perfectly into the situation can be a huge benefit for CFOs, many of whom are dealing with expanding job creep. While becoming an interim is not necessarily less stressful than a permanent CFO position, “in a way, you get relief when you get to the point where you fix everything, and when you’re in a permanent role that never happens,” Malleck said. “When you’re in a permanent role, there’s always something new that’s a new problem.”

With CFOs taking on more responsibility for areas like digital transformation, keeping up with the books and juggling other operational needs across the organization, “the CFO is blamed for this and blamed for that … increasingly, people get burnt out or there’s a loss of trust,” he said.

“Hundreds of analysts are looking at your stock and your performance, the market and the competitors and the technology and you have to explain things not once a quarter, but like five times a day,” Malleck said.

Succession planning is vital

Another often unexplored benefit of on-demand talent is as a source of expertise for future company leaders. A shortage of talent in the finance and accounting fields is worsening, with potential accountants lured away by shinier fields such as technology.

As a result, building a pipeline for executives with CFO skills is crucial.

Moreover, CFOs who were at the top financial seat the last time the U.S. saw serious inflation in the 1980s have long since retired, McCullough said. Finance leaders today face a “steep learning curve.” 

“CFOs, through no fault of their own, they haven’t had to develop the skills” necessary to navigate current economic turmoil, he said.

Many CFOs with decades of experience are also either looking to retire, or seeking promotion rather than lateral opportunities, said Shawn Cole, president of boutique executive search firm Cowen Partners.

The jump from the CFO to the CEO seat is “way more commonplace” today than it was just a few decades ago, Cole said in an interview, opening up more opportunities for finance heads. Promoting internal candidates to an interim chair can be an easier and more affordable way for certain companies — faced with both a dearth of qualified external candidates and shaky succession planning — to fill the seat while they hunt for a long-term replacement, he said.  

“For the last decade or so, businesses have been in like a boom or bust kind of scenario,” Cole said. “And so I think there’s just this lack of investment in a future generation.”

Whether an internal or external interim hire, the executive should also be a welcome and engaged part of the search for a long-term candidate, Cole said. It is part of their fiduciary obligations to a company and its shareholders to “do the necessary due diligence to make an informed hire.”

While internal interims can be an affordable choice, there can also be drawbacks: the “most damning issue” being when an internal interim pick is acting both as interim CFO as well as retaining the responsibilities of their original role at the company, Cole said.  

“So what they wind up being is CFO in name only and they still are fulfilling the role of financial reporting or something like that,” he said. 

Interims and on-demand talent will probably play a greater role in a company as time goes on, Pinnavaia said. She pointed to clients who might think they need an interim CFO, for example, but who are really searching for an expert or CFO who is able to do a specific project with the existing leadership team. In such a scenario, hiring an interim controller or another executive on-demand with the right finance skills would be the best way forward, she said.

“I’m very excited about this as an innovation in how business gets done,” she said. “It is a way of applying … real time alignment of skill and capacity against particular challenges or opportunities in the business.”

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.

KPMG primes shrinking CFO, CPA pipeline

Posted on by • Posted in Accountant, Accounting Talent Shortage, Certified Public Accountant (CPA), CFO, Controller, Financial Reporting, Financial Statements, Financial Stewardship, Financially Distressed, Recruiting, Talent Competition, Talent Imperative, Talent Management • Leave a comment
https://www.cfodive.com/news/kpmg-primes-shrinking-cfo-cpa-pipeline/641245/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202023-01-26%20CFO%20Dive%20%5Bissue:47579%5D&utm_term=CFO%20Dive

The shortage of accountants is one of the main concerns keeping KPMG’s Greg Engel up at night. The firm is teaming up with universities to expand the talent pool.

KPMG’s Greg Engel likens the accounting profession to the turtle in the proverbial race with the hare — a turtle that’s seeking to pull ahead even as it competes with flashier industry sectors for workers.

The shortage of accounting talent is one of the main concerns keeping Engel — vice chair of tax in the U.S. for the Big Four accounting firm — up at night as he assesses the new year’s challenges, even as KPMG has undertaken numerous initiatives to ease the talent crunch. 

At the same time, he sees a potential silver lining for his sector in the recent surge of layoffs in the formerly sizzling tech sector that has won over some college graduates who might have otherwise gone into accounting.

“A lot of people went to the technology sector because it was exciting. But now that Meta and Twitter and all these other companies are laying off people, kids going into college might go, ‘wait a minute, maybe KPMG sounds a little better than Twitter,’” Engel said in an interview. “Accounting is that boring, stable profession that doesn’t do as well in hugely expansive economies but does great when the economy’s on the downslide.”  

Making accounting’s case

Historically, the Big Four accounting and consulting firms have mounted robust programs designed to recruit and train accounting students right out of colleges and major universities. 

KPMG, along with PwC, Ernst & Young and Deloitte, hire thousands of graduates and students each year out of colleges, often training them through internships which lead to full-time jobs. Many of the certified public accountants go on to be controllers, tax directors and even CFOs. The entry level accounting salary range at such programs in the tax area can be roughly in the $70,000 to $80,000 range, depending on the market, according to some industry estimates. 

“The hallmark of the Big Four was to train people really, really well,” Engel said. The longer employees stay at a firm, the better their prospects after they leave, Engel said.

That means an employee who leaves after a couple years could probably join a company’s accounting department at a lower level, he said. But if the employee leaves after rising to the level of senior manager, he or she could join the same company as controller — and those who leave as a partner might join as a CFO, Engel said.  

CFO machine showing signs of wear  

But the machine generating CPAs and CFOs has shown signs of wear in recent years. For one thing, KPMG has not been immune to the Great Resignation. It was hit by the surge in turnover that weakened the middle ladder rungs of its workforce. “There’s a kind of battle in the middle,” Engel said. The company responded in part by hiring experienced accountants from companies like Apple and Home Depot, he said. 

At the same time, accounting has attracted fewer students in recent years. The total number of U.S. students completing a Bachelor’s degree in accounting fell about 8% in the 2019-2020 school year compared with the 2011-2012 period, shrinking to 52,481 graduates from 57,482, according to a 2021 report from the American Institute of Certified Public Accountants.

Priming the pipeline

Firms and accounting organizations have been taking deliberative steps in recent years to boost their case with talent and solve the talent shortage. For instance, the AICPA and the Department of Labor announced in November that they had teamed up to cultivate candidates and expand the pool of professionals, CFO Dive reported. 

If students are not deterred by the accounting profession’s long hours and subdued reputation, they may feel reluctant to put in the credit hours required before taking the exam to become a Certified Public Accountant. That typically means a student will need more study beyond that of a four-year degree. 

In an effort to make the extra course work pay off, KPMG worked with a number of universities to develop a Master in Accounting and Data Analytics Program that gives students the data analysis skills that are increasingly important in the field.

Recently, an additional seven universities were added to the program and KPMG has pledged to provide more than $7 million in scholarships. The schools added to the program included some historically Black Colleges and Universities such as Howard University School of Business and North Carolina Agricultural and Technical State University. Other universities that offer the program include Villanova University and The Ohio State University. 

Separately, KPMG has teamed up with Engel’s alma mater, the University of Northern Iowa in Cedar Falls, Iowa, to help strengthen the accounting program and opportunities for students attending Des Moines Area Community College.

The company will also aim to provide internships to the students who often attend school at night or part-time, which can make it difficult to obtain the credit hours needed to become a CPA. 

“We’re going to start adding people to the profession with two-year associates degrees,” Engel said, noting that similar programs are cropping up elsewhere. “We’ll give them a pathway to add the extra courses and programs they need.” 

Hospitals average 100% staff turnover every 5 years — Here’s what that costs

Posted on by • Posted in Continuity of Care, Labor Cost Structure, Labor Shortages, Labor Spend Management, Nurse Agency Staffing, Nurse Retention, Nurse Travelers, Nurses Compensation, Nurses Shortage, Operating Expense Reduction, Operating Expenses, Quality of Care, Talent Competition, Talent Management, Workforce Retention, Workforce Shortages, Workforce Turnover • Leave a comment
https://www.beckershospitalreview.com/finance/hospitals-average-100-percent-staff-turnover-every-5-years-heres-what-that-costs.html?origin=RCME&utm_source=RCME&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G

Hospitals have been paying astronomical prices for staff turnover, according to the “2022 NSI National Health Care Retention & RN Staffing Report.”

It covers 589,901 healthcare workers and 166,087 registered nurses from 272 facilities and 32 states. Participants were asked to report data on turnover, retention, vacancy rates, recruitment metrics and staffing strategies from January to December 2021. 

The survey found a wide range of helpful figures for understanding the financial fallout of one of healthcare’s hardest labor disruptions:

  • The average hospital lost $7.1 million in 2021 to higher turnover rates.
  • The average hospital loses $5.2 to $9 million on RN turnover yearly.
  • The average turnover cost for a staff RN is $46,100, up more than 15 percent from the 2020 average.
  • The average hospital can save $262,300 per year for each percentage point it drops from its RN turnover rate.
  • To improve margins, hospitals need to control labor costs by decreasing dependence on travel and agency staff, but only 22.7 percent anticipate being able to do so.
  • For every 20 travel RNs eliminated, a hospital can save $4.2 million on average.

In the past 5 years, the average hospital turned over 100.5 percent of its workforce:

  • In 2021, hospitals set a goal of reducing turnover by 4.8 percent. Instead, it increased 6.4 percent and ranged from 5.1 percent to 40.8 percent. The current average hospital turnover rate nationally is 25.9 percent, according to the report.
  • While 72.6 percent of hospitals have a formal nurse retention strategy, less than half of those (44.5 percent) have a measurable goal.
  • Overall, 55.5 percent of hospitals do not have a measurable nurse retention goal.
  • Retirement is the number four reason staff RNs leave, and it is expected to remain a primary driver through 2030. More than half (52.8 percent) of hospitals today have a strategy to retain senior nurses. In 2018, only 21.6 percent had one.

Historically, RN turnover has trended below the hospital average across all staff. For the first time since conducting the survey, this is no longer true: 

  • In the past five years, the average hospital turned over 95.7 percent of its RN workforce.
  • Close to a third (31.0 percent) of all newly hired RNs left within a year, with first year turnover accounting for 27.7 percent of all RN separations. Given the projected surge in retirements, expect to see the more tenured groups edge up creating an inverted bell curve.
  • Operating room RNs continue to be the toughest to recruit, while labor and delivery RNs are trending easier to recruit than in the year prior.
  • Hospitals are experiencing a dramatically higher RN vacancy rate (17 percent) compared to last year’s rate of 9.9 percent.
  • The vast majority (81.3 percent) reported a vacancy rate higher than 10 percent.

Hospitals living paycheck to paycheck, unable to make long-term investments

Posted on by • Posted in Administrative Complexity, Administrative Costs, Administrative Workload, Health System, Hospital, Hospital Industry, Leadership Excellence, Resilient Teams, Smarter Technology, Talent Acquisition Strategy, Talent Competition, Talent Identification, Talent Imperative, Talent Management, Talent Pipelines, Workforce Challenges, Workforce Crisis, Workforce Executives, Workforce Providers • Leave a comment
https://www.beckershospitalreview.com/finance/hospitals-living-paycheck-to-paycheck-unable-to-make-long-term-investments.html?utm_medium=email&utm_content=newsletter

Healthcare added almost 45,000 jobs in November, but many hospitals and health systems will continue to struggle to meet staffing needs, retain top executives and providers, and foster long-term pipelines for talent, Ted Chien, president and CEO of independent consulting firm SullivanCotter, wrote in a Dec. 15 article for Nasdaq.

Hospitals and health systems are living “paycheck to paycheck” and unable to make long-term investments at the height of the current workforce crisis, Mr. Chien said.

The challenge boils down to a healthcare delivery problem, not a demand problem. 

Baby Boomers are the greatest source of care demand on the healthcare system, but are unable to contribute to the provider workforce in the numbers needed to achieve balance, according to Mr. Chien. To compound that issue, burnout is a major factor why “too many” frontline workers have left or plan to exit healthcare, he said. 

Last year, an estimated 333,942 healthcare providers dropped out of the workforce, including about 53,000 nurse practitioners, which has led hospitals to spend more on contract labor and feeling more pressure to consolidate, according to an October report published by Definitive Healthcare.

Long term, a continued lack of healthcare workers would force hospitals to operate in a heightened crisis mode, according to Mr. Chien, depriving non-critical patients of sufficient health prevention and demanding too much of providers who are already overly taxed. 

Mr. Chien highlighted three key areas to tackle the workforce crisis: smarter technology, resilient teams and excellent leadership. 

Technologies that alleviate providers’ administrative burdens will be critical to reduce burnout and keep caregivers focused on patient care, while smarter tech can also forge pipelines for future providers by streamlining clinical experience operations and aligning student placements with existing opportunities.

Building resilient teams begins with competitive pay and robust benefit packages, which fosters trust and demonstrates that a hospital values its staff, according to Mr. Chen. Supporting career growth, including upskilling and redeploying staff when appropriate, empowers employees.

Lastly, capable executive leadership teams, under intense scrutiny from industry stakeholders, must clearly outline their hospital or health system’s strategy and provide the change needed to support their staff. Lack of trust in leaders drives staff out of healthcare, so it is crucial to recruit and retain “modern, strategic thinkers with depth of experience who are prepared to lead,” Mr. Chien wrote. 

Click here to read the full article.

The dire state of hospital finances (Part 1: Hospital of the Future series)

Posted on by • Posted in Administrative Footprint, Average Length of Stay (ALOS), Business Model, Business Transformations, Clinical Management of Complex Patients, Cohesive Care Teams, Competition, Cost Management, Cost Reduction, Deferred Healthcare, Disruption, Elective Procedures, Elective Surgery, Employee Layoffs, Employee Loyalty, Employee Staffing, Employee Staffing Shortage, Experience Complexity Gap, External Market Forces, Financial Instability, Financial Pressure, Financial Stewardship, Financial Strength, Financial Viability, Financially Distressed, Health System, High Deductible Health Plans, Home-Based Care, Hospital, Hospital Industry, Inflation, Innovation, Labor Cost Structure, Labor Market, Labor Shortages, Labor Spend Management, Leadership, Mission, Nonoperating Income, Nonoperating Income Dependency, Nurse Agency Staffing, Nurse Retention, Nurse Staffing, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Metrics, Operating Performance, Operating Revenue, Outpatient Care, Outpatient Surgery, Patient Demand, Patient Safety, Payor Contracting, Payor Mix, Post Acute Care, Quality of Care, Rationalization, Recession, Reorganization, Retention, State of the Union, Strategy, Strategy Sustainable Long Term, Streamlining Operations, Supply Chain, Talent Acquisition Strategy, Talent Competition, Talent Management, Turnover, Turnover Rates, Work Life Balance, Work-Life Balance, Workforce Challenges, Workforce Strategy • Leave a comment
https://radioadvisory.advisory.com/142?utm_source=member_db&utm_medium=email&utm_campaign=2022Dec22&utm_content=member_trendingnow_final_x_x_x_x&elq_cid=4838956&x_id=0033b00002owB9sAAE

About this Episode

The majority of hospitals are predicted to have negative margins in 2022, marking the worst year financially for hospitals since the beginning of the Covid-19 pandemic.

In Part 1 of Radio Advisory’s Hospital of the Future series, host Rachel (Rae) Woods invites Advisory Board experts Monica Westhead, Colin Gelbaugh, and Aaron Mauck to discuss why factors like workforce shortages, post-acute financial instability, and growing competition are contributing to this troubling financial landscape and how hospitals are tackling these problems.

Links:

As we emerge from the global pandemic, health care is restructuring. What decisions should you be making, and what do you need to know to make them? Explore the state of the health care industry and its outlook for next year by visiting advisory.com/HealthCare2023.

The gig economy is back — even for execs

Posted on by • Posted in C-Suite, Gig Workers, Interim Executives, Interim Resources, Leadership, Leadership Skill Sets, Leadership Transition, Talent Acquisition Strategy, Talent Competition, Talent Imperative, Talent Management • Leave a comment
https://www.beckershospitalreview.com/hospital-management-administration/the-gig-economy-is-back-even-for-execs.html?origin=CFOE&utm_source=CFOE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G

Contract or “temp” employment used to be viewed as a means of supplemental income: a side hustle to an average day job, or a way to pay the bills while searching for full-time work. Now, gig work is back in style, and more workers want in on the flexibility — including C-suite executives, Korn Ferry recently reported.

The gig economy surged when older millennials, born in the 1980s, began rejecting the one-firm careers their parents had, according to Korn Ferry. Although they are currently midcareer, older millennials have switched jobs 7.8 times on average. Baby boomers are also using temporary work to keep busy during retirement, and Generation Z appreciates the flexibility that comes with contract labor. 

As temporary work grows in popularity, its influence is spreading to the C-suite. Interim executives are becoming more likely to be tapped when a leader departs, Korn Ferry reported. This gives organizations like health systems, which urgently need leadership in a rapidly changing industry, more time to conduct their searches for full-time replacements. 

Sixty percent of executives predict that the number of interim workers at their companies will “substantially increase” within the next three years, Korn Ferry reported. In a period of economic instability, temporary labor can mean less commitment and cost than a permanent worker. But there are downsides to contract labor, too. Since they lack benefits, many contract workers demand higher pay — which can trickle down and lead their permanent counterparts to ask for matched salaries. In the healthcare industry, this is visible in travel nurses’ paychecks, and their controversial effects on health systems’ finances. 

For better or for worse, contract labor does not appear to be dying out anytime soon. Fifty-eight million U.S. workers now consider themselves “independent,” Korn Ferry reported — an estimated 36 percent of the total workforce. 

CFOs experienced in cutting costs, restructuring in high demand

Posted on by • Posted in Budget, CFO, Cost Management, Cost Reduction, Health System, Hospital, Hospital Industry, Labor Spend Management, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Metrics, Operating Performance, Operating Revenue, Restructure, Talent Acquisition Strategy, Talent Competition, Talent Management • Leave a comment
https://www.beckershospitalreview.com/finance/cfos-experienced-in-cutting-costs-restructuring-in-high-demand.html?utm_medium=email&utm_content=newsletter

Fall is typically a period of increased CFO turnover as hospitals and health systems begin searches for new executives for the beginning of the following year, but the pressures associated with high inflation, a projected recession and the continued effects of the pandemic have led to more churn than usual for top financial positions, The Wall Street Journal reported Oct. 23

Many economists and financial experts are expecting a recession to hit the U.S. in early- to mid-2023. This is pushing some executives to switch roles now before the labor market changes. Many healthcare organizations are also preparing for a potential economic downturn by searching for CFOs who are experienced in cutting costs or restructuring operations, according to the report.

Recession planning in healthcare is challenging because it can have both negative (payer mix, patient volume) and positive effects (decrease in labor and supply inflation) on financial performance, according to Daniel Morash, senior vice president of finance and CFO for Boston-based Brigham and Women’s Hospital.

“The best advice I would give is that hospitals need to consider recession scenarios when making long-term commitments on wage increases, capital expenditures and planning for capacity for patient access,” Mr. Morash told Becker’s Hospital Review. “Most of our focus needs to be on the acute challenges we are facing. Still, it’s important to be careful not to overreact or overcommit financially when a recession could change a number of trends we’re seeing now.”

As hospitals make cuts, the losses are loud or quiet

Posted on by • Posted in Budget, Budget Cuts, Cost Management, Cost Reduction, Health System, Hospital, Hospital Industry, Labor Spend Management, Talent Acquisition Strategy, Talent Competition, Talent Imperative, Talent Management • Leave a comment
https://www.beckershospitalreview.com/finance/as-hospitals-make-cuts-the-losses-are-loud-or-quiet.html?utm_medium=email&utm_content=newsletter

There are few easy ways to cut expenses. But in hospitals and health systems, there are quieter ways. 

Workforce reductions are never painless — or never should be, especially for those doing the reducing. Involuntary job loss is one of the most stressful events workers and families experience, carrying mental and physical health risks in addition to the disruption it poses to peoples’ short- and long-term life plans. 

But as health systems find themselves in untenable financial positions and looming risk of an economic recession, job cuts and layoffs in hospitals and health systems are increasingly likely. In a report released Oct. 18 from Kaufman Hall based on response from 86 health system leaders, 46 percent said labor costs are the largest opportunity for cost reduction — up significantly from the 17 percent of leaders who said the same last year. 

Job cuts at hospitals may seem counterintuitive given the nation’s widely known shortages of healthcare workers. But as hospitals weather one of their most financially difficult years, some are reducing their administrative staff, eliminating vacant jobs and reorganizing or shrinking their executive teams to curb costs.  

Decisions to reduce administrative labor tend to garner quieter reactions compared to budgetary decisions to end service lines or close sites of patient care, including hospitals. While the implications of administrative shakeups may be felt throughout a health system, the disruption they pose to patients is less immediately palpable. Few people know the name of their community hospitals’ senior vice presidents, but most do know how many minutes it takes to travel to a nearby site of care for an appointment during a workday or a tolerable amount of time to wait for said appointment. 

It doesn’t hurt that hospital and health systems’ administrative ranks have ballooned compared to their patient-facing counterparts. While the number of practicing physicians in the U.S. grew 150 percent between 1975 and 2010, the number of healthcare administrators increased 3,200 percent in the same period. More broadly, administrative spending accounts for 15 to 30 percent of healthcare spending in the U.S. and at least half of that “does not contribute to health outcomes in any discernible way,” according to a report published Oct. 6 in Health Affairs.

A couple of health systems have denoted their plans to cut nonclinical employees and jobs in the past week. 

Cleveland-based University Hospitals announced efforts to reduce system expenses by $100 million Oct. 12, including the elimination of 326 vacant jobs and layoffs affecting 117 administrative employees. The workforce reduction comes as the 21-hospital system faces a net operating loss of $184.6 million from the first eight months of 2022.

Sioux Falls, S.D.-based Sanford Health is laying off an undisclosed number of staff, a decision the organization’s top leader says is “to streamline leadership structure and simplify operations” in certain areas, the Argus Leader reported Oct. 19. Bill Gassen, president and CEO of Sanford Health, also said the layoffs primarily affect nonclinical areas and that they will “not adversely impact patient or resident care in any way.”

These developments are only several days old, but have not yet triggered any newsworthy follow-up developments or pushback. Cost reduction efforts that close facilities or reduce services tend to — on the other hand — catalyze scrutiny, debate and conflict in communities that can span for months and even years. 

Look to Atlanta. Marietta, Ga.-based Wellstar unexpectedly announced on Aug. 31 that its 460-bed Atlanta Medical Center will end operations on Nov. 1, with plans to progressively wind down services leading up to that date. The system attributed the decision to the $107 million loss incurred operating the hospital over the last 12 months. Noteworthy is that the system has said that 1,430 (82 percent) of Atlanta Medical Center workers affected by the facility’s impending closure have accepted job offers at other Wellstar Health System facilities. 

Since, the decision to close one of Atlanta’s level 1 trauma centers has drawn attention from Georgia’s governor and gubernatorial candidate, congressional members and Atlanta Mayor Andre Dickens, who in a town hall Oct. 19 said that in closing Atlanta Medical Center, “Wellstar said they don’t want to be in the business of urban healthcare.” 

The decision has also spilled over to affect area hospitals, namely Atlanta’s public Grady Health System, which received a $130 million cash infusion from the state and reported a 30 percent increase in patient volume after the emergency department of Atlanta Medical Center closed. 

Health systems have a lot to weigh. Their administrative layers are thick, varied and necessary to a degree, meaning this broad category of workers still poses tough decisions when it comes to cost containment efforts. But in a very simple view, laying off people who care for patients will only hurt health systems’ chances of recruiting and retaining clinical talent — in a time when no health systems’ odds of doing so are especially outsized.

CFOs continue talent retention battle

Posted on by • Posted in Career Development, Career Growth, CFO, High-Value Activity, Meaningful Work, Recognition, Recruiting, Retention, Talent Competition, Talent Imperative, Talent Management, Work Environment Flexibility • Leave a comment
https://www.cfodive.com/news/cfos-continue-talent-retention-battle/632483/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202022-09-23%20CFO%20Dive%20%5Bissue:44744%5D&utm_term=CFO%20Dive

Dive Brief:

  • CFOs looking to attract and retain the right kind of talent amidst inflationary pressures, rising interest rates and other economic tensions need to “double down on recognition and meaningful work for employees,” said Jessica Bier, managing director of Deloitte Consulting, in an interview. 
  • In order to attract and retain viable talent to keep business afloat, 71% of CFOs indicated that a flexible workplace environment was their approach, 63% said clarity around career development and growth opportunities and 62% pointed to increased salaries, per the second wave of data in the Q3 CFO Signals report.
  • The report also revealed that CFOs who took steps to alter, reduce or streamline the type of work their finance organizations performed saw several benefits throughout the enterprise — 78% said one benefit was more time spent on higher-value activities and 71% indicated greater use of technology was another. Contrastingly, only 20% saw talent retention as a benefit, and even less (10%) saw higher quality talent as one.

Dive Insight:

The managers and workforce of financial departments are looking for five main things, said Bier, per the report — those being work environment flexibility, career growth and development, salaries, meaningful work and recognition, she said.

“As we think about the workforce experience, every CFO is also the chief talent officer,” Bier said. “Your HR business partner can support you but at the end of the day the way your managers work and the way you connect people to the work that they’re doing — that’s the CFO’s job to set that tone.”

In today’s macroeconomic environment, with inflation at its highest point in nearly four decades, meeting the expectations and needs of finance employees is all the more expensive, and important. 

One misconception, Bier said, is that a recession means workers will be happy just to have a job. “The people in the workforce who are the ones you want to keep, are the ones who are always going to have options,” she said. 

Talent retention continues to be a multifaceted challenge for CFOs and remains top of mind. Over half of CFOs (54%) cited hiring and retaining staff as the most difficult task over the next 12 months, according to a July Gartner study.