For years, pioneering CFOs steadily extended their duties beyond the boundaries of the traditional finance and accounting function. Over the past year, an expanding set of beyond-finance activities – including those related to environmental, social and governance (ESG) matters; human capital reporting; cybersecurity; and supply chain management – have grown in importance for most finance groups. Traditional finance and accounting responsibilities remain core requirements for CFOs, even as they augment planning, analysis, forecasting and reporting processes to thrive in the cloud-based digital era. Protiviti’s latest global survey of CFOs and finance leaders shows that CFOs are refining their new and growing roles by addressing five key areas:
Accessing new data to drive success – The ability of CFOs and finance groups to address their expanding priorities depends on the quality and completeness of the data they access, secure, govern and use. Even the most powerful, cutting-edge tools will deliver subpar insights without optimal data inputs. In addition, more of the data finance uses to generate forward-looking business insights is sourced from producers outside of finance group and the organization. Many of these data producers lack expertise in disclosure controls and therefore need guidance from the finance organization.
Developing long-term strategies for protecting and leveraging data – From a data-protection perspective, CFOs are refining their calculations of cyber risk while benchmarking their organization’s data security and privacy spending and allocations. From a data-leveraging perspective, finance chiefs are creating and updating roadmaps for investments in robotic process automation, business intelligence tools, AI applications, other types of advanced automation, and the cloud technology that serves as a foundational enabler for these advanced finance tools. These investments are designed to satisfy the need for real-time finance insights and analysis among a mushrooming set of internal customers.
Applying financial expertise to ESG reporting – CFOs are mobilizing their team’s financial reporting expertise to address unfolding Human Capital and ESG reporting and disclosure requirements. Leading CFOs are consummating their role in this next-generation data collection activity while ensuring that the organization lays the groundwork to maximize the business value it derives from monitoring, managing and reporting all forms of ESG-related performance metrics.
Elevating and expanding forecasting – Finance groups are overhauling forecasting and planning processes to integrate new data inputs, from new sources, so that the insights the finance organization produces are more real-time in nature and relevant to more finance customers inside and outside the organization. Traditional key performance indicators (KPIs) are being supplemented by key business indicators (KBIs) to provide sharper forecasts and viewpoints. As major new sources of political, social, technological and business volatility arise in an unsteady post-COVID era, forecasting’s value to the organization continues to soar.
Investing in long-term talent strategies – Finance groups are refining their labor model to become more flexible and gain long-term access to cutting-edge skills and innovative thinking in the face of an ongoing and persistent finance and accounting talent crunch. CFOs also are recalibrating their flexible labor models and helping other parts of the organization develop a similar approach to ensure the entire future organization can skill and scale to operate at the right size and in the right manner.
- Hospitals across the country have spent more than $3 billion on personal protective equipment since the start of the COVID-19 pandemic, though costs have steadily declined since the worst shortages experienced during the second quarter of 2020, according to an analysis from Premier, a group purchasing organization.
- Before the pandemic, hospitals normally spent about $7 on PPE costs per patient per day. That figure shot to $20.40 during the second quarter of last year, and during the first quarter of this year was around $12.45 per patient per day, according to Premier.
- Hospitals are also still paying more for qualified clinical labor — roughly $24 billion more in total per year compared to before the pandemic, according to another Premier analysis out last week.
PPE was in short supply early in the pandemic, spurring bidding wars and financially straining hospitals as they suffered from the budgetary fallout of canceled elective surgeries and other lucrative services.
While supply chain challenges have since eased and costs are down since their peak, hospitals are still spending more on PPE than before the pandemic, and consumption and demand remains strong in light of the delta variant, according to the report.
Premier used a database representing 30% of U.S. hospitals across all regions from September 2019 through last month to track spending trends, looking at costs for eye protection, surgical gowns, N95 respirators, face masks, exam gloves and swabs. It then calculated total costs measuring quantities used per patient, per day, multiplied by the percent change in pricing for the quarter.
Ultimately, hospitals are still using far more N95 respirators than they were prior to the pandemic.
Demand is still up for eye protection, surgical gowns and face masks, though pricing is close to pre-pandemic levels for those items. Costs for surgical gloves and N95 respirators are still above pre-pandemic levels, according to the analysis.
While most PPE costs have steadily declined for hospitals, other expenses have not, namely labor costs.
Contract labor costs have fluctuated, though they reached record highs amid COVID-19 surges, commanding record rates from providers. And nursing shortages, especially, have been so dire that hospitals are spending more on recruiting and retaining for the positions, boosting benefits and offering steep sign on bonuses.
Clinical labor costs are up 8% on average per patient, per day compared to before the pandemic, according to the earlier Premier analysis. That translates to about $17 million in additional annual labor expenses for the average 500-bed facility.
As of last month, overtime hours are up 52% since before the pandemic. The use of agency and temporary labor is up 132% for full-time employees and 131% for part-time employees.
The most expensive labor choices for hospitals are contract labor and overtime, typically adding 50% or more to an employee’s hourly rate, according to Premier.
For that report, Premier used a database with daily data from about 250 hospitals, bi-weekly data from 650 hospitals and quarterly data for 500 hospitals from October 2019 through August to analyze workforce trends among employees in emergency departments, intensive care units or nursing areas.
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.
Nearly three in five U.S. health care workers are optimistic about where the industry is headed, according to a new poll released today by Morning Consult.
Why it matters: Amid increasing concerns about burnout in health care and workforce shortages, the poll of more than 900 workers between Sept. 2–8 shows there is still a lot of optimism about the health care profession even as workers deal with stressful working conditions.
A common theme among the responses was the message that “working in healthcare is hard and it’s something that should only be done if you are completely committed to it.”
- Responses ranged from one worker who said “it’s a great career,” to another who said young people should avoid the field “unless you have a death wish.”
- The poll also found men were more likely than women to be optimistic about the future of the health care industry.
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.
As the pandemic rages on, hospitals across the country are experiencing significant labor shortages for critical clinical roles. In the graphic above, we highlight the shortage of nursing talent, perhaps the most sought-after role for which health systems are struggling to hire.
Even before the current COVID surge, many nurses reported feeling dissatisfied or feeling burned out. In a May 2021 survey, more than one in five nurses said they were considering leaving their current jobs, citing insufficient staffing, workload, and the emotional toll of the work. Many health systems are offering lucrative incentives, such as five-figure signing bonuses, to fill immediate critical care needs, and to address the growing backlog of patients returning for delayed care.
As more nurses quit or retire from their permanent positions, health systems are being forced to fill workforce gaps by luring temporary talent at much higher costs (now cresting $8K a week to fund a single travel nurse in some parts of the country). Travel nurse demand reached an all-time high in August, up almost 40 percent from the previous peak in December 2020. As they struggle to fill essential openings, hospital leaders must also focus on keeping the current nursing staff engaged—a challenge that only gets harder as staff nurses compare their salaries to those paid to the temporary colleagues working alongside them.
Providence is investing $220 million to fill open positions and give bonuses to current employees, the Renton, Wash.-based system announced Sept. 3.
The health system is giving a $1,000 bonus to every caregiver who has been with the organization for at least 90 days. The bonuses, which will be given to workers up to and including the director level, will be paid in two installments in September and December.
Providence is also making investments to rapidly fill 17,000 job openings. The system said it is offering sign-on bonuses to front-line workers with the goal of filling positions quickly and alleviating the stress and burnout many clinicians are experiencing. Current employees are eligible for referral bonuses of between $1,000 and $7,500.
“Our caregivers are the core of who we are, and we have been committed to supporting their health and well-being throughout the pandemic,” Providence President and CEO Rod Hochman, MD, said in a news release. “Now, as we enter month 21 of our COVID-19 response, it’s even more imperative to continue to care for and bolster those who make our mission possible.”