Category Archives: Turnover Rates

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

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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.

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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.

Hiring, turnover improves for some employers

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https://www.beckershospitalreview.com/workforce/hiring-turnover-improves-for-some-employers.html?origin=SupplyE&utm_source=SupplyE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G

Hiring is getting less challenging on some level, even amid a tight labor market, several employers said, according to The Wall Street Journal.

Take Nashville, Tenn.-based HCA Healthcare, for example.

In July, the hospital operator released its second-quarter earnings, and CEO Sam Hazen said turnover was down more than 20 percent in the second quarter compared to the first, The Wall Street Journal reported Aug. 8. Other large companies like Verizon, Uber and Marriott also indicated improvements in hiring or less turnover.  

The decreased turnover comes as employers have faced workforce shortages during the COVID-19 pandemic. While employers continue to face challenges with shortages and hiring certain roles, some say the situation is improving to some degree, according to The Wall Street Journal.

Companies and economists cited multiple factors contributing to the trend, including some workers returning to their former employers, as well as inflationary pressures motivating workers to accept jobs more quickly or keeping workers in their existing jobs.

Overall, healthcare gained 69,600 jobs in July, an increase from the amount added in June, according to the latest jobs report from the U.S. Bureau of Labor Statistics. The July count compares to 56,700 jobs added in June and 28,300 jobs added in May. 

Hospitals face increasing competition for lower-wage workers 

Posted on by • Posted in Attrition Rate, Employee Benefits, Employee Retention, Employee Satisfaction, Employee Value Proposition, Health System, Hospital, Hospital Industry, Labor Force Participation Rates, Talent Acquisition Strategy, Talent Competition, Talent Imperative, Talent Management, Turnover, Turnover Rates • Leave a comment

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Although the nursing shortage has attracted much attention in recent months, the healthcare workforce crisis is hitting at all levels of the labor force. As the graphic above shows, the attrition rate for all hospital workers in 2021 was eight percentage points higher than in 2019. 

Among clinicians and allied health professionals, certified nursing assistants (CNAs) have the highest turnover levels. Given the demands of the job and relatively low pay, CNA openings have been consistently difficult to fill. But it’s become even harder to hire for the role in today’s labor market as job openings near an all-time high. 

Although labor force participation rates have rebounded to 2019 levels, pandemic-induced economic shifts have led to a boom in lower-wage jobs. In 2021 alone, Amazon opened over 250 new fulfillment centers and other delivery-related work sites. The company is competing directly with hospitals and nursing facilities for the same pool of workers at many of these new sites.

In fact, our analysis shows that more than a quarter of hospital employees currently work in jobs with a lower median wage than Amazon warehouses. Health systems have historically relied on rich benefits packages and strong career ladder opportunities to attract lower-wage employees, but that’s no longer enough—Amazon and other companies have ramped up their benefits, such that they now meet, or even surpass, what many hospitals are providing. 

The time has come for health systems to reevaluate their position in local labor markets, and better define and promote their employee value proposition. 

Companies should brace for a culture of quitting

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Organizations should prepare themselves for a continuation of quits as a new culture of quitting becomes the norm as the annual quit rate stands to jump up nearly 20 percent from annual pre pandemic levels, according to Gartner. 

The pre pandemic average for quits stood at 31.9 million, but that figure could rise to 37.4 million this year, said executive consultancy Gartner in an April 28 news release. 

“An individual organization with a turnover rate of 20 percent before the pandemic could face a turnover rate as high as 24 percent in 2022 and the years to come,” Piers Hudson, senior director in the Gartner HR practice said in the news release. “For example, a workforce of 25,000 employees would need to prepare for an additional 1,000 voluntary departures.”

The reason for the likely increase in quits is new flexibility in work arrangements and employees’ higher expectations, according to Gartner. A misalignment between leaders and workers is also contributing to the attrition. 

“Organizations must look forward, not backward, and design a post-pandemic employee experience that meets employees’ changing expectations and leverages the advantages of hybrid work,” said Mr. Hudson.

Rising turnover, agency costs compound hospital labor problems

Posted on by • Posted in Bonus - Retention, Bonus - Signing, Health System, Hospital, Hospital Industry, Labor Cost Structure, Labor Market, Labor Shortages, Labor Spend Management, Nurse Agency Staffing, Nurse Travelers, Nurses, Nurses Compensation, Nurses Shortage, Permanent Wage Increases, Talent Competition, Talent Imperative, Talent Management, Turnover Rates • Leave a comment
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Even as COVID admissions continue to wane, hospitals report that workforce shortages persist. The impact on hospital finances is stark: as shown in the graphic above, there has been an eight percent increase in clinical labor costs per patient day since the start of the pandemic, amounting to an additional $17M annually for an average 500-bed hospital. 

Two of the primary factors driving this increase—higher turnover among clinical staff and a continued reliance on travel nurses—are mutually reinforcing. 

Quarterly turnover rates for some nursing positions doubled from Q4 2019 to Q2 2021, as hospitals turned to expensive agency labor to fill resulting vacancies. Spiking demand for travel nurses, still running nearly three times higher than the pre-pandemic baseline, fueled more turnover, as more nurses left for these lucrative roles. 

It’s unclear how long increased labor costs will persist. 

Some HR tactics, like signing and retention bonuses, are one-time expenditures. But total hospital employment is still down two percent from pre-pandemic levels, pointing to a diminished healthcare labor supply. 

Permanent wage increases may end up being unavoidable, especially for lower-wage jobs, where a new compensation baseline for talent is being set by the market, both inside and outside the healthcare industry.