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The costs hospitals can control: 7 insights from clinical leaders on talent turnover, recruitment and retention
High levels of employee turnover is costly in any industry, but as the demand for talented medical staff increases, issues with employee retention and recruitment can be particularly problematic for hospitals and health systems.
Hospitals are labor-driven entities dependent on talented frontline providers for fiscal success. In order to keep operations cost-effective, administrators must successfully recruit and retain highly skilled staff members or shoulder the financial burden of high turnover. The cost of turnover for just one experienced registered nurse can reach $88,000, according to a 2017 study published in SAGE Open Nursing. When factoring in the cost of recruitment, onboarding and lost revenue, the cost of physician turnover can reach as much as $1 million per physician, according to a 2012 study published in Recruiting Physicians Today.
High costs associated with turnover are likely to become even more palpable for many hospitals as the percentage of Americans over age 65 continues to increase, driving up provider demand. According to a 2017 projection from the Association of American Medical Colleges, the United States may face a physician shortage as high as 104,900 by 2030.
“The demand for talent, particularly for clinical executive talent, has never been greater,” Gail Wurtz, MSN, MBA, RN, vice president and account relationship executive with healthcare leadership solutions company B.E. Smith, told a room of more than 20 clinical healthcare leaders during a May 11 executive roundtable discussion at Becker’s Hospital Review Health IT + Clinical Leadership in Chicago. “You and the clinical staff you lead are the key to providing superior patient care, which supports your organization’s future success and services.”
During the roundtable event, clinical leaders split into groups to discuss issues related to turnover, recruitment and retention. After these mini-discussions, designated leaders relayed the most crucial elements of their group’s discourse to the larger group.
Here are seven insights from the roundtable.
“Location, location, location.”
1. During the discussion, an administrator from a 300-plus bed hospital in the Midwest described physician recruitment as all about “location, location, location.” While the leader’s hospital is located in a city of less than 30,000, it is located within driving distance of a major metropolitan area. The hospital tries to market its proximity to the big city when recruiting top talent.
2. The CMO of a Midwestern children’s hospital said his organization is not located in what is generally considered a “destination community.” The hospital’s location proves challenging for physician recruitment. The leader said his organization addresses these issues in a number of ways, including investment in medical residents.
“We’ve done some innovative things to tap into resident talent,” the CMO said. “We invest in them during their training with stipend programs and three-year [employment] guarantees upon residency completion, which have worked out pretty well for us.”
The CMO said the three-year mark is a critical turning point for his organization. “Within the first three years, we have a reasonably high turnover rate,” the CMO said. “Once they’re employed with us for three years, they get really engaged and they stay.”
3. Ms. Wurtz said a B.E. Smith survey of 800 hospital leaders published in January reflect executives’ comments about the importance of location when recruiting talent. In the survey, 33 percent of respondents identified location as their organization’s greatest challenge to staff recruitment, making it the most identified challenge in the survey. Twenty-four percent of respondents said access to high quality talent was their organization’s greatest challenge, making it the second-most identified challenge.
Prioritize retention to combat turnover
4. In the B.E. Smith survey, which participants completed in November and December of 2017, 35 percent of respondents said they were contemplating a job change in 2018. Ms. Wurtz said this finding highlights the importance of implementing retention programs within organizations to “foster a culture of continuity” and staff engagement.
5. During the discussion, a nurse leader who heads the intensive care unit at a medical center in the Southwest said her organization is piloting programs to hold onto top nurse talent. “There’s been more of an emphasis on new nurse hires at my organization rather than a focus on retaining top nursing talent,” the ICU leader said. “We’re looking to do more to hold onto leaders that are seasoned.”
6. The assistant director of clinical support for an academic health system based in the Midwest said her discussion group believes mentorship programs should receive more attention and resources to help develop leaders from within. Such programs could help mitigate potential overreliance on outside recruitment for leadership positions.
Focus on the nurse-physician relationship
7. During the roundtable, multiple leaders discussed the importance of creating an environment of inclusion and collaboration to facilitate positive relationships between providers — specifically nurses and physicians. As a nurse leader, the ICU director from the Southwest said strong nurse-physician relationships require both provider groups to keep the perspective of the other in mind.
“When we have good relationships, those can help retain talented employees,” the ICU director said. “For my part, I know I think very often about, ‘Do I like to work with this doctor?’ But I don’t often think, ‘Does this doctor like to work with me?’ To be successful, that kind of thinking has to go both ways.”
For more insights into hospital workforce recruitment and retention trends, click here.
Vanderbilt University Medical Center points to Epic rollout for 60% drop in operating income
Nashville, Tenn.-based Vanderbilt University Medical Center saw revenues increase in the first nine months of fiscal year 2018, but the hospital ended the period with lower operating income.
Here are four things to know about the hospital’s most recent financial results.
1. VUMC reported revenues of $3.04 billion in the nine months ended March 31, up from revenues of $2.85 billion in the same period of the year prior, according to recently released bondholder documents. The hospital said the financial boost was primarily attributable to higher net patient service revenue, which climbed 5 percent year over year.
2. The hospital’s operating expenses increased 9 percent year over year to nearly $3 billion in the first nine months of the current fiscal year. The hospital’s expenses related to salaries, wages and benefits, as well as drug and supplies costs, increased year over year.
3. “The increase in salaries, wages and benefits is primarily due to increased staffing to meet additional demand associated with higher net patient service revenue, research contracts, and training costs for staff related to our EMR system implementation,” VUMC said. Higher consulting and management fees related to the Epic EMR implementation also caused the hospital’s expenses to rise.
4. VUMC ended the first nine months of fiscal year 2018 with operating income of $44.4 million, down 60 percent from $110 million in the same period a year earlier. The decline was largely attributable to higher expenses related to the rollout of the new EMR system. The hospital said it planned for future operating income reductions due to the implementation.
“We successfully completed our EMR implementation in November and we anticipate the new system will yield future efficiencies,” VUMC said. “However, in the year of implementation, increased operating expenses related to implementation caused a reduction in operating income. The EMR implementation put pressure on clinical volumes in the post-live period. Although we have achieved net patient services revenue in excess of our budget, the implementation has muted volumes.”
Providers argue against Medicaid rate cuts without oversight
States with at least 85% of their Medicaid population in managed care could implement nominal payment cuts without assuring care.
Hospitals, particularly rural providers, would be hurt by a Centers for Medicare and Medicaid Services proposed rule that would force them to take lower Medicaid rates without a review of the impact of the cuts, according to comments made to CMS asking for a reconsideration of the plan.
Provider organizations, hospitals, the Medicaid and CHIP Payment and Access Commission, are among those asking the Centers for Medicare and Medicaid Services to rethink its proposed rule.
Comments were due this week.
CMS proposed the rule in March to allow states that have a comprehensive, risk-based Medicaid managed care enrollment that is above 85 percent of their total Medicaid population to get around network adequacy rules when implementing “nominal” rate changes.
States had raised concern over the administrative burden associated with the current requirements, particularly for states with high rates of Medicaid managed care enrollment.
For states proposing nominal cuts below 4 percent a year or 6 percent over two years, the rule amends the process for them to document whether Medicaid payments in fee-for-service systems are sufficient to enlist providers to assure access to covered care and services.
These states would be exempt from access monitoring requirements and they would not need to seek public input on the rate reductions.
America’s Essential Hospitals said, “Requiring states to ensure, through monitoring, that rate reductions do not diminish access to needed services is particularly important now, as access monitoring reviews are the only vehicle left for providers to challenge state payment rate decisions.”
The Federation of American Hospitals contends that the rule would allow for more than nominal rate changes. If finalized, FAH said, the rule would allow for an estimated 18 states to implement a rate reduction of up to 12 percent over a period of four years or 16 percent over five years, without going through requirements for ongoing monitoring of the impact of the rate changes.
This would disproportionately impact vulnerable Medicaid beneficiaries and subject providers with unsustainable rate reductions, FAH said.
Most states, even those with very high rates of managed care enrollment, often exclude certain categories of particularly vulnerable groups from managed care plans, the organization said. People with physical, mental or intellectual disabilities or who are elderly, largely get services through fee-for-service, FAH told CMS Administrator Seema Verma.
The Medicaid and CHIP Payment and Access Commission said it did not find the states’ argument of administrative burden compelling enough given the federal government’s obligations to oversee state performance and assurances related to access.
“Moreover, exceptions to reporting may introduce gaps in oversight,” MACPAC Chair Penny Thompson said. “In short, the need for states to maintain resources and tools to monitor access as an ongoing element of state program administration and decision making outweighs the limited savings states would achieve as a result of these changes.”
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HENRY KOTULA 