The Cost of the Health Care Workforce
There are many expenses that go into running a hospital. Some of those expenses coming from updating technology/machines, supplies, marketing, etc. One of the larger costs of operating a hospital is the labor cost. Paying physicians, nurses, admin, cooks, janitors, and more can really start to add up. It is important to understand labor costs and what that all entails.
Labor Costs
A large majority of hospital expenses stem from labor costs. The amount of money that goes into paying their employees is around fifty-four percent. Although hospitals can manage labor costs when they are typically around fifty percent, anything above that can become a burden and hurt their financial position (Daly, 2020).
So, what creates labor costs and how do we keep them at a reasonable percentage? High turnover rates, staffing inappropriately, and overtime are some of the causes for higher labor costs. Turnover can become very expensive, especially if it happening often. One way to help eliminate a high turnover rate is to start from the beginning. Recruiting properly is the first step. Choosing the appropriate screening tools pre-hire will help the future turnover costs (Moore, 2019).
Depending on the way employees are staffed, can create higher labor costs. Making sure that employees are doing the job that fits within their credentials is vital to keeping labor costs down. Appropriate staffing can be improved by setting specific standards for which staff members should be performing which duties (“8 Ways to Cut Labor Costs in Your Hospital”, 2020). Having a guideline to allow the proper parties to work where necessary will assist in avoiding to pay higher waged staff to spend extra hours on work that can be completed by lower waged staff.
Conclusion
There are many aspects to controlling labor costs that can be implemented across an organization. Controlling overtime allowances by putting a policy into play, is a step that can be taken to monitor extra hours and pay for each employee. Along with appropriate staffing and proper recruiting tools, a company can start making cuts in their labor budgets and help lower the turnover rates for the future. One major goal in adjusting labor expenses is to avoid future layoffs and by taking certain steps to manage labor costs, it will benefit not only the staff but organization as a whole.
References
8 Ways to Cut Labor Costs in Your Hospital (2020). Retrieved from
https://www.beckershospitalreview.com/hospital-management-administration/8-ways-to-cut-
labor-costs-in-your-hospital.html
Daly, R. (2020). Hospitals innovate to control labor costs. Retrieved from
Hospitals innovate to control labor costs
Moore, L. (2019). 3 Drivers of Labor Costs in Hospitals. Retrieved from
3 Drivers of Labor Costs in Hospitals
There are many expenses that go into running a hospital. Some of those expenses coming from updating technology/machines, supplies, marketing, etc. One of the larger costs of operating a hospital is the labor cost. Paying physicians, nurses, admin, cooks, janitors, and more can really start to add up. It is important to understand labor costs and what that all entails.
Labor Costs
A large majority of hospital expenses stem from labor costs. The amount of money that goes into paying their employees is around fifty-four percent. Although hospitals can manage labor costs when they are typically around fifty percent, anything above that can become a burden and hurt their financial position (Daly, 2020).
So, what creates labor costs and how do we keep them at a reasonable percentage? High turnover rates, staffing inappropriately, and overtime are some of the causes for higher labor costs. Turnover can become very expensive, especially if it happening often. One way to help eliminate a high turnover rate is to start from the beginning. Recruiting properly is the first step. Choosing the appropriate screening tools pre-hire will help the future turnover costs (Moore, 2019).
Depending on the way employees are staffed, can create higher labor costs. Making sure that employees are doing the job that fits within their credentials is vital to keeping labor costs down. Appropriate staffing can be improved by setting specific standards for which staff members should be performing which duties (“8 Ways to Cut Labor Costs in Your Hospital”, 2020). Having a guideline to allow the proper parties to work where necessary will assist in avoiding to pay higher waged staff to spend extra hours on work that can be completed by lower waged staff.
Conclusion
There are many aspects to controlling labor costs that can be implemented across an organization. Controlling overtime allowances by putting a policy into play, is a step that can be taken to monitor extra hours and pay for each employee. Along with appropriate staffing and proper recruiting tools, a company can start making cuts in their labor budgets and help lower the turnover rates for the future. One major goal in adjusting labor expenses is to avoid future layoffs and by taking certain steps to manage labor costs, it will benefit not only the staff but organization as a whole.
References
8 Ways to Cut Labor Costs in Your Hospital (2020). Retrieved from
https://www.beckershospitalreview.com/hospital-management-administration/8-ways-to-cut-
labor-costs-in-your-hospital.html
Daly, R. (2020). Hospitals innovate to control labor costs. Retrieved from
Hospitals innovate to control labor costs
Moore, L. (2019). 3 Drivers of Labor Costs in Hospitals. Retrieved from
3 Drivers of Labor Costs in Hospitals