The Cost of the Health Care Workforce
Monna Marrongelli
MHA/543: Tackling The Talent War In The Health Sector
July 20, 2020
Lawrence Fergus
The Cost of the Health Care WorkforceMonna Marrongelli
MHA/543: Tackling The Talent War In The Health Sector
July 20, 2020
Lawrence Fergus
There is no denying healthcare has many challenges. One of the leading challenges a healthcare organization face, is the labor costs of maintaining the nursing staff. “An example of that burden was that labor’s share of total expenses increased steadily from 2008 to 2018, rising from 50.6% to 54.9% among hospitals tracked by Fitch Ratings” (Daily, 2019, pg. 5). Some organizations have begun to research and evaluate the reasons for such large numbers of nurse turnover to find a solution.
Key Drivers
Key drivers of labor costs are management, nurse turnover and retention. Management must be willing to empower, engage and support nursing staff. Nursing is a very difficulty job. Management should be “in the trenches” with nurses offering support and rallying the nurses. “When physicians and nurses are engaged and supportive, he said, good things can happen for the patient” (Lagasse, 2016, pg. 14). This supportive culture can provide a culture of job satisfaction and can lead to retention of nurses. Healthcare is in a state of constant change. The constant changes in policies and regulations has a direct impact on patient care. "The reality of healthcare reform is that while continuous cost improvement is important, it can't be done in a way that sacrifices the quality of care or patient satisfaction. Poor quality can have a direct correlation to financial returns." (Lagasse, 2016, p.7). Cost improvement is directly related to staffing. Staff, in this case nurses, who are happy in their jobs perform better, thus, patient satisfaction is better, and hospitals can have a direct impact on profits. Curbing the costs of labor can have significant affects on nurse turnover. When nurses are empowered and engaged in the job, the culture of nursing becomes attractive to those already employed and any potential employees. Organizations could direct by this example, “efforts to improve retention included adding ways for Northwell employees to advance their careers. An example was the launch of a school for nurses and physician assistants in partnership with Hofstra University that includes a track for nurse practitioners (Daily, 2019, pg. 19). Management should be willing to listen to nurses and implement change processes to encourage staff satisfaction. An article in the Journal of Hospital Marketing & Public Relations, 2010, an expectation of “20% turnover rate yearly” (Nowak, Holmes, & Murrow, (2010, p. 15). Turnover rates this high are constant reminders to healthcare organizations, for the need to change tactics. When nurses leave organizations are forced to look to agency or travel nurses to fill the vacancy. This is at a premium cost to the organization.
Conclusion
If organizations focus some of the funds used to replace those who leave, on employee retention, there could be some significant impact to retention. Developing interventions aimed to encourage and engage staff, resulting in happier more productive employees. This may directly impact nurse retention numbers and decrease nurse turnover. A 2019 article explains “efforts were credited with reducing the organization’s turnover rate to 9% and allowing average tenure to reach 9.5 years (Daily, 2019, pg. 17). Management must focus efforts to working with nurses, having conversations to decrease these high labor costs.
References
Daily, R., (2019), Hospitals innovate to control labor costs, Healthcare Financial Management Association.
Lagasse, J., (2016), Healthcare providers keep close tabs on labor costs to keep spending in check, Healthcare Finance, (p. 14).
Nowak, P., Holmes, G., & Murrow, J. (2010). A model for reducing health care employee turnover. Journal of Hospital Marketing & Public Relations, 20(1), 14–25. https://doi.org/10.1080/15390940903450925
Marrongelli, M. (2020), The Cost of the Health Care Workforce, Unpublished Manuscript, University of Phoenix.