Healthcare today faces a two-sided labor crisis. On one side, labor costs have increased one-third from pre-pandemic levels, constituting almost 50 percent of a health system’s total expenses. On the other, healthcare workers are leaving the profession at an unprecedented rate. According to the 2022 NSI National Health Care Retention & RN Staffing Report, hospital turnover has increased by 6.4 percent to its current rate of almost 30 percent.
A healthcare labor management solution is urgently needed. When hospitals are understaffed, patient safety and quality of care diminish, and the healthcare workforce is forced to assume an unsustainable burden. For example, when the workforce was overburdened during the COVID-19 pandemic, healthcare-associated infections rose by as much as 47 percent. Meanwhile, nursing turnover costs the average hospital between $2 million to $9 million per year. Health systems must leverage quality data and work collaboratively to understand and proactively approach staffing.
To address this double-sided crisis, health systems need a comprehensive data-driven approach that reduces unnecessary costs while maintaining high-quality care and patient and employee satisfaction.
As the industry develops long-term labor management strategies, organizations can achieve short-term wins by leveraging current resources. To provide insight into how organizations can employ their workforce to become more efficient at serving patients in a high-quality way, short-term strategies need to leverage data analytics.
With data at the core of these efforts, the following short-term labor management strategies can effectively enable labor management wins, according to A Healthcare Worker Shortage Action Plan: Short-term Wins and Long-Term Strategy.
Implementing these short-term strategies can help organizations gain a better understanding of shifting labor dynamics across their organizational departments and teams.
Optimizing labor allocation over the long term requires robust data platforms and AI-enabled applications, which can help organizational leaders help understand everything from predicting patient volumes and matching supply to demand to optimizing skill mix and scheduling.
One such AI-enabled tool is the Health Catalyst PowerLabor™ application. PowerLabor was designed to provide healthcare organizations with a comprehensive view of the organization’s labor cost allocation and the data insights necessary to identify opportunities to optimize labor resources. PowerLabor pairs real-time, actionable data with a robust analytics platform that offers leaders a more nuanced overview of healthcare labor data by system, department, team, and job role, including special contract and pay categories. The platform also includes embedded AI forecasting to predict patient volumes.
To gain the actionable insights needed to optimize the effectiveness of long-term strategies, organizations are utilizing labor management experts, such as Health Catalyst’s Labor Management Expert Services. This service provides organizations with a customized analysis to determine where labor demands are not being met and are potentially undermining the quality of care as well as guidance to devise and implement strategies, structures, and practices for short-and long-term labor management success. This approach provides a tailored approach to each organization’s unique circumstances and labor challenges, equipping them to tackle their unique challenges and create a plan forward.
As one of the largest healthcare providers in Hawaii, Hawai‘i Pacific Health (HPH) understood that its labor management strategies were not effectively using budgeted resources and sought to determine where clinicians and operational leaders could better accommodate staffing challenges. To gain insight into its performance, HPH partnered with Health Catalyst to conduct an opportunity analysis. The data uncovered opportunities to reduce costs in healthcare labor management and identified the top ten areas across four hospitals with the biggest potential to improve. They implemented the Health Catalyst Data Platform, along with the PowerLabor application, to analyze where labor allocation could be optimized. For the first time, HPH was able to access a detailed overview of the organization’s labor resources and allocation across four hospitals, including hours, volume, and budget data from four different data systems.
Using a data-driven approach to labor management, HPH now has detailed insight into operations, supporting the creation of interventions aimed to decrease expenses, while improving operational efficiency and satisfaction. The health system improved labor utilization across four pilot facilities in only six months—significantly reducing labor costs. Building on its initial success, the organization has rolled out the program across its entire system, resulting in substantial savings and operational efficiencies, including:
With labor expenses making up approximately 50 percent of hospital and health system operation expenses and projected healthcare worker shortages reaching millions in just a few short years, the industry is facing a complex labyrinth of labor-related challenges. And, for any long-term benefit, efforts to address these challenges will need to bridge the widening supply and demand labor gap in a way that supports high-quality care and patient well-being, as well as employee engagement and provider job satisfaction.
Implementing AI-enabled labor tools will effectively garner short-term wins, bolster employee engagement, and provide organizations with an integrated view of their labor landscape in order to inform strategies to accommodate unpredictable changes in volumes and find the right balance between quality care, safety, patient and employee satisfaction, and fiscal responsibility
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