Hospital Executives Projecting Clinician Shortage Volatility and Labor Budget Increases
Navigant analysis of HFMA survey data shows providers focusing on labor and supply chain productivity to reduce hospital operating expense
The survey of 101 chief financial officers and operations executives also suggests leadership is targeting labor and supply chain productivity improvements to reduce hospital operating expense over the next 12 months.
Staffing Shortage Volatility
Executives offer a volatile view of current staffing shortages, citing nurse and physician shortages as areas of both the largest increases and reductions compared to a year ago:
- Nurses: 43% say current shortages are worse than this time last year, with 27% suggesting improvements.
- Physicians: 35% cite existing shortages as worse and 20% as better than a year ago.
Mental health provider shortages may represent the most dire situation, with 35% of respondents believing current shortages are worse than last year, while just 10% cite an improvement. In addition, 20% of executives suggest revenue cycle management and coding expert shortages as worsening. Support services, pharmacists, and imaging experts represent the areas with the least shortage issues.
Labor Budget Growth
When asked how their organizations’ labor budgets are likely to change in the next 12 months, 78% of executives predict an increase, with almost one in five projecting surges of 5% or more. Just 14% predict decreases, and none more than 5%.
Hospital total employment compensation grew 2.3% in 2016 and 2% in 2017, according to the Bureau of Labor Statistics’ Employment Cost Index.
“The need to more effectively manage labor by staffing to demand will
only intensify as operating margins continue to diminish, and as the
pressure to enhance care quality and efficiency increases,” said
Targets for Operating Expense Reduction, Labor Management Productivity
When asked about their top target areas for reducing operating expenses over the next year, respondents cite labor (44%) and supply chain including purchased services (38%) as the top priority areas. Combined, labor and supply chain costs represent more than three-fourths of a hospital’s overall operating expense on average, according to industry statistics.
In addition, executives rank productivity improvement and workflow redesign as the main labor management initiatives their organizations will focus on for improvement over the next 12 months.
“Staffing shortages are placing hospital leadership in a paradoxical
situation, both due to the economic theory of supply and demand and the
tendency to maintain surplus with shortages looming,” said Navigant
Providers can use analytics, predictive algorithms, and other technology tools to:
- Analyze historical data around patient volumes and visits, procedure logs, and more to identify timing patterns and determine departmental staffing demand.
- Map out workflow steps and identify processes to combine, eliminate, or streamline.
- Plan staffing budgets and track labor metrics, including costs and productivity.
Click here to view the full survey results.