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High Hospital Turnover May be Linked to Underfunded HR

John Commins, for HealthLeaders Media, October 31, 2011

There is not much good news in a report from PricewaterhouseCoopers Saratoga that reviews the state of personnel departments at health systems nationwide.  

The report -- 2011/2012 US Human Capital Effectiveness Report – Executive Summary for the Hospital Sectorsuggests that hospital and health system human resources departments lag behind their colleagues in most other industries by most measures, especially in stemming hospital staff turnover.

Annual turnover – both voluntary and involuntary – at the 50 hospitals represented in the report dropped from 33.5% in 2008 to 26.2% in 2010, compared with 22.7% annual turnover for all industries in 2010. PwC Saratoga's Shebani Patel, the author of the report, credits much if not all of that decline in turnover to a weak economy and a bunker mentality that most workers in all sectors have adopted in a stagnant economy.

"It's not that all of a sudden the on-boarding and acquisition and assimilation process has become solid. It's that individuals are just happy to have a job," Patel tells HealthLeaders Media.

What is striking, however, is the report's notion that hospital HR departments spent an average of $701 per employee in 2010, while the industry average was $1,495. In addition, there were approximately 148 employees for every HR employee at hospitals, while the industry average was 91 employees per HR employee.
So, hospitals have higher turnover than most industries and hospitals underfund and understaff their HR departments compared with other industries. Is there a correlation?

"What we can say is the money that is invested in hospital HR tends to be more focused on the basics: getting people hired, benefits, and getting paid," Patel says. "Financial services or technology might focus on more strategic issues such as talent management, succession planning, leadership development, predictive analytics, how to use analytics to manage the workforce, how do we pay for performance, how do we identify and differentiate our high performers versus the overall population."

Strategic thinking takes data and other resources, and that requires money.

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