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Labor Lesson

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Like many hospital systems, Houston-based Memorial Hermann faces a severe labor shortage in crucial areas such as nursing and allied health. So six years ago, the nine-hospital delivery system decided to open its own internal staffing agency, Premier Staffing. Rather than rely on a number of independent agencies providing short-term-and expensive-labor, Memorial Hermann figured it could streamline the hiring process and cut labor costs, recalls Robert Blake, R.N., chief patient care officer at Premier Staffing. "We were using 85,000 agency hours a month for nursing, physical therapy, rehab, imaging and other areas," he says. "We questioned whether we could sustain that."But before it could compete with the 80 agencies it had been using for temporary help, Memorial Hermann needed an information system that could track thousands of employees, their availability and their current credentials. The hospital system turned to RES-Q Healthcare System, a Calabasas, Calif.-based vendor of scheduling and labor management software. Department managers across Memorial Hermann now use the system to schedule staff. In turn, Premier's managers use the system to determine staffing needs and assign temporary staff. Rather than relying on individual hospitals to negotiate with staffing agencies, Memorial Hermann has centralized the hiring of most temporary workers. As a result, those 85,000 monthly agency hours have been cut to around 10,000, Blake says. "To compete with the agencies, we in essence created a large float pool," he says.According to Blake, Memorial Hermann has saved $23 million in labor costs since launching Premier Staffing. "It took a year to show the value of having our own agency," he says. The RES-Q software is sold on a per-user basis, Blake explains, with each 10-year license costing about $20,000. Memorial Hermann acquired 350 licenses to cover the various managers across its hospitals. The software interfaces with Memorial Hermann's homegrown human resources information system and its time and attendance system, as well. By tracking licensure and certification updates, the software also helps managers avoid unwittingly hiring someone with invalid credentials, Blake says. "That's a significant problem with agencies," he says.Although Memorial Hermann still contracts with some outside staffing agencies, the hospital system requires the labor vendors to work through Premier. "Before, the agencies could talk with anyone at Memorial Hermann," Blake says. That policy led to inconsistent billing rates and widely varying contractual terms across member hospitals. "Now all outside agencies pass through just one door. Having the software in place was critical if we wanted to turn the tables on them." -Gary Baldwin