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High Hospital Turnover May be Linked to Underfunded HR

 |  By John Commins  
   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.



"When you don't have the budget, you don't have the resources to dedicate to that," Patel says. "That is not to say that is the way it is at all hospitals. Some hospitals are very effective in outsourcing more of the administrative components so that the dollars remaining are spent on more strategic elements. But the reality is that most are not there."

It is possible that some of hospital HR costs are hidden in what Patel calls "shadow HR spend" on services that might be performed by nurse supervisors and mentors during the on-boarding process.  "Some hospitals have a particular function that focuses on retention. That may or may not fit within HR," she says. "The question becomes, is there cross collaboration so that the organization is effective in managing the workforce? I have clients who say every hospital in their system can do whatever they want for anything HR oriented. That creates a lot of fragmentation and redundancy and expense, where if certain things were centralized that could help the organization."

As the economy rebounds – however slowly – many workers will look elsewhere for new opportunities. Patel says there is already some evidence of that. "That's especially true for what we would consider pivotal roles that are absolutely critical to keeping the doors open, and also with high performers," she says. "People are still a bit uncomfortable about testing the waters and seeing what is out there but if you know you are good or you know you are in a role that is in high demand, you are more willing to look at what is out there."


Hospitals should not accept turnover as inevitable. "If you start to see this as part of the business cycle and expect that this is what it is, then that creates a problem because everyone just accepts it for what it is and nobody places attention on it," Patel says.

Patel says "a big missing component" for many people in hospital HR is their lack of experience with analytics and their discomfort with using data to help drive labor force decisions.

 "We have a lot of individuals who are not, um, how do you say this? The business acumen isn't necessarily as strong," she says. "So traditionally it has been about 'how do we have happy employees? We are the people pleasers!' and less about 'how do we manage labor costs so we are delivering the highest return on workforce development?'"

That needs to change as hospitals look to contain labor costs and recruit and retain the best employees in a fiercely competitive environment, all within a limited budget. "HR is evolving into 'we want to operate like a business. We are here to manage the human capital of the organization and that requires operations and being comfortable with finances," Patel says. "Traditionally it has been the place that hears complaints. I hate it when I hear, 'I work in HR because I like people.' That drives me nuts."|

 

"Leverage data that HR might collect on exit and on-boarding with those that are handling retention programs to make sure they are effective," she says. "Look at systems with the technology that supports HR to make sure they can develop a workforce analytics capability."

 

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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