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Layoffs an Effective Strategy for Economic Crisis, But Beware the Downstream Costs

John Commins, for HealthLeaders Media, February 15, 2010

Once those employees are laid off, Becker says, there is very little chance that they will return, especially if they are skilled clinicians. "They are going to go somewhere where there is work. And, there is work. They may have to move, but we are dealing with a much more mobile workforce than we were 10 or 20 years ago. Our Gen X and Y folks don't have anywhere near the geographic restrictions that their predecessors did, and there is no sense of organizational loyalty. That is not in their blood. They think short term rather than long term anyway."

Becker recommends changing the cost-cutting focus from numbers of employees to payroll costs. "There is a bit of a knee-jerk reaction when an organization is faced with some serious financial obstacles that says ‘We have to let people go,'" he says. "Merely reducing head counts may not be the most effective or efficient way of achieving those targets. The organization is probably better served at looking at total payroll costs without necessarily letting people go. Maybe you examine some of your pay methodologies. Maybe you look at your overtime utilization, or your call pay utilization. Maybe look at benefit redesigns. There are ways to reduce the total labor costs without necessarily reducing head count."

The healthcare workforce shortage is not a threat to the future of healthcare delivery, because it's already upon us. It's not going to get better as our nation ages and requires more medical care and the people tasked with that care age along with us.

We often hear employers saying that "employees are our greatest asset." Why would anybody cut their greatest asset at a time of greatest need?


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John Commins is a senior editor with HealthLeaders Media.

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