The Winning Edge for Lowering Labor Costs: Strategies for Recruitment and Retention

Are CFOs looking at recruitment and retention the way they should be?

As CFOs dive into 2025, many leaders are preoccupied by labor costs. Coupled with high inflation and an uncertain economy as a new administration ramps up, CFOs are looking for any way they can to lower the cost of labor while maintaining quality care, as well as employee satisfaction.

In the latest edition of HealthLeaders' The Winning Edge webinar series, a panel of finance leaders discussed best practices for lowering labor costs for health systems.

The Winning Edge for Lowering Labor Costs webinar included two experts on the subject: Kaitlyn Anderson, Director of Finance at AdventHealth, and Brandon Williams, Chief Financial Officer of Providence Health System.

Anderson said her organization has tackled this challenge with a four-pronged strategy. Firstly, AdventHealth looked at reducing agency workers and converting them to full-time employees using its internal staffing agency.

“We were able to convert over 500 contractors into our internal staff flex agency,” she said. “And then 40% of those staff decided that they wanted to take on a permanent full-time role at AdventHealth.”

Second, the team looked at how to reduce length of stay, which was a major component for the organization's success.

“So not only does length of stay reduction help with reducing the cost of labor, but it has also helped us create a ton of capacity,” said Anderson.

Thirdly, robust recruitment and retention strategies, especially around nurses, have played a large role, ensuring they are aligned to the health system’s mission, culture and vision. Lastly, AdventHealth created a workforce management department which specifically examines inefficiencies in the system and helps promote consistency.

Providence has also made significant strides in reducing labor costs, including flexible staffing models that offer part-time or work-from-home options where applicable, and using technology to complete smaller, repetitive and administrative tasks. When the health system saw labor shortages in its medical group, it stepped up its strategies.

“We've chosen to attack that on a few fronts, mainly for us, we've done a lot of focus on recruiting, also training a lot of our employees up, also looking at new grads as well,” said Williams.

Creating a Caring Culture

Organizational culture is a big factor in employee satisfaction, and one CFOs should not overlook when examining retention. Both panelists spoke about training programs that help employees feel confident in their roles.

“[It’s important to] really listen to our employees to try to understand what it is that they need, ‘how can you be more efficient?’”  he said.

Collaborating with other leaders to ensure a positive, well-led culture is another factor. Williams says having a close relationship with his CNO and CMO so the team can truly look at how finance plays a part within the organization’s labor is critical.

“We want to make sure our team members are happy and that we're fostering a culture that has growth and development opportunities for them,” said Anderson.

How Tech Intervenes

Technology can have an important impact on labor costs, but leaders need to think past simply bringing in the newest AI. For these two execs, benchmarking and data analytics have had substantial impacts.

Using technology to compare appropriate staffing models is one use. When looking at efficiency, it's vital to have conversations with employees, says Williams. He says its important to really listen to employees to try to understand how they can be more efficient in their roles.

Notably, benchmarking is one task that may be crucial to understanding labor challenges.

“Through benchmarking work, we have been able to find a lot of opportunity for efficiencies and consistency just across our own eight hospitals in the Orlando area,” said Anderson.

Using benchmarking data can help health systems look at a variety of factors that can impact labor, even small factors that may not seem as vital as others at first glance.

“We're benchmarking ourselves on overtime, agency percentage, even work, even missed meals, and break penalties,” said Williams

R&R: Recruitment and Retention

Recruitment and retention efforts are the main avenue for a successful workforce.

“I think for us, number one is recruitment and retention strategies,” said Anderson.

CFOs should ensure their health system is acting on comprehensive strategies that not only recruit the right employees who want to work there, but also ensure a structure of tools, programs, and other offerings that work as incentives to keep them and keep them happy.

“We have been paying out market adjustments to ensure our team members are being paid a living wage and that they feel fairly compensated,” said Anderson. “We also offer tuition assistance as part of our benefit package. That has been a really big part of our recruitment and retention strategy.”

Advent Health has gone even farther to help their employees outside of the workplace.

“We also have a student loan repayment program as well, especially for our nursing team,” she said. “This year we rolled out a new health insurance option for our employees. So we're now offering a third health insurance option that's more affordable.”