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To Cut Costs, Motivate Nurses, Take a Cue From Airlines

 |  By kminich-pourshadi@healthleadersmedia.com  
   July 16, 2012

In healthcare finance there is a constant drumbeat to cut costs and that often equates to cutting seemingly non-essentials. But, sometimes by putting small money toward the non-essentials, you can motivate your staff without shelling out big money later.  And you may even find they are able to cut costs.

The longer I'm in the workforce the more I realize what I've learned from my past experience. I'll impart a bit of wisdom gained from my own eclectic work history. Years ago I worked as a sales clerk at a hugely successful cosmetic counter generating over $8 million a year (not bad for a staff of six). What I learned from my manager there was a simple lesson in non-monetary motivation.

As a salaried employee I was paid no matter what I sold. Retail hours are long and de-motivating, which meant sales and service could be jeopardized. Recognizing this, my manager and the cosmetic company employed a highly effective, incentive approach to keep the staff engaged and sales and service high.

To ensure the staff showed up to work, and picked up extra shifts if someone was sick, each month employees received free makeup via a system that was based on the number of hours an employee worked. In addition, for products that it wanted sold in greater numbers the company attached a tangible reward. For instance, if we sold over 200 of X product in a month, we received an expensive Tiffany bracelet.

Why do I share this story? Well, what are you doing to motivate staff without spending too much? What if you tested this idea with your nursing staff. This team comprises a huge chunk of your labor budget, but some of that expense can be trimmed with a bit of ingenuity. Unquestionably, shifts must be filled, but not necessarily with agency nurses or incentive payments.

Those costs can be avoided.

Two years ago St. Francis Hospital in Columbus, GA, realized it needed to address a nursing cost and scheduling problem. Like any hospital, St. Francis, a not-for-profit, 376-bed community hospital was looking at how to lower its costs without reducing the quality of care. But the nurse labor budget was on the rise. What's more, the nurses weren't particularly happy with the scheduling system. Nurses were made to float between units when they didn't want to. Moreover, the hospital was paying loads in overtime and incentive payments to cover extra shifts or relying on expensive agency nurses to fill in the gaps.

If this scenario sounds like one you're dealing with at your hospital, you're not alone.  At the Healthcare Financial Management Association conference in Las Vegas last month, I spoke with several financial leaders who bemoaned that they need help addressing how to:

  • Reduce the nurse labor expense without sacrificing quality of care
  • Optimize nurse schedules for maximum cost savings, and
  • Drastically cut the need for staffing agency nurses

Surprisingly, these issues may be easier to fix than financial leaders may realize. At St. Francis Hospital everyone from the nurses to administration was dissatisfied with the scheduling system. That's why the organization got creative, explains William Reynolds, RN, nurse manager at St. Francis Hospital.

The hospital set a goal of using zero agency nurses, not hiring any new nurses, and still filling all the nurse shifts while improving staff morale.

Step one was putting the schedule into the nurse's hands. The hospital implemented a web-based self-scheduling tool and shifted away from a paper-based system. This allowed unit nurse managers and staff nurses to view all the open shifts across the entire hospital and bid for the ones they wanted.

"Before this system, nurses would come to work thinking they were going to work on a specific unit and then we'd float them off to another floor that was very dissatisfying to the nurses. Now, [they] can actually pick the floor and shift they want to work and know that's where they will be working," Reynolds explains.

From a financial standpoint, Reynolds says the approach is a cost reducer. "I can go in to the system and see which nurse is going into overtime and who makes $25/hour versus another nurse who isn't going into overtime and makes $20/hour. I can make a better decision as to which nurse to bring in. Plus, the system has all the nurses' credentials so I can select the most cost-effective person while still maintaining the right skill mix," he says.

Self-scheduling has always been an employee favorite, but having the ability to see all the open slots and to select specific units knowing that they won't be floated added a layer of satisfaction.

"It makes it easier on all the nursing staff because the person who's coming there wants to be there. That adds to better retention and less absenteeism," Reynolds notes.

Although the web-based scheduling tool was well-received by the staff, that doesn't mean filling critical or less-desirable shifts was made easier. That's where having a tangible motivator made a difference, explains Debbie Saylor, RN, senior vice president of patient services, St. Francis Hospital.

Raffles and other reward programs were used during celebratory weeks, such as nurses or hospital week, and were always very popular, says Saylor. "We found that staff loved to win stuff. Though our labor costs were escalating, … we believe in the concept of encouraging our staff to own their schedule was important. So [we created a program] in which nurses can reap a reward for scheduling, and it's more appealing to the staff," she says.

St. Francis Hospital opted to use a point system similar to travel miles. Shifts are assigned a point value, with the critical or more challenging shifts are assigned a greater point value. "That encourages more nurses to bid for the shift so we can fill those more quickly," he says.

St. Francis Hospital opted to use a point system similar to travel miles. Shifts are assigned a point value, with the critical or more challenging shifts are assigned a greater point value. "That encourages more nurses to bid for the shift so we can fill those more quickly," he says.

The system exchanges one dollar per 1,000 points, and the nurses can redeem those for merchandise through a catalog. "The more shifts a nurse picks up, the more they can redeem. We've found the most popular items are actually gas cards and a Jessica Simpson hobo bag," he says.

Saylor notes, however, that in the beginning, the staff was apprehensive.

"Some of the staff were reluctant and concerned that we were just trying to control dollar spend," she says. "But as soon as they understood that they had full access to self-schedule and also had easy access to accept or reject additional work, including floating options, they jumped on the bandwagon. They also love the fact that they can bank earned points for major purchases, or even use them for gift cards. It is not unusual to see a nurse showing off his or her latest purchase gotten through the reward system."

The program has been a success. The hospital no longer uses agency nurses and it  saved $884,000 in its first year.

Now if you can reduce your budget by that for the cost of a few handbags and gas cards, that's well worth it. And it's worth it to your employees, too.  I still have my Tiffany bracelet; I worked hard for it and it remains a tangible reminder to me that hard work pays off.

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Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
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