It will take efficiencies in staffing, recruiting the next generation, and a culture change to solve these costly issues.
Hospitals and health systems are at a crossroads. To achieve success, they must embrace new strategies to maintain and grow their financial well-being.
One of the key issues that has continued to plague healthcare providers is labor. Employee costs are going up, while the number of clinical staff has been going down. The quit rate among nurses in October 2022 was 2.5%, the highest of any month before 2021, according to research from the Lown Institute. Burnout due to demanding and burdensome schedules seems to be the main culprit in this exodus of healthcare providers.
Ann Duffy, the chief financial officer for Cottage Hospital—a Woodsville, New Hampshire, healthcare provider with 35 total staffed beds and $38 million in total net patient revenue—recently connected with HealthLeaders to discuss the labor challenges hospitals are facing and the best strategies to overcome them.
HealthLeaders: What is the biggest economic obstacle facing healthcare providers today?
Ann Duffy: The workforce shortage is the main contributor to our financial challenges. Our labor costs—contract labor, and travel staff costs—are the number one challenge. Because of inflation, our drug costs have increased by nearly 30% since 2019. Overall, our operating expenses are up 25% since 2019. And of course, COVID is still an issue impacting us. Yesterday, our entire health information department had zero staff because the department was either sick or stuck because of a snowstorm we had here. If someone has COVID, they can be off for up to 10 days, which has a big impact on our operation.
HL: What strategies are in place to deal with these issues?
Duffy: We're focusing on strategic planning and performance improvement plans. We are reviewing our staffing by department, looking at each role and how they are functioning, and we are looking at what each department needs before we post a new position.
We’re looking at the efficiencies in our staffing, and in our processes. We're highly focused on process improvement. We are also working with our HR department to fill the position with the most qualified candidates. We offer remote work and a flexible schedule, and we're trying to incentivize our employees and staff to reduce our contract labor and travel staff.
Eighteen months ago, we established a travel workgroup that meets biweekly and includes nurses, lab techs, radiology techs, and other staff who historically never had to travel before. We’re also incentivizing our employee staff by offering programs like a 12-week contract to work a certain number of shifts. If they meet the contract terms, they’ll receive a bonus at the end of the 12 weeks. We've also increased the pay for our per diem staff.
HL: Many CFOs have talked about the rate of clinical staff turnover having to do with these professionals leaving healthcare altogether. Are you seeing staff leaving healthcare? What do you think hospitals and health systems must do to attract people back into these positions?
Duffy: People are leaving healthcare because they are burnt out. It’s going to take a community; it’s going to take effort at the state and federal level to overcome some of these challenges. We need to increase the capacity of our nursing education programs. We're just not producing enough nurses and clinical staff to meet the needs of our healthcare system in our communities. Whether it's incentivizing high school students to pursue a career in healthcare by offering more scholarships, providing reimbursement, or even waiving costs altogether. Getting young people to pursue healthcare must be a priority—incentivizing them from a cost perspective will be important.
HL: What about the people who have left? How do you get them back?
Duffy: We have to assure them that we can create an environment where they're not overworked—and that is a big struggle right now. How can we do that when you only have a certain number of people to meet the needs of the community? We don't have a solution, but what we’re doing internally is trying to create a culture where people want to work at Cottage Hospital. And for many people it is about more than just money, it’s about how they feel when they come to work every day. Our CEO has a background in nursing, and she has actually come in and worked as a licensed nursing assistant.
HL: Do you think more healthcare providers should engage leadership that has a background in clinical care?
Duffy: I do believe that's extremely beneficial. It has been beneficial for us because our CEO can communicate with the clinical team because she has been a nurse, she has been a director of inpatient, she has been the CNL, and now she is CEO. She understands the boots-on-the-ground work that it takes every day to care for our patients. So that certainly is a benefit and a great strategy.
Amanda Schiavo is the Finance Editor for HealthLeaders.
Leaders with a background in clinical care can make a huge difference in the fight against turnover.
The quit rate among nurses in October 2022 was 2.5%, the highest of any month before 2021.