5 Ways Hospital Executives Can Improve Labor Management

Labor and workforce costs usually comprise the largest chunk of a hospital or health system's budget, and better utilization of the labor pool can drive savings across the entire organization.

Jamie Parsons, chief human resources officer at Mountain States Health Alliance, a 13-hospital system based in Johnson City, Tenn., explains how the health system's workforce is preparing for healthcare reform through different ideas on how to streamline labor management.

1. Build a new model or approach. Before a hospital or health system executive can reorganize the principles of the organization's labor management, he or she must lay down a blueprint of the path.

For Mr. Parsons and MSHA, the ultimate model is the Malcolm Baldrige business model, which awards the Malcolm Baldrige National Quality Award each year. The award honors only a handful of organizations every year for performance excellence through new, innovative management strategies. Last year, Henry Ford Health System in Detroit and Schneck Medical Center in Seymour, Ind., received the award, and MSHA views those types of organizations as beacons of how labor should be managed.

"It gives us the focus — strategic planning, customer focus, workforce, outcomes — to meet what we're trying to do," Mr. Parsons says.

2. Implement a people resource program. A people resource program is a tracking system that lets hospitals and health systems look at the core competencies of all staff members. It thereby gives hospitals the opportunity to compare and contrast the present skill sets of all employees and see what is required for the organization, which could help management make several important determinations (e.g., Does our hospital have an optimal workforce with the right skill sets to start a new service line?).

"This program allows us to look at competencies for team members in one of our hospitals one-and-a-half hours away, and it allows us to plan and meet those needs for competencies," Mr. Parsons says.

3. Centralize operations when possible. For small and large health systems, labor management and staffing decisions may be optimized from a centralized location instead of having individual labor offices at each facility. This not only gives the hospital a better overall view of how labor should be managed, but it could also save significant amounts of money. "This alone saved us about $8 million within one year," Mr. Parsons says.

4. Focus on retention. Too often, growing organizations look to hire more employees without putting an equal emphasis on retaining the quality employees they already have. In sales, it is said that it costs more to find a new client than it is to retain current clients, and the same principle applies to hospital labor management.

"It sounds very cliché, but we are trying to get the right individual for the right job at the right time, but it's very important," Mr. Parsons says. "By focusing on retention, we saw another $8 million in savings. Those are soft savings, or savings that resulted from a lack of turnover."

5. Make data accessible. Hospitals and health systems will be able to manage their employee scheduling and workforce utilization best when data is shared among departments and other hospitals within the system. Sharing best practices is the best way to learn new efficiencies for almost every industry, and the hospital sector is no different.

"We provided financial and other various labor dashboards within our system," Mr. Parsons says. "We wanted to see where the opportunities are, be extremely nimble and agile and make staffing changes where necessary. [Sharing data] even got union hospitals to understand this product and accept it."

More Articles on Hospital Labor Costs:

3 Workforce Management Issues to Address During Transaction Discussions

The Cost Reduction Imperative

PwC Report: 5 Trends on the Hospital Sector Workforce

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