PwC Report: 5 Trends on the Hospital Sector Workforce

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Labor costs normally represent 45 to 60 percent of a hospital's expenses, making the workforce a perpetual target of cost control. In 2011, many hospitals experienced increases in turnover and continued to struggle with the retention of high performers, according to PricewaterhouseCoopers' 2012/2013 U.S. Human Capital Effectiveness Report.

PwC's report included labor data from calendar year 2011 from roughly 60 hospitals and health systems, which represents roughly 1 million employees and more than 175,000 bedside nurses. Here are five "human capital" trends from the report.

1. Quality of hires has weakened. Hospitals recorded an increase in turnover of first-year hires in 2011, bucking the trend in most other industries. In 2011, bedside nurses had a first-year turnover rate of 22.2 percent, up from 19.2 percent in 2010.

"First-year turnover also remains much higher for hospitals when compared with the all-industry median," according to the report, "suggesting that this sector in particular continues to struggle with acquisition, assimilation and retention of new hires."

2. Executive retirement has become a more pressing issue. As more employees, especially executives, become eligible for retirement, PwC analysts believe hospitals will direct more of their attention to succession planning and "knowledge transfer." In 2011, 27.1 percent of hospital executives were eligible for retirement within five years compared with 15.2 percent for the entire hospital industry.

3. As the economy improves, voluntary turnover rates increase. Over the past two years, high-performing hospital employees and those in pivotal roles have departed at increasing rates, which is following an upward trend nationally.

4. Return on workforce investment has diminished. While many hospitals and health systems experienced boosts in revenue last year, labor compensation and benefits have also risen. PwC analysts said the growth of workforce costs is actually outpacing revenue growth.

5. Investment in human resources is increasing. Hospitals did not see much of an increase in the ratio of people in HR from 2010 to 2011, but HR costs per employee more than doubled — from $806 to $1,610. "This trend can be partly attributed to the ongoing transition of HR from a transactional role to the role of a consultant/strategic partner to the organization — an approach that more and more organizations are instituting."

More Articles on Hospital Labor:

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