Healthcare Consolidation: 6 Strategies to Optimize Labor

Collaboratives, mergers, partnerships, ACOs, GPOs, etc. Every day we hear news of another group of hospitals or medical groups consolidating in some way, shape or form to grow their patient base, spread out fixed costs, expand patient access to services, develop more reliable referral systems, etc.

Chris FoxWhile there is strength in size, there is also the risk for redundancy and inefficiency if the effort is not planned and executed effectively. The benefits of consolidation are contingent upon the decisions executives make, the communication infrastructure in place and the cultures of the organizations coming together; specifically, how willing the new culture is to accept change, see the bigger picture and trust in their leadership to steer the course.

With regard to managing labor, consolidation can result in enormous savings opportunities because of the incredible potential to streamline, standardize and automate the end-to-end workforce management process across the system. It is that thought, "across the system," that is the key to reaping the benefits of consolidation.

Tackling labor management at the system level can and should result in improved coordination of resources, proactive identification of needs, reduced labor costs, economies of scale and better communication, to name a few. Achieving these results is contingent upon an organization's ability to effectively achieve the following:

  • Standardize policies across the system
  • Eliminate variance between policies and practices
  • Right-size core staff and properly layer contingency resources
  • Develop accurate forecasts of patient volume
  • Centralize resource management
  • Leverage BI tools to continually refine and improve outcomes

Standardize policies across the system

An organization's staffing polices can vary widely across the system. Different hospitals and even different units can be following a different set of rules than everyone else. The first step in standardization is to review what policies exist. Next, compare those policies with best practice. The critical part comes with the implementation of new policies, the elimination of unnecessary or flawed policies and the enforcement of existing best practices. How and when to begin the employee engagement process to gain buy-in is arguably as important as any other step in the process.

Eliminate variance between policies and practices

Within every organization there is some level of variance between policies and practices. These variances can exist unit to unit and even shift to shift. One example of a common variance is cancellation order. Ensuring that every unit follows the established order (every time) ensures a cost effective, uniform process that is fair, understood and orderly. While deviations from policy can seem insignificant at the time, when rolled up to the system level, the accumulation of "insignificant instances" is significant.

Right-size core staff and properly layer contingency resources

By analyzing core staff behaviors and trends, historical census levels and predicted future census, staffing levels, payroll data and various HR information, an organization can determine how to align core staff size to the point that keeps them working to their FTE without the need for excessive floating or cancelation. Then, by developing a right-sized and nimble supply of internal contingency staff, an organization can adjust to the ebb and flow of patient demand without last-minute agency and overtime utilization.

Develop accurate forecasts of patient volume

Assuming the three previous items have been managed, knowing how many patients to expect on a unit six weeks or more before the shift gives an organization the opportunity to develop schedules that are in line with patient demand. Creating better, more accurate initial schedules greatly reduces the amount of time mangers spend in staffing activities and ensures contingency resources are available to satisfy last-minute needs or unexpected spikes in census — not known holes in the schedule.

Centralize resource management

While this strategy can be beneficial to virtually all organizations, it is especially powerful at large, single-site hospitals or regional, multiple-site systems. In these types of organizations, the establishment of a centralized resource management center is one of the most effective ways of controlling costs, coordinating care and ensuring consistent practices (leading to predictable and sustainable results) across a health system. With advanced workforce management tools at their fingertips, a resource management center can provide in-depth schedule analysis and reporting functions and manage the strategic deployment of flexible resources against real-time patient throughput across the system.

Leverage BI tools to continually refine and improve outcomes

Absolutely key to the effective management of labor resources is the ability to look at key metrics in real or near-real-time. Access to staffing outcomes information, FTE leakage, incidental worked time and daily productivity (among other metrics) helps gauge the performance of the system but also can be drilled into to detect issues at the unit and shift level that can be corrected before they have a negative effect. Further, tools that enable transparency relative to the daily management of resources against financial targets ensures a "single version of the truth" within the leadership team, allowing for a shared understanding of the challenges and opportunities for improvement.

While this list of six strategies to effectively manage labor at the system level is not comprehensive, it does provide the overarching framework of necessary steps to begin to optimize what is the largest operating expense for every healthcare organization (i.e., labor). Inefficiencies with regard to labor management can cause a major disruption to an organization’s ability to offer consistent, high quality, coordinated care, control expenses and minimize turnover and its related costs. These inefficiencies can be exacerbated as a result of consolidation. However, if these enterprise labor management strategies are carried out effectively, the organization can experience incredible savings while improving morale, retention and quality of care.

Chris Fox is chief executive officer at Avantas, a leading provider of strategic labor management technology, services, and strategies for the healthcare industry. Chris is an industry veteran and proven leader who has played a critical role in the company’s rapid rise to leadership in healthcare enterprise labor management.


More Articles on Labor Management:

5 Ways Hospital Executives Can Improve Labor Management
3 Workforce Management Issues to Address During Transaction Discussions
PwC Report: 5 Trends on the Hospital Sector Workforce


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