The hospital staffing emergency has cooled from its pandemic peak, but labor pressure has not disappeared — it has shifted. Rather than trying to out-hire shortages or outbid competitors for scarce talent, more systems are treating workforce strain as a strategic pivot point: redesigning work, cutting contract labor and using technology to expand capacity.
That shift is showing up in measurable ways. Renton, Wash.-based Providence has reduced agency use, cutting what one leader described as “unhelpful” labor costs such as excessive overtime and unsustainable contingent staffing. Sacramento, Calif.-based Sutter Health returned more than 1 million hours of work in 2024 and another 1.4 million hours in 2025 through digital automation, AI-powered tools, enhanced technology and streamlined workflows. Chicago-based CommonSpirit Health launched an AI Workforce Readiness Academy to support reskilling and upskilling for technology-enabled roles.
The backdrop is a cost environment that remains tight, even as labor cost growth has slowed from pandemic-era peaks. Labor expenses rose 4% year over year and 5% year to date through November 2025, according to Kaufman Hall’s “National Hospital Flash Report,” released Jan. 15. Kaufman Hall data from late 2025 show labor expenses continuing to rise across regions and hospital sizes.
Executives say the response to this labor pressure is increasingly less about adding headcount and more about returning time to the workforce already in place through internal staffing flexibility, more disciplined workforce planning and technology that reduces administrative burden.
DeLinda Washington, senior vice president and chief people officer of Bloomington, Minn.-based HealthPartners, said labor strategy is also being shaped by broader pressures, including Medicaid and Medicare reimbursement rates that lag behind the true cost of care and sustained high demand for services and medications.
“We are hit on both sides,” she said, noting HealthPartners, a health system and insurance company, operates both care delivery and a health plan. “We have to rethink how we deploy, attract and develop our workforce.
“To address cost realities in how we deploy labor, we are intentionally investing to sustain long-term engagement and productivity. The long term is really important to us.”
Becker’s spoke with Greg Till, chief people officer of Providence; Wayne Frangesch, senior vice president and chief human resources officer of Scottsdale, Ariz.-based HonorHealth; and Ms. Washington about how health systems are rethinking labor strategy for 2026.
Reducing dependency on travelers
Many health systems have scaled back agency contracts in response to stabilizing workforce markets and the elevated labor costs that emerged during the pandemic — often by investing in internal staffing pools and more flexible deployment models.
Over the past several years, Providence has significantly reduced its reliance on contingent labor. The system reported that agency spending for the fiscal year ended Dec. 31, 2024, was 70% lower than its 2022 peak and that contract labor spend decreased 33% for the three months ended Sept. 30, 2025, compared to the same period in 2024.
“We’ve gained more certainty in our workforce needs and are better able to project talent demand. That’s helped us reduce what I’d call unhelpful labor costs — excessive overtime and unsustainable agency use,” Mr. Till said.
HonorHealth, one of Arizona’s largest nonprofit health systems, employs more than 17,000 people across nine acute care hospitals and multiple outpatient and specialty sites. The organization does not currently use travelers or agency staff.
Mr. Frangesch said the health system has maintained a workforce that meets its volumes by staying disciplined in its position control process.
“We’re making sure that we justify every replacement,” he said. “And anything that’s a new position, we really spend a lot of time thinking through the necessity.”
Years ago, HonorHealth also committed to developing a deep internal pool of staff who can work across multiple locations. The approach allows the organization to flex with volumes and cover unexpected absences without relying on external agencies.
“If there’s an unexpected leave or spike in volume, we can flex staff to where they’re needed most,” Mr. Frangesch said. “We think about staffing across our nine hospitals and clinics all the time — not just one department or shift.”
HealthPartners has taken a similar approach. The organization, which employs about 28,000 people, maintains a strong pool of float colleagues that allows it to supplement open shifts and reduce agency or temporary staff utilization, Ms. Washington said. She added that the model also creates a pipeline for permanent roles.
Strategically, she said HealthPartners recruitment and finance leaders meet weekly to assess open roles, evaluate department performance against budget and prioritize critical positions.
Using workforce analytics to improve planning
As labor costs remain elevated, health systems are also leaning more heavily on workforce analytics and forecasting tools to anticipate staffing needs, align labor to demand and reduce inefficient spending.
At Providence, a human capital management and workforce management platform is reshaping staff planning.
“For years we used our own tools, and now with UKG Pro, we’re able to predict workforce needs based on community demand and our current care models,” Mr. Till said.
“We can now better predict what kind of talent we need, when, and where. That reduces waste and decreases reliance on agency and overtime. From a capacity standpoint, analytics are helping us optimize how we use people’s time.”
The tools also give employees more autonomy over when and how they work, Mr. Till said, helping democratize schedules. Providence is also designing more flexible shift strategies that open shifts previously filled with overtime or agency labor to internal caregivers.
At HonorHealth, workforce analytics has increasingly focused on leadership planning as the organization prepares for retirements and succession needs. Mr. Frangesch said the health system spent the last year focusing leadership analytics on teams from executive through director and supervisor levels. Since going live on software platform Workday in mid-2025, HonorHealth is expanding projections across all levels of staff.
“That helps us better anticipate changes, like retirements,” Mr. Frangesch said. “Staff retire at all different ages now, so you can’t perfectly predict, but it helps us think ahead.”
HealthPartners is also moving toward more cross-functional planning. Ms. Washington said workforce planning has become more collaborative across human resources, finance and operations, with a stronger focus on aligning decisions with cost discipline and patient and member needs. Rather than relying only on static forecasts, she said staffing is managed in real time, with nurse leaders reviewing staffing frequently and participating in daily productivity calls to respond to changes in census, acuity and operational priorities.
Alongside analytics and planning, leaders said a core goal is ensuring clinicians and nurses are working at the top of their license. For HealthPartners, Ms. Washington said that means ensuring clinicians and nurses focus on patient care and bedside decision-making. The organization is also investing in electronic medical record enhancements, ambient listening technology and better communication with care teams to improve efficiency and reduce administrative burden.
Building a more sustainable workforce model
Executives said the next phase of labor strategy is less about stabilizing from the pandemic and more about long-term capacity, retention and care model redesign.
Mr. Till said health systems cannot rely solely on traditional approaches to close future workforce gaps.
“Over the next decade, we’re going to have more people needing care and fewer people available to provide it, due to birth rates and demographic shifts,” he said. “We can’t rely only on the models of the past 20 years — ‘just hire better, develop better, be more efficient.’ Those will still help, but we need to rethink the overall care model.”
While technology is central to that shift, Mr. Till cautioned against framing it as a simple headcount reduction tool.
“It’s a bit of a fool’s errand right now to talk strictly about reducing FTEs or cutting costs with tech. The real opportunity is using technology to make the work more human, to reduce administrative burden and allow caregivers to do what they really want to do: take care of patients.”
He cited ambient technology, AI and flexible shift models as examples of tools aimed at reducing administrative burden and increasing time for direct patient care.
For HonorHealth, Mr. Frangesch said the evolution of technology is changing how work gets done and making HR partnerships with IT and transformation leaders more critical.
At HealthPartners, Ms. Washington also emphasized the connection between cost efficiency and long-term workforce strategy.
“When I talk with my CHRO peers across the region, we often discuss how cost efficiency and a long-term workforce strategy are not opposing goals,” she said. “They are interconnected. Sustainable cost management requires discipline in staffing practices, an effective care model and leaders who understand both their team’s needs and their budgets.”
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