Inside a hospital COO's strategy for California's wage increase

California's minimum wage for healthcare workers is slated to increase this year, eventually reaching $25 an hour. Those increases begin June 1, and when workers see the $25-per-hour level depends on their size and location. 

Although Gov. Gavin Newsom is looking to modify the bill, leaders are still preparing a strategy to accommodate the wage increase. 

Lyndon Edwards, COO of Loma Linda (Calif.) University Health Hospitals, spoke with Becker's to discuss his system's strategy for approaching the increase. 

Editor's note: This response was edited lightly for clarity and length. 

Question: What healthcare trend are you the most concerned about in 2023?

Lyndon Edwards: The state Legislature and governor signed a bill requiring a standardized minimum wage — there's a lot of dependencies around the size of the organization and the type of organization, but we are projecting for our system that we will be required to have a minimum wage for all healthcare workers of at least of $23 an hour, which is about $6 an hour higher than our current lowest hourly rate. 

There's a lot of concern about how that will get implemented and what that means to our overall financial picture, and the law actually has increases every year for the next three years. 

Q: What is your team's strategy for approaching this wage increase?

LE: We are looking at a number of options which will coalesce into a strategy. One of the things that we are looking at is the potential for offshoring jobs and even relocating some sort of administrative tasks to other less expensive states. Obviously, most of the workers that are directly impacted by a minimum wage are people who have to physically be in the hospital to provide services. So where we find opportunities to reduce our labor costs in other areas is really what we've been focused on.

We've also been looking at ways to leverage technology to reduce labor spend. An example of that is using a kiosk for arriving patients and leveraging the EMR for arriving patients so that you don't necessarily need a complement of registration and admission staff when patients show up for appointments. Access to labor is not as huge of a challenge as it was right after the pandemic, but … we are still working with a smaller pool of applicants for many of our positions. The law actually is helping us to focus more on how we can be more efficient with our labor.

We are projecting for our system an annual impact of about $25 million from the increase, and that doesn't even fully address compression issues. We're still analyzing what it may mean even beyond that.

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