Every year Becker’s Hospital Review surveys CEOs to discover their current priorities; what occupies the forefront of their minds as they steer their organizations into a relatively uncertain future.
This year, cost control initiatives took the top two spots, overtaking last year’s top concern, revenue growth.
The actual verbiage of the top two concerns are:
- Preparing the enterprise for sustainable cost control — 62 percent
- Innovative approaches to expense reduction — 56 percent
Focusing on the Largest Expense
On average, workforce expenses account for upwards of half of an organization’s operating expense. It is logical then to focus effort on the single largest bucket, as small percentage gains here will save substantial dollars.
There are a number of strategies at the disposal of provider organizations. I will highlight a few strategies ranging from “low hanging fruit” items that can be implemented and tracked right away for quick ROI, all the way to advanced strategies that require infrastructure and enterprise-level coordination.
Low Hanging Fruit Opportunities
Two metrics we see as opportunities for all organizations are FTE leakage and incidental worked time.
FTE leakage refers to the hours a staff member has not worked but should have based on their commitment. On average, we have found there is FTE leakage equivalent of one or two FTEs per hospital department per pay period.
Incidental worked time (IWT) is any instance where staff members clock in before their scheduled shift or clock out late beyond their scheduled shift time. We know that roughly 40 percent of IWT is clinically necessary, such as staying late to ensure a complete report off of a patient, but that leaves a 60 percent opportunity. This can equate to $40,000 or more per hospital department per year spent on unnecessary incidental worked time.
Centralized Resource Management
One of the most effective ways of controlling costs, coordinating care, and ensuring consistent practices across a health system is through the implementation of a centralized resource management center (RMC). Serving as a communication hub and collaborating with clinical leaders to manage staffing resources, an RMC is an enterprise approach to managing labor. An RMC promotes transparency across the organization and keeps leadership up to date on potential real-time adjustments to deploy staff across the system as supply and demand ebbs and flows, all while ensuring standardized practices.
Another key element that can be wrapped into an organization’s workforce plan is predictive analytics. With the Avantas method, forecasts of staffing needs are generated 120 days out from the shift, helping organizations create better schedules and staffing plans sooner. Forecasts are updated weekly and go through a manual quality assurance process and are monitored by an analyst – at the unit level – for trends, potential issues, and possible improvements. Predictions made 60 days out can be expected to get within one staff member of what is actually needed 96 percent of the time.
Better alignment of staff throughout the scheduling and staffing process results in:
- Improved core staff utilization (fewer cancelled shifts, less FTE leakage and overtime)
- Proactive management of contingency resources
- Cost-effective approach to managing open shifts
- Accurate, sophisticated budgeting
- Reduction of “in-the-moment” staffing decisions
These buckets are just a few of a multitude of options available to provider organizations focused on reducing costs. To learn more about our strategies, fill out the contact form below.
You can find the Becker’s Hospital Review article here: The No. 1 priority for hospital CEOs? Cost control