It’s far from easy to lead a successful independent hospital these days. One of the biggest challenges is a hospital’s workforce. In short, salaries and employee turnover are high – and predicted to stay that way – while fewer workers are available.

In the words of one straight-talking CEO,

“’The real challenge [to our labor costs] is on the back end, you know where the turnover rates continue to go up. Replacing nurses ‘who were making $65 to $70 an hour with temporary or traveling nurses who are making $225 an hour, that’s really the drag on our earnings.’”

There are many data points that lead me to conclude this blunt CEO’s experience is all too common these days, including:

Salaries:

• In the first nine months of 2021, the average annual salary for registered nurses, excluding bonus pay, increased approximately 4 percent to $81,376.
• Citizens Memorial Hospital, an 86-bed facility in southwestern Missouri, increased nurse salaries by as much as five percent in November of 2021 “after hospitals nearly 40 miles away boosted wages.” According to Sarah Hanak, Citizen Memorial Hospital’s chief nursing officer, “We were forced to. We absolutely have to stay competitive.”

Turnover:

• A study of 125,717 full-time healthcare workers found “high turnover rates amid the COVID-19 pandemic among physicians, long-term care workers, and health aides and assistants.” Pre-pandemic, 3.2 percent of the healthcare workforce, on average, reported turnover – defined as being unemployed or out of the workforce the month after reporting employment – versus 5.6 percent from April to December 2020 and 3.7 percent from January to October 2021.
• According to 2021 NSI National Healthcare Retention & RN Staffing Report, the hospital turnover rate is 19.5 percent. “Since 2016, the average hospital has turned over about 83 percent of its registered nursing staff and 90 percent of its overall workforce.” Turning over a bedside registered nurse costs $28,400 to $51,700, “enough to cause many hospitals to lose between $3.6 and $6.5 million per year.”

In 2021, the national hospital turnover rate was 25.9 percent for all employees and 27.1 percent

for registered nurses, according to 2021 NSI National Healthcare Retention & RN Staffing Report.

Healthcare Worker Availability:

• Pre-pandemic, the average burnout rates for healthcare workers ranged from 30 to 50 percent compared to 40 to 70 percent in 2021. Nurse burnout is particularly acute, leading to early retirements and turnover rates of 30 to 50 percent among younger nurses.

Improving Healthcare Workforce Productivity: An Elevate Client Success Story

Notwithstanding how challenging it is to staff a hospital with high-quality, patient-focused and cost-effective clinicians and support staff, some Elevate client hospitals like Van Wert Health are succeeding.

Van Wert Health is a 22-bed, nonprofit hospital in northwestern Ohio. A Elevate workforce productivity analysis comparing Van Wert to benchmark and peer hospitals revealed overstaffing in certain areas of the hospital. The nursing department sought an objective and criteria-based method to determine appropriate daily nurse staffing levels.

Elevate created an acuity-based tool that nurse managers utilize to determine the correct level of staffing needed. The model incorporates acuity data from Van Wert’s electronic medical record (EMR) for patients in the hospital and expected patients, and is used by nurse managers to align worked hours per unit with that day’s mix of patients.

Nurse managers favor the acuity-based staffing tool.

It has improved productivity and is on track to help Van Wert save $138,000 this year, a 5 percent reduction. Rather than eliminating nurses, the savings is from fewer hours worked by contract labor and other premium pay types.

With the help of the tool, Van Wert has been able to continuously exceed their workforce productivity targets, while meeting their patient acuity needs. 

As Van Wert Health’s recently retired Chief Nursing Officer and Vice President of Patient Care Services Elizabeth Neuschwanger, RN shared with Elevate,

“As the Chief Nursing Officer for a small community hospital, one of the daily challenges faced is appropriate staffing for patient census and patient acuity. Moving to an acuity-based staffing tool has been one of the most significant initiatives implemented this year. Patient acuity, which is determined by the electronic medical record, is added to the Elevate acuity tool, which then calculates the number of staff needed. Even through weeks of high COVID patient census, staffing was managed to patient need, patient acuity and our productivity metrics.

Through the use of the Elevate acuity tool and evaluating staffing productivity metrics, an opportunity was identified to move our outpatient infusions to our pre-operative department. This change stabilized the FTE usage of the pre-op nurses and created a cost savings of $138,000 in one department, a 5 percent cost reduction. Furthermore, because the location change reduced the patient’s travel time through the hospital, this change also improved patient satisfaction.”

Improving Healthcare Workforce Productivity: Getting Started

For Van Wert Health and other Elevate client hospitals, we start with a Strategic Workforce Assessment. As a part of each hospital’s assessment, our workforce team – who collectively have more than 50 years of labor expertise – reviews:

• 12 months of payroll and volumes,
• One year of financial statements,
• Key human resource statistics to determine workforce performance, such as top-of-license staffing, orientation and employee distribution,
• Human resources, labor management and budget policies,
• Completed departmental questionnaires, and
• Onsite interviews and observations with key stakeholders.

A month later, we present a completed Strategic Workforce Assessment to a hospital’s chief executive officer, chief financial officer, chief nursing officer and head of human resources. The Elevate Strategic Workforce Assessment includes:

• A summary of overall labor expense opportunity
• Span of control analysis that reveals whether a hospital organization is top heavy
• Top-of-license analysis to show if clinical professionals are working at the top of their license
• Premium pay analysis
• Department level productivity targets
• Salary and wage rate analysis
• Turnover and labor shortage analysis
• Strategies to meet an organization’s specific workforce needs, such as turnover planning and reduction and traveler use reduction
• An organizational readiness outline that specifies what is achievable in years one, two, and three
• A Workforce Strategic Implementation Plan