Blog

How to Improve Workforce Productivity

Ryan Nestrick, FACHE
Senior Vice President

Chances are if you are a hospital leader, you are well aware that workforce is your top one, two and three priorities.

Workforce is challenging hospitals on many fronts – and the challenges are unrelenting:

  • Increased labor costs
  • Shrinking labor pool
  • High turnover
  • Contract labor utilization
  • Increased expectations by associates
  • Competition for entry level positions

Staggering statistics that illustrate the magnitude of hospital workforce challenges are:

  • Salaries and benefits are the largest expense category for hospitals, totaling more than 50 percent of a hospital’s total expenses.
  • Between February 2020 and August 2021, average hourly wages for hospital employees rose 8.5 percent.
  • In the first half of 2022, hospital labor expenses increased 12.7 percent, following an increase of more than 15 percent in 2021.
  • Hospitals are paying contract nurses as much as seven times more than permanent staffers
    .

How Gritman Medical Center Is Improving Workforce Productivity

I recently had the opportunity to present with Dani Lynas, the chief financial officer of Gritman Medical Center, at the Idaho Hospital Association annual conference. A longtime QHR Health client, Gritman Medical Center is an excellent example of a critical access hospital that’s committed to continuous improvement.

QHR Health’s CEO featured Gritman in a recap of our annual gathering of hospital CEOs, CFOs and boards of directors,

“Hands down, the highlight from the first day (of Leadership 2022) featured Kara Besst, President and CEO of Gritman Medical Center, and Kristine Wolff, QHR Health’s Senior Vice President, Clinical Solutions. Besst shared how QHR Health helped her hospital create and execute its strategic plan.”

I have worked closely with Gritman’s leaders during the past two years as they have sought to answer the question –

What labor savings opportunities can be realized through improved staffing efficiency at Gritman Medical Center?

In short, quite a few.

When Gritman began the process of evaluating staffing levels against patient volumes and industry benchmarks in order to manage labor costs, the analysis revealed that two departments were at the 75th percentile level compared to 400 peer hospitals and 26 departments were at the recommended levels, which are below the goal of 50th percentile. Two years later, there is marked improvement: four departments are at the 75th percentile and 50 departments are at the 50th percentile.

It’s critical to note that Gritman has achieved this level of improvement in workforce productivity without major layoffs or FTE reductions.

  • Phase 1: bring the hospital staffing levels towards median
  • Phase 2: set a process to move towards 75th percentile

Instead, Gritman has used a three-step process:

  1. Align labor and volume (revenue): Staffing models in clinical and overhead departments determined by revenue and volume
  2. Identify opportunities: Onsite analysis of current work processes to establish the most appropriate targets
  3. Set deployable tactics: Achieve an affordable, sound workforce with:
  • Workflow and process redesign
  • Staffing model refinement
  • Skill mix planning
  • Accountability-control adoption
  • Pay practice audit and redesign

One example Lynas shared is the hospital’s radiology time of day analysis. In short, the analysis showed Gritman was staffing four x-ray techs starting at 7:00 am yet patient volume at that time of day did not necessitate that level of staff. Adjusting staffing to volumes enabled the radiology department to move closer to the benchmark level of the 50th percentiles.

The analysis also identified opportunities in imaging. Ultrasound coverage hours were changed to reduce paid hours and increase associate satisfaction. The Women’s Imaging Center had increased demand for services, so hours and resources were added.

A critical element to the Gritman approach is a Labor Steering Committee comprised of leaders from many aspects of operations:

  • Human Resources Director or Manager
  • Finance – CFO/Controller
  • Nursing – Chief Nursing Officer
  • Operations – COO/VP
  • Medical Staff – CMO/Director
  • QHR Health Productivity Expert
  • Other members as appropriate

At a high level, the committee framework is:

  1. Provide strategic direction
    • Vision that drives goals
    • Data-based annual budgeting
    • Incentives at middle-manager level that drive performance
  2. Create accountability
    • Strategic oversight of labor management program
    • Policies and procedures that drive discipline
    • Action planning with enforced follow-up
  3. Measure performance
    • Financial reporting at the facility and department level
    • Consistent and timely productivity reporting
    • Incorporate benchmarking data
  4. Create structure and processes
    • Position control process
    • Staffing to demand based on actual volumes, not capacity
    • Vacancy review council
  5. Mentor managers
    • Education of reports
    • Process and workflow redesign expertise
    • Education on tools, methodologies and flexing strategies

Gritman’s Labor Steering Committee meets every one to two weeks to review:

  • Most recent productivity reports,
  • The watch list,
  • Position requirements and all relevant data, e.g., productivity, patient satisfaction, strategic plans, and make recommendations,
  • Action plans presented by department directors,
  • Recommendations on which areas necessitate a focus review.