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A Workforce Management Approach to Help Solve for Post-COVID-19 Labor Shortages

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Key takeaways:

  • In our post-COVID-19 pandemic world, optimizing existing labor resources is critical to improving the quality and value of health systems.
  • A disproportionate number of health systems across the U.S. are struggling with a nursing shortage, an aging workforce and staff burnout – all of which can lead to variation in patient care and unnecessary costs.
  • Using Premier’s PINC AI™ labor productivity technology combined with benchmarking metrics, health systems can identify and manage appropriate staffing levels across their organizations to help create sustainable models for the future.

The new normal in healthcare post-COVID-19 is not normal at all. Pre-COVID-19 staffing design, benchmarks and patterns are now history. Establishing consistent patterns in the new normal that will provide the best care and value requires reliability. Reliability assesses how regularly health systems or processes perform in terms of care quality and safety.

Errors and process failures that could endanger patients are less likely to occur in a highly reliable system. As such, it’s important to shift attention to predictive data and staffing practices that realign to prioritize effectiveness over volume. Existing labor resources are precious and finding ways to keep them is critical when so many health systems are faced with a nursing shortage, an aging workforce and staff burnout. Staffing and labor struggles are not a pandemic-born challenge; it is well known that our health systems have been navigating these issues long before the battle against COVID-19 began.

Workforce Challenges are a Top Issue for Hospital CEOs

According to a study by the American College of Healthcare Executives, hospital CEOs cited workforce challenges as their number one organizational concern for the second year in a row. Throughout the COVID-19 pandemic, there have been significant changes in the healthcare workforce, with widespread burnout causing increased labor turnover and staffing shortages. Top issues highlighted by CEOs included shortages of registered nurses (RNs), technicians and therapists as well as burnout among non-physician workers.

The nurse shortage in particular is causing a ripple effect across the entire healthcare system. Changing demographics signal a need for more nurses to care for our aging population but insufficient staffing has led to longer shifts and higher patient-to-nurse ratios. When hospitals don’t have enough nurses, they must rely on staff who are less qualified to fill the gaps. Thus, patients may not have access to the level of care they need. Not only does this undermine the quality of patient care, but it can also cause fatigue, injury and stress.

When burnout leads to nurse departures, that turnover becomes very costly for hospitals. In fact, turnover costs per nurse is about $46,000 which can quickly add up where turnover ranges from 8.8 percent to 37 percent, depending on geographic location and nursing specialty.

More than 900,000 nurses will permanently leave the field by 2026, which is the same year that the demand for nurses will reach levels 5 percent higher than previous years. If current trends continue, 29 states won't have enough nurses to meet the demand for their services. This amounts to a shortage of over 100,000 nurses in the next five years. Suffice to say, the nursing shortage is overwhelming the entire healthcare system and is negatively affecting everyone to some degree.

Impact of the Healthcare Staffing Shortage

In addition to staff shortages, healthcare challenges include unnecessary costs and variation in patient care. The healthcare industry has focused on lowering or eliminating unnecessary costs, or waste, for more than a decade. Even with that focus, a 2019 study reported ongoing waste of nearly $1T. In terms of variation in care, a portion of those unnecessary costs can be attributed to variation in care opportunities such as length of stay, level of care and utilization of services. Recent PINC AI™ data found the average hospital had nearly $9M in variation of care opportunities.

Unfortunately, these environmental changes are leading to worker fatigue, and consequently, a significant rise in premium pay. Premium pay is additional compensation provided to staff for working overtime or under certain types of conditions. Nursing wages have increased over 19 percent from Q1-2020 to Q1-2022 and increasing cost impact equates to $24B in additional expense across all U.S. acute-care hospitals, with a typical 500 bed hospital seeing an increase in total paid labor expense of $17M annually (base pay representing 9.6 percent of the increase and the remainder of the increase coming from premium pay).

With costs for valuable resources increasing unsustainably, it’s critical to have a strategy to ensure the right staff are in the right place at the right time. Rebalancing staff is key to appropriate allocation of resources. Without that strategy, there is a certain risk of damage to the workforce and their ability to deliver high-quality care.

A 2019 Journal of Nursing Administration study of more than 100,000 patients found that on 15 percent of patient days, either the AM or PM shift was understaffed with RNs, and 6.2 percent were short of RNs on both shifts. Most importantly, according to their analysis, patients on a unit with not enough RNs on both the day and night shift were 15 percent more likely to develop a urinary tract infection, bloodstream infection or pneumonia two days later, compared to those with adequate nurse staffing.

Improve Reliability with Benchmarks

The COVID-19 pandemic transformed these challenges into even more significant issues. In any process, one way to improve reliability is to create consistent and reliable patterns in demand. According to benchmark data pulled from Premier’s PINC AI™ Workforce Management solution, the pandemic has disrupted consistent patterns in our patient activity. The bottom line is that the operational norm we are now experiencing is abnormal.

Operational benchmarking has been a key component of healthcare workforce management (WFM) for decades. During the pandemic, some healthcare executives believed that the benchmarks were so abnormal that they did not want to benchmark every quarter and preferred to wait until things were back to normal. With volumes now starting to rebound post-pandemic, there is an observed increased demand as well as an increase in volatility in certain volumes and labor productivity benchmarks. We have also observed an increase in acuity (case mix index) of over 8 percent since the beginning of the pandemic per data extracted from the PINC AI™ benchmark database.

This changing landscape means healthcare senior leaders need to re-establish performance expectations with the department leaders most impacted. In looking at Worked Hours per Unit (WHpU) across hospital operations from Q4-2019 to Q4-2021, in PINC AI™ departments most impacted (compared to the national median) include Nursing and Emergency Services, Ancillary Services and Facilities/Support Services.


Source: PINC AI™ data

Recommended Workforce Management Program Components

As the healthcare community continues to navigate WFM and the evolution of this changing landscape, quality must remain at the forefront of any WFM program with an emphasis on improving outcomes. Through departmental focus on improvement in general, desired performance outcomes tend to fall in line – enhanced productivity, costs, satisfaction and quality.

An effective WFM program includes the following three pillars:

  1. Expectations: Use annualized, external benchmarks to inform your departmental labor productivity standards, that in turn align with your budget targets. Having all three systems speak the same language in terms of reflecting actual department structure and performance is critical – same worked hours, same expenses, same workload volumes.
  2. Operationalization: Proactively managing to the expectations using bi-weekly and daily labor productivity monitoring to flex resources to fluctuating volumes is a must, but ensuring staffing is appropriate should happen in real time. Many hospitals operate with both fixed and variable departments; however, Premier is now seeing some of its more mature WFM clients move to an all-variable structure, where every department becomes variable.
  3. Accountability: Identify departments performing unfavorably in key performance indicators (KPIs) by automatically enacting accountability through action planning to ensure staffing plans are on target. For example, if a certain nursing department is in overtime variance for x number of pay periods in a row, they will automatically receive an action plan, where they will need to create specific action tasks explaining why they are in variance, what they plan to do to get out of variance, when this action will take place and what the financial impact will be by taking this action. Accountability = sustainability.

Premier’s workforce management Advisory Services recommends that organizations implement a strategy that allows existing staff to gain efficiency:


How Premier’s PINC AI™ Workforce Management Platform Can Help

Healthcare organizations can reclaim the waste in variable workforce expense and hardwire a structured, sustainable workforce management program for long-term success with Premier’s PINC AI™ Workforce Management Solution. The PINC AI™ technology has been supporting integrated operational benchmarking and labor productivity for hospitals and health systems for over 50 years.

With peer-to-peer benchmarking, a unique model for target setting and performance accountability, and robust management reporting, the PINC AI™ Workforce Management solution enables healthcare leaders to:

  • Easily compare operational performance against peer and national benchmarks to help identify and prioritize attainable improvement opportunities.
  • Improve staff engagement and satisfaction with the WFM process.
  • Appropriately optimize labor costs.
  • Sustain and continuously improve performance.
  • Achieve a rapid return on investment.

For more:

  • Learn more about PINC AI™ Workforce Management and how Premier’s workforce management Advisory Services can help your organization with its current workforce challenges.

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