Staffing costs of higher patient volume exceeding extra revenue
Insurance expansion under healthcare reform is starting to yield increased patient volume for hospitals, but the costs of staffing up for more patients are eclipsing the additional revenue.
Earnings reports for not-for-profit systems in the first half of the year show that many providers are seeing rising salary and benefit expenses cut into revenue gains, leading to smaller operating surpluses. The Patient Protection and Affordable Care Act is “shifting the way providers are thinking about their labor pools,” said Jeff Jones, managing director at Huron Consulting Group.
Compensation costs are increasing as more systems move to a physician employment model to drive referrals and prepare for population health management. In addition, healthcare reform is driving demand for specific skill sets such as experience with electronic health-record systems.
The Cleveland Clinic, in its secondquarter earnings report, said management is focused on the recruitment and retention of qualified staff in many clinical areas as the Affordable Care Act increases the number of insured Americans seeking care. “These efforts pressure the system’s salary cost structure, as well as employee-benefit costs,” according to the report.
Salaries are increasing because the demand for highly skilled healthcare workers is outstripping supply, said Jay Sage, vice president of business development at Randstad Healthcare, a staffing firm.
“Health systems are forced to look at how effectively they’re managing their labor,” said Brendan Courtney, president and CEO of Parallon Workforce Management Solutions.
Ways that systems are managing labor costs include having employees take on multiple responsibilities, using data analytics to predict patient demand, and creating staffing pools of part-time or seasonal employees that can be shared across hospitals or systems.
“The whole issue of staffing strategically is going to be crucial to the bottom line,” Jones said.