Data-driven labor management delivers financial and operational improvements

As hospitals and health systems face tighter margins, reduced cash flow, and increased competition, they are under immense pressure to improve efficiency and reduce costs. One of the major drivers of healthcare operating expenses is labor management, accounting for approximately 60 percent of hospital costs. The demand for nurses, clinicians, and healthcare-support professionals are projected to increase along with the aging population, creating labor shortages that can drive up wages and lead to the increased use of contract workers and staffing agencies. The problem is further complicated when patient volumes are lower or higher than expected and place a strain on the budget. Managing labor costs while meeting the demands for ensuring adequate and qualified staff is a top concern for healthcare leaders who recognize that tight management of labor utilization is essential to maintaining financial health. Successfully managing labor costs requires a system that can track and benchmark labor expenses. Effective healthcare labor management requires the right balance between quality care, safety, patient and employee satisfaction, and fiscal responsibility. In an effort to improve staffing efficiency, Hawai‘i Pacific Health (HPH) sought to realign its staffing practices to better manage and predict its labor needs. Although the health system had a culture of flexing staffing to fit volume, it based staffing decisions on latent, retrospective data, resulting in less accurate planning than it desired. Utilizing its data platform, HPH was able to forecast its workforce needs and effectively manage staff schedules — two changes that led to significant cost savings. This report details how HPH leveraged data and analytics to facilitate more efficient labor force utilization by understanding basic operation and staffing indicators.

“We use data to drive improvement, and we saw opportunities in labor management to improve our performance.” Art Gladstone, Chief Nursing Officer, Hawai’i Pacific Health