The search for new and innovative methods to manage ever-increasing labor expenses is never-ending. Directly addressing labor costs — which account for more than half of total operating costs — often requires a multipronged strategy because of the complexity.
A California-based safety net health care system with nine facilities struggled in several labor-related areas, including core staff utilization and contract labor management. Under a decentralized staffing model, individual hospitals and departments accessed multiple staffing registries using nonstandardized processes. The agency service quality varied and individual hospitals were not leveraging a system approach to benefit from optimal pricing.
Improving labor costs was a key focus in the health system’s strategic plan to achieve $168 million in savings by 2020 without sacrificing quality of care.
Administrators knew they needed expert guidance to achieve the level of goals they set. They looked no further than Vizient Consulting.
Vizient provided consulting and data-driven technology from its Workforce Optimization to improve staffing processes and reduce premium labor expenses.
The focus of our Workforce Optimization team was to:
- Identify factors driving workloads for nursing, nonclinical and ancillary support services
- Create standardized approaches to allocate staff, determine pay, measure staffing effectiveness, manage overtime, and gather data for accurate workforce utilization reporting
The team developed these key components:
- Appropriate staffing targets and staffing grids to align with targets
- Refined work schedules to match anticipated volume
- Centralized staffing office and a float pool of crossfunctional personnel
- Comprehensive supplemental staffing management program to reduce premium pay, negotiate competitive terms, and ensure effective credentialing and invoice management
- Facilitation of ongoing communication and collaboration among the organization’s leadership team, all workforce levels and union representatives to address state staffing mandates and broad union membership
Vizient worked with departmental leadership to better match staffing resources with workload, and establish department-specific performance standards. The consulting team also helped implement a new productivity management tool and additional analytics solutions.
Departments now manage real-time staffing and meet productivity targets. Each area now receives regular overtime reports.
The initiative also measured productivity versus volume in emergency room (ER) environments where varying lengths of stay require allocating staffing resources for the entire duration of the stay, and not just per visit. An analysis of the metrics established appropriate benchmarks for length of stay as a driver of ER workloads.
Staffing vendors are now managed through a standardized comprehensive sourcing process. Using Vizient web-based vendor management technology to manage credentials and procurement, the system reduced variability in service levels, number of agencies, and overall agency spend.
Vizient and the health system created an inclusive governance structure to represent all key stakeholders, from C-suite to staff, with working groups at each level.
A scorekeeping system tracks progress toward milestones, and a systems operation council conducts regular scorecard reviews.
Vizient also worked closely with front-line staff to resolve issues and achieve buy-in for process improvements.
As a result, a new culture of expense management extends beyond the C-suite to staff who appreciate seeing their suggestions put into practice.
The health system’s workforce initiative yielded significant financial and operational benefits and improved patient satisfaction and other quality metrics. The health system achieved nearly $14 million in cost savings. Overall, system expense reductions reached $21.6 million, with a significant portion achieved during their work with Vizient.
One system hospital that previously averaged two full-time equivalents (FTEs) over budget now averages 10 FTEs under budget — a reduction attributed to decreased overtime and staffing registry use and better core staffing allocation to meet actual demand. Another hospital that previously budgeted for 18.9 registry FTEs reduced utilization to 5.9 FTEs.
Patient satisfaction scores increased from the bottom 10 percent to the top 75 percent, along with increased employee engagement scores and improved quality core measures.
With powerful processes and data analytics tools, precise measurements and reporting, and unwavering leadership support, the system is well-positioned to sustain labor utilization improvement.
“This process reinforced the need for data and analytics to make correct decisions and maintain our focus. By improving workforce utilization, we are creating efficiencies to keep our cost structure in line, which allows us not only to continue as a safety net provider and help our underserved population, but also be a viable choice in the market,” a hospital executive concluded