A large health system needed to align its contract labor interests. With our multidimensional approach of Workforce Optimization specialists and exclusive technology, the system's staffing future is secure.

Challenge

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.

Solution

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.

Results

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

Building on a successful relationship spanning many years, the health system called on Vizient  to bring  clarity to the complex staffing and  labor process. The organization’s specific goals were to:

  • Identify and  deploy the right staff for the right shift  at the right time
  • Standardize one rate and set of terms and conditions for all vendors
  • Improve productivity and patient care
  • Maintain required staffing levels
  • Reduce contract labor expenses
  • Reduce liability  risks

Vizient applied a multidimensional approach to the health system’s persistent staffing challenges.

Knowledgeable advisers

Vizient first sent in a team of expert sourcing specialists that rigorously evaluated the member’s market rates, rationalized  contracted  rates by market, and tailored the best vendors for the member’s unique staffing needs. For the first  time, standardized contracts and  stringent service-level requirements were established across all vendors to provide maximum protection for the health system and its patients.

Proprietary procurement technology

To optimize contract staffing procurement, Vizient  implemented its proprietary, web-based technology used by nearly 80 health systems across the country.

It provides access to nearly 600 contracted staffing vendors. These vendors represent more than 90 percent of clinical staffing nationwide, including 94 percent of all agency-registered nurses. This technology provided the organization with online  staff procurement, credentials capture, labor time tracking, and quality management.

These system automated functions help streamline the staffing process:

  • Online job procurement from any location with a secure Internet connection, generating job requests only to contracted agencies
  • Availability  of contract terms and rates and  individual staff information, including credentials for nursing, allied, and nonclinical staff
  • Invoice and contract employee time tracking, including holiday and overtime pay
  • Direct interface with contemporary accounts payable systems

Using the system guaranteed that temporary staff was only procured from contracted vendors, eliminating off-contract spend. It also gave the health system the ability to manage vendor invoices and payments. This effectively eliminated manual reconciliation, creating reverse invoicing and putting the responsibility of reconciliation on the vendor agency. Additionally, the system assures high levels of compliance with contract terms and tracking to enforce service-level penalties with vendors.

The Workforce Optimization market management team

The Vizient market management team provided individualized account management, advising leadership throughout the onboarding process and ensuring vendor compliance. This team took on a number of essential roles:

  • Shared staffing best practices from  across the country and  recommended strategies to meet labor needs
  • Facilitated technology deployment and  the development of standardized processes
  • Teamed with sourcing specialists on vendor agency negotiations and helped realize significant savings through high contract compliance
  • Served as a liaison between the health system  and vendor agencies to achieve enterprisewide adoption
  • Provided system-level and  facility-level consultation and coaching throughout program adoption, rollout  and on an ongoing basis
  • Managed vendor agency audits annually and on an ad hoc basis, and enforced rigorous vendor service-level agreements and credentialing requirements

Working with Vizient, the health system completely transformed a disjointed contract staffing process into  an efficiently managed system that saved $6.9  million in labor  expense. Other achievements include:

  • Decreased cardiac catheterization lab rates by $7 an hour
  • Achieved 96% overall contract compliance
  • Achieved 99% nursing contract compliance

Going on eight years of partnership with the Vizient Workforce Optimization team, the customer is driving even greater efficiencies through the adoption of nonclinical staffing contracts to provide staff for administration, accounting and  finance, human resources, health information systems, and  information technology.

The health system’s vice president of supply chain says the future holds even more progress. “We achieved a majority of what we can do on savings. Now we are partnering with Vizient  Workforce Optimization on process flow and optimization.”

We achieved a majority of what we can do on savings. Now we are partnering with Vizient Workforce Solutions on process flow and optimization.
Vice President of Supply Chain