As health systems struggle to return to pre-pandemic levels of financial performance, they are increasingly facing capacity challenges — not from a lack of space or equipment but rather from a mismatch between staff supply and demand. Many organizations no longer have the workforce they need to keep beds and clinics open or to staff a full complement of procedural space thanks to increased attrition, opting out, and competitive recruiting. For the staff who remain, this means an even more difficult day-to-day situation: covering vacancies with overtime and doing more with less — on top of exhaustion and burnout from managing through the pandemic.
Left unchecked, this situation can rapidly become a downward cycle from which it is difficult to break free, given the revolving door of onboarding and unexpected turnover. This situation has the potential to get worse in the future. A recent survey indicated that nearly 40 percent of healthcare workers are not very likely to remain in the field following the COVID-19 pandemic.
Some organizations already are experiencing an above average utilization of high-cost, temporary contract nurses, with estimated demand for travel nurses up 30–40 percent, numbers that are likely to increase.
On top of unprecedented exhaustion and burnout, healthcare workers are putting their lives on the line, covering vacancies with overtime, and doing more with less. Healthcare organizations need to take a comprehensive approach to workforce management that includes addressing the stress and burnout employees face daily and fostering their well-being and morale.
To avoid this doom loop, healthcare leaders must take this opportunity to reimagine and reinforce critical aspects of workforce management. Such measures include proactively managing staffing levels, deployment, and utilization, while fostering provider and staff well-being and morale. A comprehensive approach — one that provides the structures, technology, and tools to support a vibrant, capable, and cost-effective workforce and that simultaneously addresses the stress and burnout employees face daily — is imperative to achieving sustainable financial performance in the years to come.
Leaders must acknowledge the magnitude of change that has occurred in many of their teams. At the same time, they must ensure that their organizations have the foundational capabilities to effectively manage their workforce. They must reevaluate all aspects of workforce management to build an organizational environment and infrastructure (i.e., the right vision, plans, structure, tools, and technology) that supports a vibrant and resilient workforce — a critical component to improving margins and achieving sustainable financial performance. A multi-dimensional approach to workforce optimization, such as the one depicted below, will support the development and maintenance of a flexible, engaged, and cost-effective workforce.
Workforce Vision and Philosophy
Managers need staffing solutions that ensure the appropriate mix and number of staff to meet the needs of the department. In addition, they need to have mechanisms in place that provide visibility into demand and the ability to effectively manage variation. For variable departments (e.g., inpatient nursing, clinics, and therapies), solutions include staffing in accordance with productivity targets, building in the ability to flex up or down through float pools, and instituting supportive pay practices and policies. For departments with fixed staffing levels (e.g., administrative departments), the solutions should include a clear delineation of the value added at incremental staffing levels. Established and agreed-upon staffing targets that are aligned with departmental and organizational requirements and validated against benchmarks are essential for ultimate workforce success.
In Chartis’ interviews of Chief Financial Officers (CFOs) and Chief Operations Officers (COOs) regarding their strategies to respond to the challenges presented by the pandemic, all of the organizations we spoke with acknowledged the importance of flexible resources, coupled with visibility and an understanding of real-time demand and performance.
Organizations have recently experienced significant disruption to legacy team structures, care models, and staffing patterns. The disruption has many drivers, including the need to accommodate fluctuations in volumes, co-manage COVID and non-COVID patients, and integrate new modalities of care, including hospital at home and virtual visits. To staff most effectively, healthcare organizations must continually review people, workflows, processes, and technology to ensure team members are fully supported and working to the top of their licenses. This includes automating routine processes, leveraging technology as available, streamlining workflows, and eliminating any work that does not add value.
In a recent survey of 25,000 physicians, researchers documented the impact of after-hours charting on physician burnout. Those who reported five or fewer hours per week on after-hours charting were significantly more likely to report lower overall levels of burnout.
“Costs for burnout-related nursing turnover are estimated at $14 billion.”
Ensuring that staff feel engaged, valued, and aligned with the broader organization is one of leadership’s most important levers to promote retention at all levels. While compensation and incentives are often thought of first, financial motivators are only one component of recruitment and retention. All else equal, it is the mutual respect and commitment between employer and employee that fosters a culture in which employees want to stay. That said, value propositions for healthcare organizations are changing due to expanded opportunities for remote work and new competition for entry-level positions. Organizations must be able to articulate the value proposition that they are offering to recruits and reinforce it with employees both financially (e.g., aligned pay practices and benefits) and non-financially (e.g., leadership visibility and accessibility, self-governance, and development opportunities).
Creating and reinforcing an organization’s value proposition is likely to be insufficient to ensure engagement in today’s environment. The physical and emotional toll on healthcare providers and staff is significant and is driving turnover and increasing vacancies. Organizations must develop and maintain strategies to attend to the mental health of staff in their organization, while also fostering new mechanisms for connectivity and open communications so employees feel heard and valued.
“We cannot overestimate the trauma our workers experienced during this time. It is financial trauma and emotional and workforce trauma. To have to potentially downsize after people have given so much during this time is just awful.”
“Staff need a break! We cannot expect people to be on and available all the time just because they are remote. They need the opportunity to totally unplug."
Equipping leaders with the tools they need to proactively manage day-to-day operations is foundational to a successful workforce program. Such tools include technology, data, and analytics to support real-time understanding and management of performance against workforce targets (i.e., comprehensive KPIs, productivity), optimize staff scheduling, and redeploy staff to areas of greatest need. Recent expansion of the remote workforce poses additional challenges for performance management, although many organizations have seen improvements in productivity and are now questioning the extent to which they will return to office-based requirements.
The criticality of performance management and monitoring tools is becoming widely recognized, as evidenced by the booming performance management software market, which is projected to be worth more than $5.5 billion by 2026.
Productivity targets and staffing tools are only valuable if they ultimately influence the hiring of new or replacement positions. A vacant position should not signal an invitation to hire. Rather, it should signal an invitation to review the areas’ productivity trends to determine whether filling the position is warranted. The organization must establish effective accountability mechanisms that reinforce agreed-upon goals through productivity review and robust data-driven position review and control processes. Metrics may include daily or bi-weekly productivity targets; overtime and agency utilization; key staffing metrics (i.e., time to fill, open positions, and turnover or retention percentages); and external leading practice comparators.
“Our Board wants to avoid any more layoffs. So, we are trying to control through vacancies and a lot more scrutiny on FTEs. As folks leave, we really evaluate rather than say we need to replace. It is a stricter, more disciplined process.”
In addition to training in performance management tools, organizations would be well served to develop and maintain the infrastructure to support and develop workforce management skills in current and future leaders. This includes a robust leadership development agenda for new leaders that teaches both the concrete skills (e.g., managing productivity, understanding volume trends and patterns, and interviewing skills) and softer skills (e.g., crucial conversations, empowering staff, and building an environment of trust). When organizations couple leadership training with strong formal and informal mentorship, succession planning, and processes to identify and develop future leaders, they create over time the necessary depth and breadth of the leadership team and ensure that strong workforce management skills are extended throughout the organization.
Gallup organizational research indicates that at least 70 percent of the variance in team engagement is explained by the quality of the manager or team leader.
Underlying these competencies is a deep understanding of what is required to make change happen within the organization. In our experience, workforce changes are only executed and sustained when they are connected to the goals or mission of the organization; when they are understood as an activity driven by operations, rather than a remote Finance Department; and when these changes include the underlying day-to-day activities, roles, and policies that guide availability and allocation of staff. Organizations must have a commitment to effective communication and a comprehensive change management plan. This plan may include early engagement of stakeholders, a cascading multi-modal communication plan, training around new policies and workflows, and concrete actions to address potential barriers and sources of resistance.
According to Prosci, a leader in change management solutions, the better we apply change management, the more likely we are to deliver on project objectives. Correlation data from more than 2,000 data points and 10 years shows that initiatives with excellent change management are six times more likely to meet objectives than those with poor change management.
Following the perfect storm of physical and emotional exhaustion of their team alongside the financial disruption brought on by the COVID-19 pandemic, healthcare organizations are reevaluating how they are managing their workforce. In doing so, they must seize the opportunity to address many of the issues that have been brewing for years. Decisions made now to invest in and build a strong, stable workforce are critical to returning healthcare organizations to a financially sustainable path that will allow them to serve their patients and communities for years to come.
Keys to Balancing a Vibrant Workforce with Financial Success
for a panel discussion on navigating the balance between workforce health and financial sustainability as we accelerate next. The risk of not finding the right balance has never been higher — 40 percent of healthcare workers report they are considering leaving the field after the pandemic.
Your workers are the soul of your organization, and in this webcast, we’ll share key competencies to achieve next-level workforce management that also creates sustainable financial performance for years to come.
What does the path to financial stability look like? We have identified five imperatives organizations must address, along with tactics leading healthcare organizations have deployed to respond to the ongoing financial, operational, and emotional challenges of the pandemic.
A handful of organizations across the country already have figured out what it takes to unlock the transformative value of APPs and are forging a path that others can follow, based on six key elements.
As health systems seek to address COVID-19’s economic and patient care challenges, success increasingly hinges on the ability to create high-performing provider enterprises. The current situation is no longer sustainable. The provider enterprise must be fundamentally redesigned to achieve required financial and operational improvements.