Labor costs a growing problem for CFOs
Labor shortages are challenging hospitals executives to lower labor costs—and the problem is worse today than it was last year, according to a survey of CFOs.
The survey, conducted by Navigant/hfma, elicited responses from 101 CFOs and revealed that more execs think staffing shortages are worse today:
- 43 percent say shortage of nurses is worse today.
- 35 percent say shortage of physicians is worse today.
- 35 percent say shortage of mental health providers is worse today.
Over the next 12 months, 78 percent of executives expect labor budgets to increase, with 18 percent anticipating increases of more than 5 percent, the survey found. Just 14 percent expect budgets to drop more than 5 percent.
Executives have consistently identified staffing shortages as a growing problem, in part due to the large number of baby boomer nurses leaving the workforce.
“Staffing shortages are placing hospital leadership in a paradoxical situation, both due to the economic theory of supply and demand and the tendency to maintain surplus with shortages looming,” Vamshi Gunukula, director at Navigant, said of the survey. “As a result, reducing labor costs has become even more difficult. Leveraging predictive analytics, proactively matching staffing to patient care demand, and more efficient workflows can help providers address these challenges.”
However, 44 percent also identified labor expenses as the top target area for reducing operating expenses over the next year. Behind labor expenses, 21 percent say they was to reduce purchased services, and 17 percent want to reduce supply chain expenses.
At the same time, CFOs want to focus on labor management initiatives, ranking productivity improvement, workflow redesign, reducing skilled staffing shortages, and leadership development as top targets
“The need to more effectively manage labor by staffing to demand will only intensify as operating margins continue to diminish, and as the pressure to enhance care quality and efficiency increases,” Danielle Dyer, managing director at Navigant, said of the survey results. “These results magnify the need for provider leadership to objectively analyze their current practices to better staff departments and meet dynamic patient volumes.”
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."