As we all know, much of the heavy lifting that gets done at hospitals is performed by employees working at or near to minimum wage. We're not talking about clinicians, of course, but low-level employees such as janitorial staff. High-level executive employees, meanwhile, may make dozens of times or more what low-level employees make, a fact even cash-strapped hospitals would defend as a necessity in attracting and retaining the best talent.
At least one hospital, however, has decided to put its finger on the scales just a bit. In a move that made national headlines, Parkland Health & Hospital System in Dallas is raising its system-wide minimum wage to from $8.78 to $10.25 an hour next month. The initiative, which will cost the hospital about $350,000 a year, is giving about 230 workers a raise.
That is unusual enough, but what makes the plan particularly striking is that the system is paying for the increase with money originally set aside for executive bonuses. The executive bonus pool set-aside is about $3 million to $5 million for the full year, so it's not a giant drain on the fund, but execs will feel it to some degree. The hospital's chief executive vice president and chief talent officer told Modern Healthcare that the decision was made in hopes of improving workers' morale and to provide a living wage.
I wouldn't weep for Parkland's executives, who despite having a smaller bonus pool to pull from, are still going to be well-compensated for their skills. But even if they had to take a hit I'd argue that the senior executives of this health system have made an excellent decision which will hopefully be considered by health systems across the U.S. Why? Well, putting aside business ethics, which are a conversation all their own, making a decision that raises morale and reduces turnover just makes sense.
Sure, many hospitals are struggling financially, and the idea of giving employees a raise in tough times like this may sound counterintuitive. But when you consider what hospitals are up against in terms of industry turmoil — the adoption of the ACA, the transition to ICD-10, the demands for increasingly sophisticated health IT and more — giving their core day-to-day workers some stability is a smart move. Nobody wants to have care quality or throughput suffer because of excessive openings and turnover in routine jobs. For example, if staff vacancies are high in housekeeping, patient flow from the ED to a bed can be held up, and that's a very costly problem.
The reality is, Parkland's decision is news because few hospitals are going there. Contemplating across-the-board raises for a class of employees is troubling to contemplate if a hospital is already in the red. But if hospitals don't want to be distracted by problems with replacing front-line workers — which can cost 20% of a given worker's salary — it's time to think about raising wages for these workers to a more-livable level. It doesn't necessarily have to come out of the executive bonus pool, though that might work, but as many hospitals as possible should find the means to stabilize their workforce. It's the right thing — and the smart thing — to do.