Hospital leaders see little relief from rising labor budgets, survey shows
- Hospital leaders anticipate continued labor budget increases and clinician shortages over the next 12 months, a new Healthcare Financial Management Association/Navigant survey shows.
- Among 101 CFOs and operations executives, 78% predict their organization's labor budget will grow and of those, 18% expect an increase of more than 5%. Another 8% don't expect labor budget changes, while 14% forecast a smaller labor budget in the year ahead.
- To reduce operating expenses, hospital executives say they will focus on labor costs and improvements in supply chain productivity.
Labor costs are a big problem for hospitals, as is the physician shortage, particularly in key areas like mental health. Compared with last year, 35% of respondents say their doctor shortage is worse and 43% say they there are fewer nurses available.
More than a third of executives (35%) say their current shortage of mental health providers is "somewhat worse" or "significantly worse" than one year ago. Just 10% say the situation is better. Other areas with worsening staffing shortages include laboratory experts, care/case managers, IT-related experts and coding/revenue cycling experts.
On the upside, staffing of support services and pharmacists has improved since last year. Nearly 20% of executives say the situation with support services is "somewhat better" or "significantly better," versus 10% who say it is worse. And 12% say the pharmacist shortage is less severe, while 8% say it is worse.
Still, while adequate staffing is a concern, many hospitals are scaling back their workforces under financial pressures. Hurting hospitals are experiencing lower reimbursements, smaller volumes and declining operating incomes. As hospitals struggle to adapt to the changing healthcare environment, some are facing hard choices.
When it comes to reducing operating losses, hospitals have a few options. Despite predictions of labor budget increases, 44% of leaders are targeting labor expenses to bring down costs. Other top priorities include purchased services (21%) and supply chain (17%).
To improve labor management and rein in costs, hospitals' main focus is on productivity enhancements and workflow design.
Brian Augustian, principal at Deloitte, believes the push for greater automation and productivity could lead to slower job growth in healthcare. "As organizations are able to use machine learning, artificial intelligence and better utilize technology to get tasks done, it will not only result in … needing fewer people but also different types of people," he told Healthcare Dive in an interview last year.
Other important initiatives on hospitals' to-do list include reducing skilled staffing shortages, leadership development, premium pay reduction and centralized services.
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