The state of the healthcare workforce

Knight noted that the healthcare industry has made significant progress since the peak of the COVID-19 pandemic. "From the peak of COVID, and within the last five years, things are starting to look a little bit better," she said.

For example, turnover and vacancy rates have decreased from their pandemic highs, but remain above pre-pandemic levels, especially among bedside nurses, CNAs, and support roles. This indicates that, while there has been some improvement, significant challenges persist.

Knight especially highlighted the financial strain on healthcare systems, noting that although agency spending has decreased, which has provided some relief, overall labor costs continue to exert pressure on margins. This dual pressure — reducing labor costs while maintaining adequate staffing levels — creates a delicate balance for health systems.

Woods emphasized the importance of not becoming complacent about the improvements seen so far. "Please do not use that as an excuse to stop and turn this off," she said, adding that the workforce challenges exacerbated by the pandemic are far from resolved.

The role of benchmarks and staffing ratios

Benchmarks and staffing ratios can be useful in managing workforce challenges, Knight noted.

Knight explained that while benchmarks provide a useful starting point, they're not a cure-all. "Benchmarks need to be looked at in combination with things like availability of support staff, experience of your nurses, the complexity of your patients, sometimes even the layout of your organization or your unit," she said. This holistic approach is essential for addressing the root causes of workforce issues.

Both Woods and Knight also differentiated between benchmarks and staffing ratios. Benchmarks are broad measures that can include turnover, vacancy rates, and hours per patient day, while staffing ratios specifically refer to the number of patients per nurse. This distinction is important for understanding how to effectively use each of these tools in workforce management.

Schmidt also noted the importance of not just addressing head count, but also the underlying factors that impact workforce efficiency, highlighting several practical solutions including reorganizing supply storage to reduce wasted time and retraining staff on the effective use of technology.

In addition, effective discharge planning can improve patient flow and improve bottlenecks, Schmidt said. By initiating discharge planning early in a patient's stay, hospitals can reduce the length of stay and improve bed availability, ultimately enhancing overall efficiency.

Quist and Schmidt also noted the importance of balancing financial and clinical perspectives in workforce management. According to Quist, managing labor expenses is not just about reducing head count but also about understanding and optimizing the use of agency staff and overtime.

This comprehensive approach can ensure that health systems are able to manage their workforce efficiently without compromising patient care.

It's also crucial to build trust with both the executive team and frontline staff for successful workforce management, Quist and Schmidt said, emphasizing the need for clear communication and education to ensure that all stakeholders understand the goals and benefits of the changes being implemented. This includes educating the C-suite on the importance of both cost cutting and improving efficiency and patient care.

"Health system leaders really have a responsibility not only to make tough decisions about their workforce, but also to clearly articulate the why behind those decisions," Schmidt said. "It's really critical that leaders can explain how proper resource allocation and optimized workflows directly contribute to financial stability."

Quist and Schmidt emphasized the importance of making labor management a core part of an organization's culture and providing managers with the right tools and support.

"I've been doing this for 20 years, and I keep coming back to executives letting them know the blocking and tackling of labor management is super important," Quist said. "So you've got to ensure that your managers have the right tools, that you're supporting them, that they have got the correct statistics. So ensuring that you've got a robust labor management program in addition to helping them understand how they get to these targets is where you need to go."

*Advisory Board is a subsidiary of Optum. All Advisory Board research, expert perspectives, and recommendations remain independent.