In health care settings, rising costs over time have outpaced gains made in productivity, leading to unprecedented cost pressures. As a consequence of this financially-constrained environment, many health care executives look to find short- to medium-term savings within the nursing labor budget. Yet, as guardians of care quality, nurse executives understand that imprecise cuts to personnel can have adverse care outcomes.
Research from the Global Centre for Nursing Executives indicates there is a way to cut labor costs without cutting personnel. This study provides nurse leaders with a four-step manual for reducing their labor costs while safeguarding their staff and the care they deliver.
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Note: this study was originally created for members of our Global Centre for Nursing Executives. While it was developed with an international audience in mind, the tools and practices are applicable to U.S. organizations.
Think differently about labor savings
Nurse leaders face increasing pressure to find savings within their budgets. In an effort to avoid cutting nursing personnel, many have focused on finding savings in non-labor areas, such as reducing supply waste and revising outdated care protocols. But the focus on labor savings is not abating, and many nurse executives struggle to find alternative solutions against the imperative to slash whole staffing positions in a time of unprecedented cost pressures.
Instead of making gross cuts of whole personnel, nurse executives must examine the drivers of productivity to identify opportunities for savings.
The Global Centre analyzed the underlying causes of why hospitals fail to precisely match staffing to demand. We found four common pitfalls: inaccurate targets, missed targets, overreliance on premium labor, and deploying “expensive hands” to do inexpensive work. By addressing these pitfalls, nurse leaders can rise above the bottom line and answer the cost savings imperative without compromising care quality. A more precise, proactive approach to staffing adjustments targets key inefficiencies and uncovers savings while preserving quality and personnel.
Section 1: Establish Safe, Cost-Effective Staffing Targets
Developing staffing targets in health care’s current financial reality is essential, but it requires a careful balance to enable delivery of quality care at lower costs. The best targets effectively balance quality and cost by accurately matching staffing to demand. By setting staffing targets that reflect unit realities, managers can deploy a more accurate number of nurses to meet the needs of patients safely and effectively. To create more precise staffing targets, the Global Centre recommends accurately projecting unit-level patient demand and then setting staffing goals based on unit-level needs.
View our tools for establishing safe, cost-effective staffing targets
Section 2: More Precisely Match Staffing to Predicted Demand
With accurate targets in hand, managers need to match their staff to the predicted demand. However, inherent scheduling complexity and rigid scheduling structures often impede their abilities to do so. To address these challenges, leaders must first equip managers to schedule appropriate staff and then avoid preventable scheduling overlap.
Read this section to learn how to more precisely match staffing to predicted demand.
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Section 3: Embed Flexibility to Respond to Unexpected Mismatches
Even when leaders precisely match staffing to predicted demand, they will still need to respond to the reality of the health care environment: unpredictable census fluctuations will occur. If managers’ only opportunity for responding to unexpected fluctuations is to rely on premium labor, they will quickly find themselves over budget.
To respond to unexpected demand more cost-effectively, leaders must embed flexibility into their organization. To this end, leaders should equip their unit managers with two critical tools. The first is accurate, real-time census data, and the second is a more cost-effective source of staff who can fill staff gaps when needed.
Read this section to learn more about how to embed flexibility to respond to unexpected mismatches.
View our tools for embedding flexibility to respond to unexpected mismatches
Section 4: Fully Leverage the Skills and Training of Each Care Team Member
Regardless of how tightly nursing leaders can match their staff hours to demand, in order to make further inroads on labor costs savings, they cannot overlook the issue of matching staff skill to patient need. By deploying nursing staff at the top of their license, leaders can equip staff to deliver high-quality care more cost-effectively.
While many nursing leaders agree with the idea of practicing at the top of license, implementation remains a challenge because of three key barriers: unknown ideal skill mix, inefficient use of support staff, and the slipping back into bad habits.
Read this section to learn how to more fully leverage the skills and training of each member of the care team.
View our tools for fully leveraging the skills and training of each care team member
By downloading the full study, Rising Above the Bottom Line, you will learn:
- How to shift from reactive labor cuts to a proactive cost-management strategy focusing on productivity, and
- What nurse-led strategies have proven effective for sustainable, long-term cost compression within the labor budget.
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