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The Cost of the Health Care Workforce

Updated | Published

The cost of the healthcare workforce is growing every day and there does not seem to be an end in sight.

by Tammy Leigh Tammy Leigh (New)

Specializes in Emergency Service and Critical Care. Has 35 years experience.

Why are labor costs increasing in health care?

The Cost of the Health Care Workforce

Healthcare is changing constantly to provide better care to its consumers. These changes include monetary consequences. Hospitals have seen a shift of consumers to Urgent Care facilities which affects a hospital bottom line. There are key drivers to this crisis in the cost of the healthcare workforce.

Three Drivers that are Increasing the Labor Costs

  1. Lack of professionals to fill the positions: nurses and physicians
  2. Supply chain demands
  3. Lack of retention of nurses and staff

1- The lack of professionals is related to the cost of education or lack of resources. The Advisory Committee on Student Financial assistance reports there has been an increase in financial barriers due to policies of the federal and state levels. There has been a shortage of student aid (Advisory Committee on Student Financial Assistance). The cost of medical school is unbelievable and prevents many students from even attempting to pursue medical school.

2- Supply and demand is a driver that has been increasingly become an issue in healthcare, especially recently during the pandemic. Supplies in a hospital setting are crucial to the operation of the organization; that being said there is an exorbitant amount of waste. IV bags are opened and never used. During the pandemic, we wasted supplies that were left in the patient’s room after discharge because they were considered dirty and had to be thrown away. The cost of getting supplies during the pandemic was incredible. An isolation gown before the pandemic was 30 cents; the pandemic cost was $9.30 each (Berklan, in press. This waste leads to high workforce costs. Supplies are an area of the hospital where cost can be contained if managed approximately.

3- The third and most important driver to the workforce cost is staff retention. Staff turnover can affect productivity and hospital revenue. Recruiting and orientation of a new employee requires staff time and money. According to the Bureau of Labor Statistics (2021), healthcare has one of the highest turnover rates. These drivers all play an important part in the cost of the workforce.

Solutions to Address Labor Cost

The key drivers discussed all have solutions that would decrease the workforce costs. A solution to recruiting professional staff is to provide bonus incentives and invest in an educational program to enhance the employee's personal and professional growth. Involve the Human Resource (HR) department and provide programs to staff about advancement. Happy staff will stay in an organization in which they are invested. The HR department can work with senior leadership to implement retention techniques. Tuition reimbursement programs should be designed to encourage staff to be life-learners. A team should be formed to review and manage the supply chain demands. A tracking system should be put into place to track supplies and waste. Addressing these areas will identify areas of cost containment possibilities.

Predicting Future Changes

The future can hold many options for cost-saving with the help of the government:

  • A governmental incentive for the future professional to want to pursue a career in healthcare.
  • Provide cost reduction for those who seek higher education careers such as doctors and other clinicians.
  • Hospital organizations should seek funding from the regulatory agency. The use of data collecting and reporting will help capture the much-needed information to improve cost

The changes that occur in the future will be the driving force in the reduction of cost to the workforce.

Conclusion

The cost of the healthcare workforce needs to be evaluated and changes need to be implemented. The drivers that were discussed need to be addressed and can produce a cost reduction. If we do not speak to the issue regarding the cost we are seeing in the workforce it will continue to grow and become a financial burden to all Americans.


References/Resources

A Report of the Advisory Committee on Student Financial Assistance. Empty promises: The Myth of College Access in America

Berklan, J. (in press). Analysis: PPE costs increase over 1000% during COVID-19 crisis. McKnight’s Long-Term Care News

Bureau of Labor Statistic. (2021)

Tammy Leigh has 35 years experience and specializes in Emergency Service and Critical Care.

2 Articles   2 Posts

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10 Comment(s)

LibraNurse27, BSN, RN

Specializes in Community Health, Med/Surg, ICU Stepdown. Has 8 years experience.

Good article! With so many people leaving the bedside or avoiding it all together, and nursing school enrollment down, I actually worry about how hospitals will be staffed in the future. Maybe if an administrator who doesn't care about ratio is cared for by a nurse with 12 other patients one day in the far future when there is not enough staff to give anyone VIP treatment, they'll realize it's not a good setup.

I've always thought hospitals could save money by treating staff a little better rather than training and losing new nurses every 6 months. Paying a few extra nurses each shift is probably cheaper than paying 3-6 months of orientation to someone not counted in the staffing only to have them quit 6 months later. Hey, maybe I should become an executive and share my brilliant ideas 😂 JK

morelostthanfound, BSN

Specializes in CVOR/General Surgery. Has 29 years experience.

21 minutes ago, LibraNurse27 said:

I've always thought hospitals could save money by treating staff a little better rather than training and losing new nurses every 6 months. Paying a few extra nurses each shift is probably cheaper than paying 3-6 months of orientation to someone not counted in the staffing only to have them quit 6 months later. Hey, maybe I should become an executive and share my brilliant ideas 😂 JK

^^^I've seen this play out in so many hospitals that I have worked.  Instead of investing in their nursing staff through earnest retention measures, hospital administrators cling tightly to their pocket books an do little other than make half-hearted promises.  The net result is always bringing in travelers (at a significantly higher cost) when nurses can no longer keep up with staffing demands.

 

I think the expectation and demand (which is satisfied) that so many new nurses are perpetually produced leads to a lot of waste.  There appears to be little desire on the part of employers to hire into acute care or provide acute care training to nurses who are either not new grads or who are not currently employed as nurses in acute care.

Edited by Susie2310
Grammar.

dream'n, BSN, RN

Specializes in UR/PA, Hematology/Oncology, Med Surg, Psych. Has 28 years experience.

On 7/7/2021 at 8:09 AM, Tammy Leigh said:
Solutions to Address Labor Cost

The key drivers discussed all have solutions that would decrease the workforce costs. A solution to recruiting professional staff is to provide bonus incentives and invest in an educational program to enhance the employee's personal and professional growth. Involve the Human Resource (HR) department and provide programs to staff about advancement. Happy staff will stay in an organization in which they are invested. The HR department can work with senior leadership to implement retention techniques. Tuition reimbursement programs should be designed to encourage staff to be life-learners.

 This is where I have an issue.  Another thread on this very website asks if nurses wanted 'higher pay' or 'better staffing ratios' and so far in every single response, money is less motivating. So I don't believe bonus and education reimbursement will have much effect on retention without addressing the staffing ratio, the elephant in the room

Robmoo, ADN, BSN, RN

Specializes in BSN, RN, CVRN-BC. Has 25 years experience.

Not a single mention of improvements in working conditions such as ensuring that nurses can step away from the bed side every couple of hours to hydrate and otherwise refresh themselves.  I went back to the bedside briefly during the pandemic.  I don't know about the rest of you, but I'm getting too old to work 12 hours straight with not more than a 30 minute lunch break.  I'm betting that there are a lo of nurses at the bedside who are not at their sharpest because they been working long hours without so much as a 15 minute break.  The reason that the industry has to pay so much is that the work environment takes a heavy toll.  I know many nurses who have taken pay cut in order to have a better work/life balance.  

We will all eventually be replaced by medical assistants because they are a cheaper labor force and work under the MD's license. A MA can do anything the MD requests of them with no repercussions or license to lose.

Edited by 2BS Nurse

SmilingBluEyes

Specializes in Specializes in L/D, newborn, GYN, LTC, Dialysis. Has 24 years experience.

12 hours ago, 2BS Nurse said:

We will all eventually be replaced by medical assistants because they are a cheaper labor force and work under the MD's license. A MA can do anything the MD requests of them with no repercussions or license to lose.

Nope.....they can't perform assessments or other tasks soley in the purvey of the professional nurse's scope.

I have said forever that taking care of the staff you already have is the key. Quit trying to entice so many new nurses in only to burn them out in less than a year and you'll see big changes and a great return on the money invested.

As usual another article that does not address the above. *sigh*

Rose_Queen, BSN, MSN, RN

Specializes in OR, education. Has 16 years experience.

56 minutes ago, SmilingBluEyes said:

I have said forever that taking care of the staff you already have is the key. Quit trying to entice so many new nurses in only to burn them out in less than a year and you'll see big changes and a great return on the money invested.

Indeed! Those sign on bonuses that so many places are offering are a slap in the face of those who have been there and stuck around, especially through the horror of COVID.

SmilingBluEyes

Specializes in Specializes in L/D, newborn, GYN, LTC, Dialysis. Has 24 years experience.

32 minutes ago, Rose_Queen said:

Indeed! Those sign on bonuses that so many places are offering are a slap in the face of those who have been there and stuck around, especially through the horror of COVID.

Yes they are to those of us who have been through so much. It's an insult actually and insulting people drives them away. Then you are stuck with short staffing. Exactly what you don't want.

Keeping experienced RNs on the floor in teaching positions would be a huge improvement. On some floors, the new grads are becoming mentors in just 1-2 years? How can this be possible?? This places new grads in a scary working environment. Start offering those RNs close to retirement (who are proven as teachers) to stay and mentor the new! A master's degree is not a necessary requirement!