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Labor Shortages: Counter Them and Improve Staff Retention

Today’s labor market for physicians, nurses, and other providers is undergoing extreme strain. Health systems are facing unprecedented levels of turnover and labor shortages, and it’s hurting both operations and budgets.

Specifically, droves of physicians, nurses, and other clinicians are retiring, quitting temporarily to escape or recover from burnout, or taking higher-paying gigs elsewhere. The annual physician turnover rate increased by 43% just between 2010 and 2018. One report found that over half (54%) of physicians switched jobs, retired, or left medicine during the pandemic. Meanwhile, the turnover rate for staff RNs hit an eye-watering 22.5% in 2022. Worse, labor shortages are affecting other roles as well: 84% of healthcare executives said that shortages of other licensed staff, like lab techs and facilities employees, are also a concern.

“This is the most acute I've ever seen the healthcare staffing challenge,” Marty Bonick, president and CEO of Ardent, told Modern Healthcare.

He’s not alone in that assessment: “This [labor shortage] is unlike anything I've seen,” Mark Smith, vice president of workforce strategy and analytics at Renton, Wash.-based Providence, told Becker's Hospital Review.

The most common solution to this problem is not proving financially sustainable: paying more. For example, the use of nurse travelers by health systems has skyrocketed. Between 2019 and 2022, the hours worked by travel nurses as a percentage of total hours worked grew from under 4% to over 23%. Altogether, travel nurse FTEs per patient day increased 183.4%. Regularly replacing exiting nurses isn’t financially supportable either. Each percent change in RN turnover will cost (or, if an improvement, save) the average hospital or health system $380,600 annually.

Health systems are getting creative to deal with these challenges.

The good news is that there’s light at the end of the tunnel. To answer these issues, stay competitive, and fill their resource needs, health systems are innovating and adapting in all kinds of clever ways.

For example, Corewell Health System in Michigan is funding education grants for new students, including expanding infrastructure and hiring faculty. "This partnership is a win-win for both our students at Schoolcraft College and for Corewell Health," Dr. Glenn Cerny, president of Schoolcraft College, told CBS News. "Not only do our students get assistance with their educational costs as they complete their studies here, they also have the opportunity to then transition to work in one of the state's most-respected health care systems."

That opportunity is a smart way for Corewell Health to cultivate much-needed staff. Similarly, the University Medical Center of El Paso, Texas, is paying for employees to earn degrees in hard-to-fill roles. Other health systems are pursuing different strategies. For instance, Sanford Health in Sioux Falls plans to hire internationally trained providers to work in its health system.

However, the best strategy is also one of the simplest: address provider wishes. “Finding out what they want and need is the ultimate retention strategy,” Celeste Armstrong, RN, an operating room nurse leader at MidState Medical Center in Meriden, Conn., told Becker's Hospital Review.

For that reason, most operations focus on improving work-life balance and flexibility for providers to help counter issues like burnout. According to an analysis from McKinsey & Co., “meaningful work (82%) and flexible schedules (62%) are the most important factors that would influence surveyed RNs to stay in their position.”

Leveraging the power of technology to strengthen relationships with providers and clinicians.

As a result of these pressures, many health systems are working to optimize their internal workforce sourcing, administration, and compensation platforms to power greater flexibility. That’s great news for providers (and the organizations that can thus decrease turnover). However, operationalizing this newfound flexibility can present a challenge without the right supporting tools. Spreadsheets and time-and-attendance solutions don’t typically present the right functionality to generate the desired outcome.

Here, purpose-built technology makes an enormous difference.

For example, for sourcing nurses and similar staff, Hallmark Health Care Solutions’ Contingent Labor Platform enables hospitals to engage the contingent workforce and deploy resources across locations more effectively, finding the resources they need faster and at lower cost. “We don't believe the shortage is as vast as what many healthcare organizations may assume,” says Matt Dane, DNP, MBA, RN, senior vice president of business development at Hallmark Health Care Solutions. “It’s not that the nurses aren’t out there. It's just that you don't have those nurses. The travel agencies do. And you can attract these employees back without going exclusively through a single agency that can then monopolize the bill rate.”

To do this, health systems must implement a technology platform that can compete directly with the agency model. For instance, the Internal Resource Pool connects with talent via mobile devices, making communication and deployment seamless and attracting the "gig economy" workforce. Simultaneously, the Vendor Managed Solution (VMS) allows users to connect with 750+ staffing firms through a single interface while tracking credentials and competencies.

As a result, the platform can drive a reduction in contract labor and related costs while filling open positions much faster than an external staffing agency. For example, the VMS holds a 97% fill rate on average and the average time-to-fill positions is less than twenty days.

The right technology is likewise critical in recruiting and retaining physicians, APPs, and other similar providers in a tight labor market. “I've personally seen financial and operational administrators have to rebuild their clinical team because their relationships with their providers were tarnished beyond control just through distrust in their compensation payments,” says Aarika Cofer, Hallmark Health Care Solutions Vice President.

With this population, modern, dedicated compensation management solutions can be transformative.

The Provider Compensation (PC) platform, for instance, can help build the trust and transparency that underpins healthy provider engagement and retention. By automating compensation, administrators can work faster while eliminating errors resulting from manual calculations. They can also enable greater transparency, allowing providers to get a breakdown of their compensation and performance metrics via their dashboard. Spreadsheets on their own simply cannot power that kind of relationship-building and strengthening.

Altogether, the Provider Compensation platform has a proven 10% reduction in the current provider turnover rate from current clients as well as a 15-20% improvement in resource productivity. On average, these customers see an ROI (return on investment) of 10 times or higher after implementing the technology into their healthcare system administration.

In short, smart technology is proving to be a pivotal asset – and one of the most financially beneficial solutions – for healthcare organizations to overcome critical labor shortages, successfully control costs, and facilitate excellence in patient care.

For more information about modernizing workforce management and compensation management in the face of mounting challenges, contact Hallmark Health Care Solutions.