A report by Kaufman, Hall & Associates revealed that the number of hospital mergers and acquisitions increased 55%, from 66 announced in 2010, to 102 in 2016. Last year also saw a flurry of mergers nationwide, from Kansas to New Jersey, with healthcare systems around the country consolidating in order to maintain their financial viability in an era of legislative uncertainty and marketplace volatility. Both independent and newly acquired hospitals are actively seeking areas for cost-containment to strengthen their bottom lines. One way to do this is to closely examine all purchased services expense categories (over 1,200!) for hidden savings opportunities. In this post, we’ll discuss, specifically, the category of staffing and what to look for when researching this category.
Hospitals are open day and night, 24/7/365, and require a high number of personnel to maintain operations. This includes not only the doctors and nurses, but also cleaning crews, IT departments, and other various staff needed to support the mission of the hospital. A large percentage of a hospital’s overall cost structure is comprised of staffing and related payroll, but the outsource staffing industry does not maintain adequate transparency when it comes to managing costs or even how they generate total costs to the end users, making price assessments difficult for health systems.
In order to better contain expenses, healthcare systems need specific strategies for covering all roles within the organization, from critical positions to the routine. The hospital type (community, Academic Medical Center, safety net) and geography (rural, urban, accessibility) will determine their optimal strategies. There are many outsource staffing providers who service the healthcare industry and a variety of cost structures, as well. Administrators must leverage benchmarking data to evaluate a staffing provider’s fitness for serving the specific needs of a hospital, as some staffing providers excel or specialize in one area (such as IT) and underperform in another (such as Nursing). Some outsource providers are highly specialized and only compete in very narrow niches, whereas certain firms take management of this category on in its totality and offer a full suite of managed services. Group Purchasing Organizations (GPOs) also offer advantages to healthcare systems that include staffing solutions.
By making adjustments to purchased services that go beyond the big categories (food, EVS, blood), healthcare systems can better manage their spending. The smaller categories provide some large saving opportunities, so addressing them can have a material impact on an organization’s bottom line. Reducing complexities within staffing and applying a blend of centralized and local contracting can reduce expenses while still allowing the hospital to offer the best patient care. Organizations who fail to provide meticulous oversight of their staffing category face a number of consequences that include fragmented staffing from multiple providers, difficulty in filling positions, and higher costs.
For more info on optimizing the expense of staffing your organization, check out our post on locum tenens, the vital practice of filling a clinical role on a temporary basis from a few days to several months.
Valify is the only 100% dedicated web-based solution that allows healthcare organizations to quickly identify, benchmark, and track savings in hospital purchased services. To discover how Valify can help reduce staffing-related costs, visit our website today!