HR Initiatives to Reduce Costs in Long-Term Care

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This post is an excerpt from the HealthcareSource and ASHHRA 2013 HR Initiatives Survey white iStock_000027657123XSmallpaper. In this white paper, we reveal what your peers in long-term care identified as their top HR initiatives to reduce costs, and improve resident satisfaction and safety. Download our 2013 HR Initiatives Survey white paper to learn the survey results, along with insights from healthcare HR experts.

Shrinking budgets and increased workloads are facts of life for long-term care professionals today. When it comes to reducing costs, most organizations are pursuing HR initiatives related to more efficient processes and healthcare reform. Over three quarters of long-term care respondents (79%) indicated that their top initiative for reducing costs was streamlining HR processes. Almost three quarters of survey participants noted that they are trying to improve retention rates (74%) and plan for the effects of healthcare reform (58%).

The healthcare thought leaders that we interviewed were not surprised at HR organizations’ continued emphasis on more efficient HR processes and increased interest in healthcare reform. They offered their thoughts about what is occurring in healthcare organizations across the country. The majority of respondents (87%) agreed or strongly agreed that their organization had service-excellence and patient or resident satisfaction related performance goals. Here are three areas that we think healthcare HR leaders should focus on in terms of reducing costs:

Use Lean initiatives to help streamline processes.

  • David Szary, Founder of LEAN Human Capital & the Recruiter Academy feels that many healthcare professionals have not yet connected the dots with respect to Lean and HR initiatives. LEAN Human Capital recently conducted a recruitment metrics benchmark survey with 172 healthcare organizations. Almost three quarters (71%) reported that they had an internal Lean team in place. Yet, Szary believes that sometimes teams struggle to show how they can save money using Lean principles. “If you use Lean principles to reduce wait time and overall time to fill with critical job families like RNs, for example, you could show cost reductions,” he noted. LEAN Human Capital recently worked with an organization and showed how a 25% reduction in time to fill for RN positions could reduce agency and overtime costs by $4.5 million.

Consider preparing for healthcare reform.

  • Serving newly insured patients. Perhaps the biggest unknown with healthcare reform is the influx of people who will soon have access to insurance for healthcare services. “We don’t know for sure what the healthcare workforce may need to be,” said Stephanie Drake, MBA, Senior Executive Director of the Professional Services Team at the American Hospital Association. “Many healthcare organizations are becoming more efficient to be as streamlined as possible, so they can have the flexibility to cover more people who will be coming for services.”
  • Structuring teams to deliver quality care. Healthcare reform is adding a lot of incentives and standards to provide quality care. Some incentives may be costly, so organizations need to reduce expenses while delivering high quality care. “Many organizations are looking at team-based care. They’re reducing costs to ensure that they have the flexibility to adapt to anything that may be introduced through healthcare reform,” Drake noted.
  • Redesigning compensation and benefit plans. Insurance costs over the past twenty years have been steadily increasing. As a result, employee benefit costs have become a large expense for organizations. The employer mandate for health insurance coverage has been postponed from January 1, 2014 to January 1, 2015. However,when it goes into effect, organizations that do not provide healthcare coverage for employees will pay a penalty.“In many situations, organizations do the financial analysis and realize that paying the penalty and giving employees an allowance to go to an insurance exchange may bemore cost effective than providing insurance for staff,”said Drake. “They are also increasing deductibles soemployees pay more of the out-of-pocket costs.” Drake commented that healthcare organizations are also thinking outside the box and looking at other benefits to offset employee healthcare costs, such as incentives related to wellness programs.

Re-examine the role of learning and talent development.

Healthcare organizations recognize that the need for learning and talent development is greater than ever.“Healthcare HR teams are rethinking their approaches to learning and realize that the best ways to reduce costs is through technological enablement and eLearning content,” said Michael Rochelle, Principal and Key Strategy Officer at Brandon Hall Group. “Healthcare organizations are also pushing harder on social and collaborative networks. This moves organizations to a ‘tribal knowledge’ approach which is much less expensive than formal classroom training,” Rochelle observed. While directors of nursing strongly agreed with this question (65%), it’s interesting to note that fewer RNs strongly agreed (45%). This suggests a gap between leaders and frontline employees related to person-centered care related performance goals. There are several steps that organizations can take to address this issue.

  • Cultivate an atmosphere that values goals. One effective approach is to create a service-excellence council comprised of frontline employees. This group should establish goals related to patient or resident satisfaction and monitor scores over time.
  • Set effective performance goals. Individual department goals should align with broader organizational objectives. In addition, employee performance should be evaluated through SMART (Specific, Measurable, Attainable, Relevant, and Time-bound) goals. Hugh Chatham Memorial Hospital evaluates staff after they have been on the job for 90 days and then annually thereafter. Goals are either job-specific or tied to one of the organization’s five Pursuit of Excellence pillars (people, quality, service, financial, and growth).
  • Recognize success when employees reach their objectives. It’s important to have a system that facilitates a consistent online dialogue between employees and managers. Open communication helps employees focus on positive behaviors. Accountability is based on an understanding of organizational goals, rather than on fear. Experience has shown that high levels of employee satisfaction translate into high levels of patient or resident satisfaction.
  • Track goals with a performance management system to ensure consistency and to embed goals into the organizational processes. Hallmark Health System has embedded its Standards of Achieving Excellence into the employee evaluation process. Managers must indicate a minimum of three standards that each employee exhibited during the year. They must also identify standards where the employee needs improvement and work with staff to create action plans for improvement.

Are you interested in learning what else is top of mind for healthcare HR professionals? Download the 2013 HealthcareSource and ASHHRA Healthcare HR Initiatives Survey Results and Insights white paper to learn what other initiatives healthcare HR professionals are focusing on.

About The Editorial Staff

The Editorial Staff is a team of writers with a passion for helping healthcare organizations manage their biggest and most important investment: their employees.