Best practices issued to help hospitals manage challenging repercussions of healthcare reform legislation

Jul 1 2010

API Healthcare, the leader in healthcare-specific workforce management solutions, today issued a set of best practices to help hospitals of all sizes effectively prepare for and manage the challenging repercussions of healthcare reform legislation. Industry experts expect this legislation to generate millions of new patients, create a severe nursing shortage and have a significant financial impact on hospitals and other healthcare providers. Operating under the tightest budgets in years, hospitals across the United States are facing even tougher conditions as healthcare reform threatens to reduce Medicare and Medicaid reimbursements, and the most severe nursing shortage since the mid-1960's looms around the corner. In addition, imminent Electronic Health Record (EHR) requirements are adding even greater financial strain to the concerns of hospital executives around the country.

“While the true impact of healthcare reform on hospitals and providers remains to be seen, we do know for certain that if hospitals want to remain competitive and fiscally strong they will need to optimize operations”

As the number of Americans eligible for healthcare coverage rises from 83 to 95 percent, hospitals will need to handle a major influx of new patients needing care. However, as that demand increases, the number of nurses available to care for them will decrease due to the retirement of baby boomers and the difficulties in attracting and retaining new nurses to the profession.

"Tight budgets and limited resources do not have to mean patient care suffers," said J.P. Fingado, chief executive officer, API Healthcare. "Through strategic talent optimization, high-quality, affordable care can still be a reality for hospitals challenged by the changes created by healthcare reform legislation. By implementing best practices, along with automation, hospitals can ensure that patients are receiving the best care from the right nurses who are trained to address their specific needs."

As reform moves healthcare from a fee-for-service based industry to one based on quality -- which considers factors such as re-admissions, mortality rates, patient satisfaction and patient safety -- hospitals will have to meet tougher metrics to protect the valuable reimbursements and subsidies that contribute to a significant portion of their operating budgets. Through the use of integrated workforce optimization technology, hospitals can achieve this objective.

"While the true impact of healthcare reform on hospitals and providers remains to be seen, we do know for certain that if hospitals want to remain competitive and fiscally strong they will need to optimize operations," said Jim Holincheck, managing vice president at Gartner, Inc. "With labor costs being the largest financial obstacle for most hospitals, it makes good sense to start with workforce management technology."

In a whitepaper entitled, Talent Optimization—The Key To Making Healthcare Reform Work For Hospitals, Fingado outlines five initiatives that every hospital should implement in preparation for healthcare-reform-driven changes:

Controlling Overtime

Since more than 60% of a hospital's operating costs can be attributed to labor, reducing overtime can significantly lower a hospital's expenses. Many hospitals rely on overtime to meet staffing demands, and some have mandatory overtime policies to address the labor shortage. Overtime is not only a financial burden; it can have devastating results for patients as well. Studies have shown that the likelihood of a nurse making a mistake was three times higher when a shift was longer than 12.5 hours. Getting overtime under control can help protect hospitals, budgets and patients.

Nurse Retention

Nurse retention should be a top priority of hospitals. Recruiting and training nurses is an expensive endeavor. It typically costs hospitals $40,000 to hire and train one nurse, and up to 5% of operating expenses can be attributed to turnover costs. In addition to directly impacting a hospital's bottom line, turnover can jeopardize the stability of the nursing workforce and negatively impact the quality of care that patients receive.

Nurse empowerment can improve staff satisfaction and patient outcomes. The Magnet Recognition Program developed by the American Nurses Credentialing Center is a formal program that recognizes healthcare providers that develop and promote nursing excellence. That program yields tangible results, with Magnet-recognized hospitals realizing lower staff burnout rates, higher job satisfaction and lower patient mortality.

Right Caregiver, Right Time, Right Patient

In the era of healthcare reform, patient needs must drive nurse staffing if hospitals want to ensure delivery of the highest quality care. Over 25% of states have enacted safe staffing legislation, but it is the responsibility of the hospital to further ensure that the right nurse is assigned to the right patient. Staffing based on matching the patient's specific needs, including their family dynamics and any underlying health conditions, with a nurse's skill set, means that patient needs drive nurse staffing. This approach helps improve patient outcomes, creates more equitable workloads for nurses and improves the bottom line.

Managing a Flexible Workforce

Flexible solutions -- such as self-scheduling, reducing or eliminating overtime by relying more on contingent staffing, and using internal float pools -- are effective ways hospitals can appeal to nurses, increase staff satisfaction, and achieve better patient outcomes. These solutions can also have a positive impact on a hospital's bottom line.

Data-Driven Decisions

From productivity measurements to patient safety outcomes and staff satisfaction metrics, healthcare executives must be focused on tracking and managing complex variables. Hospitals that use business analytics to make data-driven staffing decisions can optimize their most valuable resource: their talent pool. Organizations that invest in a robust talent optimization solution, and encourage system usage and compliance, will be able to utilize real-time data to make better decisions regarding their valuable workforce teams.