A new study takes a closer look at how staffing impacts profitability in hospitals.
By the Editors
Earlier this year, HRO Today produced a report sponsored by Clinical Magnet called HR in the ER. The study explored the link between human resources and business outcomes in hospitals and health systems.
As a follow up, Clinical Magnet once again partnered HRO Today to take a closer look at staffing this time around. The research focused on staffing levels—one of the biggest costs of any medical center—to determine what profitable hospitals do differently compared to those struggling to maintain profitability. The results from study outline specific steps for success in achieving profitablity, and it should be noted that these steps are actually different for non-profit hospitals and for-profit hospitals
The full results of HR in the OR will be available in October, but here are some highlights:
Anyone working in a hospital or medical center should ask themselves this: Is staying profitable important to the hospital/medical center? Study findings consistently illustrate that those who focus on profitability in addition to patient care have different priorities than those who do not. Those with a profitability focus tend to:
• Have a commitment to increasing revenue through
higher occupancy rate and focus on revenue as much
as cost reduction.
• Are actively looking to increase staffing as part of organization objectives.
• Agree that larger staffing budget leads to higher occupancy rate.
• Consider revenue generation as important as reducing costs.
• Maintain staffing levels approaching 90 percent, which leads to greater success in patient care, maximized revenue potential and cost reduction, and meeting mandates and government requirements.
Study participants were asked if increasing the bed occupancy rate increases revenue for the hospital. Those respondents from hospitals with a profitability focus agreed that a higher occupancy rate increased revenue, significantly more often than those without a profitability focus (87.9 percent versus 60.7 percent). The conclusion is that hospitals who focus on maintaining profitability look to increase occupancy rate as part of their objectives.
Many of the best practices on managing hospital operations center around cost reduction and pay very little attention to revenue generation. To see if cost reduction is a primary focus for hospitals, respondents were asked if reducing costs was as important as increasing revenue for their hospital. The findings suggested that profitable hospitals report both reducing cost and increasing revenues as two main priorities of nearly equal importance (87.1 percent). On the other hand, hospitals without a profitably focus are significantly less likely to focus on revenue as they are on reducing cost (42.9 percent).
High occupancy rates are critical to maintaining hospital profitability. But higher occupancy also means more staff is required. Study participants were then asked what impact a larger staffing budget has on their organization’s ability to increase occupancy rates.
Once again, a clear distinction is made between those with a profitability focus and those without. In fact, 79.1 percent of those with a profitability focus felt that higher levels of staffing would increase their ability to achieve higher occupancy rate, with only 57.1 percent of those in hospitals without a profitability focus agreeing—a significant difference.
The question that remains: What is the optimal level of staffing to make a hospital the most profitable? Again, those with a profitability focus indicated a higher level of staffing needed for optimal profitability than those without that focus, 87 percent versus 81 percent respectively.
Every hospital has objectives beyond profitability. Study participants were asked how successful they are in maintaining optimal staffing levels to address a series of objectives. Interestingly, those with a focus on profitability were more successful in achieving all the objectives measured.
Nearly 9 out of 10 of hospitals with a profitably focus felt they successfully maintained the right staffing levels to optimize patient care, versus only about 6 out of 10 of those without a profitably focus.
There was a similar finding for other objectives as well. Successfully maintaining staffing levels correlated to success in optimizing revenue potential, cost reduction, and meeting government requirements.