Decreased reimbursement, declining volumes, increased regulatory burden and pressure from the Centers for Medicare and Medicaid Services to reduce costs are forcing many hospitals and health systems to turn to layoffs to remain viable organizations. Labor expenses can account for more than 50 percent of a hospital's total expenses, according to Sherilynn Quist, workforce efficiency practice leader at management and consulting company Quorum Health Resources, making them a required target for cost reductions. However, employee cuts cause stress for both the organization and community. Ms. Quist shares seven ways to implement layoffs while preserving quality, safety, efficiency and strong community relations.
1. Prevention. The best policy for managing hospital labor is to prevent the need for massive layoffs or cuts. "The biggest thing hospitals can do is avoid the [layoff] situation by building a comprehensive strategy for labor management and consistently following through with disciplined accountability across the hospital," Ms. Quist says. A comprehensive labor management strategy will include things like a labor steering committee, management metrics to track productivity, overtime and premium pay policies and an up to date organizational position control.
2. Preparation. One of the first ways to prepare for employment reductions is to delineate the goals of layoffs. Understanding both short- and long-term goals can help hospitals determine which departments can be targeted for reductions to leave the best possible imprint on the organization and ensure patient care is not compromised during the process. Adequate preparation can also help hospitals avoid having to make multiple sets of layoffs over a short period of time, which can raise tension among staff due to uncertainty over when the layoffs will end. Ms. Quist says deciding where and to whom the cuts should occur is an analytical, methodical process, and should be governed by a tight preparation timeline.
3. Labor management process. Hospital leaders should examine the organization's labor management process when considering layoffs. She suggests executives "take a look at their labor productivity by department and [determine if] they have the right people in the right place doing the right things." The "right" things can be measured by benchmarking departments against similar organizations and determining if processes can be changed to become more efficient.
To assess employee performance on an individual basis, hospital leaders should work with the Human Resource department to develop a skills inventory list that includes objective criteria. The inventory should include important information about the employee such as length of employment, full- or part-time status and any patient complaints. Ratings from the skills inventory can provide guidance for which departments, positions and employees to consider for layoffs when they are necessary.
4. Department evaluations. One of the biggest mistakes hospitals can make when cutting jobs is establishing a fixed percentage cut in each department, according to Ms. Quist. This tactic may exacerbate staffing issues by eliminating positions in departments that are understaffed, which may jeopardize quality and patient safety. "It never works," Ms. Quist says. "You'll end up right back [where you started]." Instead, she suggests using benchmarks and thorough evaluations of departments to identify areas where cuts would have the least negative impact or have a positive impact. "Understand what departments [you] can go after without affecting clinical quality or patient satisfaction," Ms. Quist says.
5. Communication and empathy. Hospital leaders can ease relations between staff and executives through communication and empathy. "Be honest with people and present the facts. That's how you can make things a little bit easier on your staff," Ms. Quist says. Although many times hospitals are hesitant about announcing, it is important for leaders to get in front of the organization and explain why the hospital needs to cut positions and what process it is using to make those cuts. Hospitals should use the Human Resources department to help affected employees find other jobs when possible.
In addition to communicating to staff, leaders should also communicate and be empathetic with department managers, some of whom may have worked with a particular team for a long period of time, Ms. Quist says. "That manager is basically telling some of [his or her] friends that they're not going to have a job anymore," she says. "The support you can give to the management team is critical."
6. Third party. Using a third party to layoff employees may help hospital leaders reduce ill will between staff and management. "It removes the internal bias that the organization already has and essentially helps them to continue to operate in an environment where they are not the sole bad guys," Ms. Quist says. "Just make sure the outside party fits the culture of your organization."
7. Other options. Leaders can also ease the pain of laying off hospital workers by considering all possible options, such as decreases through attrition, early retirement and switching employees from full- to part-time. As part of leaders' preparation, they should consider the feasibility of offering options other than complete cuts to the workforce. "What you're really trying to do is lessen the hardship and heartache of the entire organization, while still achieving the organization’s goals" Ms. Quist says.
Learn more about Quorum Health Resources.
Related Articles on Hospital Employment:
10 Hospitals Creating Jobs, 9 Hospitals Cutting Jobs
Healthcare Employment Growth Slows; Hospital Employment Drops
Recruiting Statistics Show More Physicians Seeking Hospital Employment
1. Prevention. The best policy for managing hospital labor is to prevent the need for massive layoffs or cuts. "The biggest thing hospitals can do is avoid the [layoff] situation by building a comprehensive strategy for labor management and consistently following through with disciplined accountability across the hospital," Ms. Quist says. A comprehensive labor management strategy will include things like a labor steering committee, management metrics to track productivity, overtime and premium pay policies and an up to date organizational position control.
2. Preparation. One of the first ways to prepare for employment reductions is to delineate the goals of layoffs. Understanding both short- and long-term goals can help hospitals determine which departments can be targeted for reductions to leave the best possible imprint on the organization and ensure patient care is not compromised during the process. Adequate preparation can also help hospitals avoid having to make multiple sets of layoffs over a short period of time, which can raise tension among staff due to uncertainty over when the layoffs will end. Ms. Quist says deciding where and to whom the cuts should occur is an analytical, methodical process, and should be governed by a tight preparation timeline.
3. Labor management process. Hospital leaders should examine the organization's labor management process when considering layoffs. She suggests executives "take a look at their labor productivity by department and [determine if] they have the right people in the right place doing the right things." The "right" things can be measured by benchmarking departments against similar organizations and determining if processes can be changed to become more efficient.
To assess employee performance on an individual basis, hospital leaders should work with the Human Resource department to develop a skills inventory list that includes objective criteria. The inventory should include important information about the employee such as length of employment, full- or part-time status and any patient complaints. Ratings from the skills inventory can provide guidance for which departments, positions and employees to consider for layoffs when they are necessary.
4. Department evaluations. One of the biggest mistakes hospitals can make when cutting jobs is establishing a fixed percentage cut in each department, according to Ms. Quist. This tactic may exacerbate staffing issues by eliminating positions in departments that are understaffed, which may jeopardize quality and patient safety. "It never works," Ms. Quist says. "You'll end up right back [where you started]." Instead, she suggests using benchmarks and thorough evaluations of departments to identify areas where cuts would have the least negative impact or have a positive impact. "Understand what departments [you] can go after without affecting clinical quality or patient satisfaction," Ms. Quist says.
5. Communication and empathy. Hospital leaders can ease relations between staff and executives through communication and empathy. "Be honest with people and present the facts. That's how you can make things a little bit easier on your staff," Ms. Quist says. Although many times hospitals are hesitant about announcing, it is important for leaders to get in front of the organization and explain why the hospital needs to cut positions and what process it is using to make those cuts. Hospitals should use the Human Resources department to help affected employees find other jobs when possible.
In addition to communicating to staff, leaders should also communicate and be empathetic with department managers, some of whom may have worked with a particular team for a long period of time, Ms. Quist says. "That manager is basically telling some of [his or her] friends that they're not going to have a job anymore," she says. "The support you can give to the management team is critical."
6. Third party. Using a third party to layoff employees may help hospital leaders reduce ill will between staff and management. "It removes the internal bias that the organization already has and essentially helps them to continue to operate in an environment where they are not the sole bad guys," Ms. Quist says. "Just make sure the outside party fits the culture of your organization."
7. Other options. Leaders can also ease the pain of laying off hospital workers by considering all possible options, such as decreases through attrition, early retirement and switching employees from full- to part-time. As part of leaders' preparation, they should consider the feasibility of offering options other than complete cuts to the workforce. "What you're really trying to do is lessen the hardship and heartache of the entire organization, while still achieving the organization’s goals" Ms. Quist says.
Learn more about Quorum Health Resources.
Related Articles on Hospital Employment:
10 Hospitals Creating Jobs, 9 Hospitals Cutting Jobs
Healthcare Employment Growth Slows; Hospital Employment Drops
Recruiting Statistics Show More Physicians Seeking Hospital Employment