6 Tips to Reach the Benchmark for Hospital Staffing & Labor Costs

Salary and benefits at an efficiently run hospital make up 35-42 percent of net patient revenue, according to Jim Rolfe, managing director of transaction services at VMG Health in Dallas.

Hospitals where salary and benefits make up a much higher percentage should consider the following steps:

1. Make up a business plan. Management needs to take a detailed look at every single department and construct a business plan for the reduction of salaries for the entire hospital.

2. Examine retirement and other benefits. Postpone benefits where possible.

3. Consider flex time. Putting staff on shorter hours means fewer of them may need to be laid off, which could help employee morale.

4. Initiate layoffs. Pinpoint departments where staff utilization is not optimized. Staff levels not coinciding with the level of patient activity should be examined and adjusted.

5. Make departments more efficient. This is a longer-term approach involving the examination of workflow in key departments such as the OR and ED and devising new strategies.

6. Review labor costs regularly. A monthly examination will help you keep apprised of appropriate staffing levels.

Reach Mr. Rolfe at rolfe@vmghealth.com. Learn more about VMG Health at www.vmghealth.com.