The healthcare industry has always struggled with labor shortages. The magnitude of the current situation, however, is unlike anything we’ve seen before. While the word “unprecedented” has almost lost its meaning in the last few years, it remains accurate: today’s labor crisis, and the many circumstances both driving it and resulting from it, is an unparalleled challenge for providers, payers, and patients that will last the magnitude of years.
Just how bad is it? The statistics are staggering. Consider:
- 47% of healthcare workers plan to leave their positions by 20251
- 1 in 5 healthcare workers already quit their jobs2 during the COVID-19 pandemic
- 40% of healthcare employees are “somewhat likely”3 to leave their current job in three to six months
These numbers clearly demonstrate that for healthcare, the talk tracks are very real. The “Great Resignation” is not just a media cliche. Healthcare workers entered the field to help people, to make a difference, and to impact their communities. In the last few years, employees have been tasked with herculean workloads, never-ending shifts, and the emotional toll of carrying a sick and dying world on their shoulders from COVID-19. They are burnt out. They are disengaged. And providers can no longer simply hire away the problem.
Between a rock and a hard place: The challenges of today’s macroeconomic reality
The current labor shortage extends beyond having too few applicants for too many open positions. Instead, it is a fundamental macroeconomic shift that will take years, not months, to recover from.
The issues are myriad and interconnected. At a fundamental level, there are not enough people to fill the necessary roles required to run healthcare systems. Over 2 million positions4 are open in the U.S. healthcare industry – a 4x increase since 2020. There simply is not a path to hire that amount of staff and counteract the issues front and center. To exacerbate things, turnover is at an all-time high. The participation rate in the labor force has fallen dramatically; 28% of the population is not actively looking for work5. Why? After the pandemic, healthcare employees are frankly, “done.” Almost a third6 of frontline healthcare workers report that they have considered no longer working in healthcare.
As a result, hospitals can’t sustain patient volumes. They must limit services due to lack of staff, reducing inpatient, operating room, and ambulatory clinic capacities. These reductions lead to other operational impacts. Emergency department diversion times go up. Length of stay, room turnover times, and left without being seen rates all increase. Patient satisfaction and loyalty, accordingly, decrease – a major issue in an increasingly competitive landscape.
At the same time, providers face sky-high labor costs. Macro-level inflation combined with the forces of supply and demand have sent labor costs up by 25%7 at major hospitals this year. Even if/when the market cools, experts predict that labor expenses will be reset at a permanently higher level for the foreseeable future. This puts providers between the proverbial rock and hard place: if they lay off staff to decrease labor costs, they have fewer people to keep operations afloat and drive revenue. But if they remain fully staffed, their labor costs may outpace revenue growth and decimate margins. Hospital executives will be forced to make some difficult decisions in the coming months.
Payer challenges can complicate matters even further. They, too, face staffing shortages, and have margins to maintain. Medical Loss Ratios (MLR) plummeted during COVID-19 as claim windfalls from deferred procedures created a gap in claim volume. To maintain margins, payers have recently clamped down on medical utilization criterion to ease the bolus of returning patients and associated claim volume. In other words, denials are up. This further burdens frontline staff and cuts into hospital margins – already in their ninth month of straight decline8.
These complex dynamics aren’t going away. In order to not only survive but also sustain operations for their communities, healthcare providers must radically rethink how they operate. Getting back to “normal” staffing is not possible and frankly will not solve this unique problem. We can do better.
Work smarter with the right people plus the right technology
Hospitals can’t solve these challenges by hiring more people. They can’t get the people that they have to work any harder. Instead, they must work smarter by leveraging the right people in the right roles with the right technology.
This approach starts with skill-based hiring. Providers must access new talent sources by thinking beyond educational requirements. Especially in high-turnover, frontline positions, organizations can grow their potential labor pool by removing educational requirements that create an unnecessary barrier to in-demand jobs. Upskilling as well as cross-training are other strategies providers have implemented to get the maximum productivity out of a scarce staffing resource.
It’s critical to reduce unconscious bias in the recruiting process as well. Many historically underserved workers are overly represented in “gateway” occupations, and skills-based matching helps them shift to “destination” roles. Similarly, teams should continually assess current employees’ skill sets and facilitate internal moves to respond more quickly to new demands. Finally, creative retention strategies such as “stay interviews”, retention incentives, and flexible shifts have proven to keep organizations competitive in the healthcare work environment.
Even with these strategies, however, people can only take you so far. Healthcare leaders now recognize that attracting and retaining talent is only one element of a holistic strategy to navigate the staffing crisis and modernize revenue management. Providers must also look to their systems for new ways to eliminate redundancy, automate processes, and collaborate with their partners and vendors.
First, consolidate your revenue cycle management (RCM) footprint. The average hospital system has 20-40 solutions9 dedicated to various parts of RCM. This creates a tremendous amount of overlap, waste, and overhead, with tools that replicate functions, struggle to integrate, and lack comprehensive visibility into revenue management operations. Modern revenue cycle management solutions take an end-to-end approach10 that reduces complexity and inefficiency, so providers can increase revenue, reduce costs, expand cash collections, and ensure regulatory compliance.
How do end-to-end RCM tools achieve those benefits? In a word, automation. McKinsey estimates that healthcare has a technical potential for automation11 of about 36%. In other words, more than a third of processes that are currently undertaken by employees could be reallocated to technology. The use cases are nearly endless, including but not limited to:
- Prior authorization and eligibility checking
- Outpatient medical necessity
- Generating accurate price estimates
- Coding
- Clinical documentation integrity and claim workflows
- Utilization review
These solutions use artificial intelligence (AI), machine learning (ML), robotic process automation (RPA) and more to support employees in their day-to-day work. They not only make rote, repetitive processes faster, more efficient, and less error-prone, they enable staff to focus on higher-value work that promotes satisfaction and minimizes burnout. Technology can directly alleviate staffing shortages as well. According to a Deloitte report, a typical RPA implementation yields an average 20% FTE savings12.
A holistic approach to managing revenue during the labor crisis doesn’t stop with end-to-end technology. Providers must also evaluate their ecosystem of vendors, partners, and payers to streamline and optimize interactions. Hold vendors accountable by asking them to demonstrate value and ROI frequently, confidently, and eloquently. Collaborate with payers to minimize the back-and-forth that so frequently bogs down the system. Consider sharing EHR data in a democratized, strategic way with payers to minimize the administrative burden on both sides. Work together across the healthcare ecosystem to provide value-based care instead of gambling on how many patients will walk in the door next year.
The labor shortage in healthcare will continue to affect how providers run their businesses for years to come. It isn’t, however, a fatal diagnosis. By rethinking revenue management through a holistic lens of people supported by technology, healthcare organizations can protect their revenue, grow their margins, and most importantly, deliver meaningful outcomes for their patients, their families, and their communities.
Jonathan Wiik has over 25 years of healthcare experience in acute care, health IT and insurance settings. He started his career as a hospital transporter and served in clinical operations, patient access, billing, case management and many other roles at a large not-for-profit acute care hospital and prominent commercial payer before serving as Chief Revenue Officer.
In his current role as Vice President of Health Insights at FinThrive, he is responsible for leading healthcare data insights and research. Wiik works closely with the market and hospitals on industry best practices for revenue management. He is considered an expert in the industry for healthcare finance, legislation, revenue management and strategic transformation.
Wiik is an active advocate of legislative changes that evolve the healthcare industry. He’s the author of Healthcare Revolution: The Patient Is the New Payer, and Revenue Evolution: Helping Providers Get Paid in An Era of Uncertainty, which was released in early 2020. He frequently speaks as a thought leader at state and national events.
Wiik is the past President of Colorado HFMA, and previously served as a board member for the American College of Healthcare Executives (ACHE) and Colorado Association of Healthcare Executives (CAHE). He holds a bachelor’s degree in sports medicine and holds two master’s degrees in healthcare administration and business.
He enjoys spending time outdoors with his family in Colorado with his wife and two very energetic red – headed boys. He’s also a certified whitewater rafting guide instructor and an avid traveler, and has had a six month stay in Antarctica and a visit to the South Pole.
1 https://www.forbes.com/sites/jackkelly/2022/04/19/new-survey-shows-that-up-to-47-of-us-healthcare-workers-plan-to-leave-their-positions-by-2025/?sh=21006bfd7838
2 https://www.beckershospitalreview.com/workforce/if-1-in-5-healthcare-workers-have-quit-where-have-they-gone.html
3 https://www.mckinsey.com/business-functions/people-and-organizational-performance/our-insights/great-attrition-or-great-attraction-the-choice-is-yours?hlkid=86ee2dcf1d1146e1b1cb5edeb6c9fd34&hctky=13012303&hdpid=ffb802b9-8c0c-4bf7-9c1a-9940f1392d4a
4 https://www.bls.gov/jlt/data.htm
5 https://fred.stlouisfed.org/series/CIVPART
6 https://files.kff.org/attachment/Frontline%20Health%20Care%20Workers_Full%20Report_FINAL.pdf
7 https://www.kaufmanhall.com/sites/default/files/2022-05/KH-NHFR-Special-Report-2.pdf
8 https://www.kaufmanhall.com/sites/default/files/2022-11/KH-NHFR_10-2022.pdf
9 FinThrive Proprietary Survey
10 https://finthrive.com/our-platform
11 https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/where-machines-could-replace-humans-and-where-they-cant-yet
12 https://www2.deloitte.com/ro/en/pages/technology-media-and-telecommunications/articles/deloitte-global-rpa-survey.html