An Arena Briefing - Quo Vadimus Communications · 2019-02-12 · An Arena Briefing: WORKFORCE...

An Arena Briefing: WORKFORCE STRATEGY COMES TO THE FORE

An Arena Briefing:WORKFORCE STRATEGY COMES TO THE FORE

Finding a new way to hire is mission critical for health leaders


An Arena Briefing:

WORKFORCE STRATEGY COMES TO THE FOREFinding a new way to hire is mission critical for health leaders

SUMMARYChanges under way in health care – the shift from volume to value, declining reimbursement, the con-solidation of organizations into larger health systems and the focus on population health – are pushing se-nior leaders to become more strategic in their hiring and retention policies, often for the first time. While the industry has suffered high employee turnover for years, the accelerating retirement of the baby boom generation and a far smaller cohort of young peo-ple entering the job market make workforce strate-gy a demographic imperative. The hiring challenge is made even more complicated as organizations seek to fill new kinds of jobs needed to carry out the man-dates of population health and accountable care.

Health care organizations are already using data and predictive analytics to predict patient outcomes, in-cluding hospital readmissions and hospital-acquired conditions. A small but growing number of institu-tions are applying these same innovative tools in their hiring practices, gathering a large amount of data about people and utilizing analytics and ma-chine learning to predict who is the best fit for each position. “Big data” replaces what has been informed guesswork in the hiring process with science-based analysis, ensuring that employees stay a reasonable length of time and help to contribute to an optimized health care delivery system.

THE SCALE OF THE CHALLENGEThe workforce offers one of the greatest areas of strategic leverage for health care leaders, both in terms of improving personalized, patient-centered care for populations, and achieving the kinds of ef-ficiencies needed to survive in the new health care paradigm. The share of revenue spent on wages, benefits and contract labor by health care organi-zations amounts to roughly half, Commonwealth Fund studies show.

For many leaders, this will be a new territory. While an overwhelming majority (85.7%) of organizations view workforce retention as a “key strategic im-perative,” it is not evident in operational prac-tice/planning. According to a recent study by NSI Nursing Solutions, fewer than half of all hospitals have formal retention strategies. Organizations are not in the driver’s seat; the health care job mar-ket has never been more supply-driven. According to the U.S. Bureau of Labor Statistics (BLS), from 2007 to 2017 health care added 2.5 million jobs and accounted for 35% of total job growth, more than any other industry. The health care unemployment rate hit 2.5% in April 2017 – the lowest level in more than 10 years. Economists consider full em-ployment to be anything below 4%, which means almost everyone in the industry who wants work has it.


Despite countless initiatives over the years, health care remains plagued by high turnover. An analysis by Compdata Surveys of data from 11,000 health care employers with more than 11 million employ-ees found the total average turnover among health care jobs in 2017 was 20.6%. That compares with earlier Compdata surveys finding turnover of 19.9% in 2016, 17.7% in 2014 and 15.6% in 2010. Among all industries, health care turnover now ranks second to only hospitality; in 2010, it ranked fifth.

Nurses, who have the most hands-on role in pa-tient care and whose work directly impacts safe-ty, quality and patient satisfaction, also change jobs often. The turnover rate for bedside RNs in 2016 was 14.6%, the NSI survey found. Few health systems formally track the direct costs related to employee churn, such as recruitment, training and overtime pay, let alone the indirect costs, such as loss of productivity, added pressure on remaining staff, and the impact on the quality and safety of patient care.

A study in the Journal of Nursing Administration found that it may cost anywhere from $97,216 to $104,440 in today’s dollars to replace a nurse, in-cluding pre-hire recruitment and elements such as unstaffed beds, overtime and losses in productivi-ty. Afterward, onboarding and training require ad-ditional time and money.

The future outlook is even more daunting. Half of nurses are aged 50 or older, and more than 1 million of them are expected to retire in the next decade. The BLS projects the need for 649,100 replacement nurses by 2024, which combined with the needed growth in the nursing ranks would create 1.09 mil-lion job openings. A 2015 study by the American Association of Medical Colleges projects that the country will face a shortage of 46,000-90,000 phy-sicians by 2025.

NEW CHALLENGES POST REFORMHealth reform is exacerbating the workforce prob-lem. There are a number of emerging roles that re-quire very different skill sets, and those who hire people to fill them will be on a steep learning curve.

Some of these positions include: • Patient navigators, who have become more

prominent at both primary care and specialty practices as a resource for patients winding their way through an often complex and confusing health care system.

• Health educators, who teach and promote com-munity wellness; and community health work-ers, serve as a bridge link between health/social services and the community to facilitate access to services and improve the quality and cultural competence of service delivery. According to the BLS, the number of health educators and com-munity health workers is expected to grow by 15,600, or about 13%, from 2014 to 2024. The field lacks unified training and employment standards. Many community health workers have less than

a four-year college degree and often get the job by being community activists.

• Telehealth. Skill in virtual care is also becoming more important as telehealth gains momentum in the drive to enhance the value of care. Everyone from physicians to medical technicians is being recruited to these jobs. Erin Fraher, PhD, is direc-tor of the Carolina Health Workforce Research Center, one of five national health workforce re-search centers funded by the Health Resources and Services Administration to provide impartial, policy-relevant research that answers the ques-tion: What health care workforce is needed to ensure access to high quality, efficient health care for the U.S. population? She writes that thegrowth in new models of care, such as patient centered


medical homes, accountable care organizations and clinically integrated networks, shows the old approaches to recruiting, evaluating and manag-ing talent are no longer working.

Her research found: • Workers with the right skills and training are inte-

gral to the ability of new models of care to con-strain costs and improve care.

• There is plenty of enthusiasm for new models of care among senior leaders but limited understanding of what roles are needed and how different skill mix configurations can meet these needs in different geographies and practice settings.

• New models of care may not be showing expect-ed outcomes because the workforce has not yet been etrained to take on new roles.

As the Centers for Medicare & Medicaid Services put it in its request for proposals for the Health Care Innovation Challenge in 2011: “A transformed health care system will require a transformed workforce. The people who will support health system transformation for communities and pop-ulations will require different knowledge and skills ... in prevention, care coordination, care process re-engineering, dissemination of best practices, team-based care, continuous quality improvement and the use of data.”

How We Got HereEnsuring the health care workforce is comprised of the right people with the right aptitude and the will-ingness to stay in their role for an appropriate tenure is no easy feat. The challenge lies in the difficulty of sizing up a candidate based on an application, re-sume, interview and references, each of which is pre-sented in the most positive way possible.

Perhaps the best evidence for the need to change hiring protocols is health care’s first-year turnover rate, which stood at 28.3% on average in one study, significantly higher than the norm in other indus-tries. When an employee does not stay at an in-stitution for even a year, this is usually categorized as a “bad hire” – a candidate who was a poor fit for the position in the first place. This measure tends to be a strong barometer of the success of an organi-zation’s approach to talent acquisition, onboarding and assimilation. “Unfortunately, there is no industry that is more ar-chaic in recruiting and talent management than health care. The approach and overall attitude found in many health care recruiting functions is often anti-quated,” writes Nadia Gruzd, vice president and chief recruitment and retention officer of All Med Search, a recruiting firm. As just one example, she cites a tendency to leave hiring to the human resources department, which may not be up to speed on the kind of talent needed or the cultural fit of a particular department.

Claudio Fernández-Aráoz, a senior adviser at Egon Zehnder International, a global executive search firm, and the author of Great People Decisions and The Definitive Guide to Recruiting in Good Times and Bad, writes that we are hardwired to hire peo-ple who are like us or make us comfortable — but that does not always yield the best candidate. In fact, managers need to be aware of what he calls “typical unconscious psychological traps,” such as overrat-ing capability or making snap judgments. The Gallup Organization has conducted research in behavioral economics that shows that managers are not good at predicting who will be the right people for the right jobs.

“Unconscious bias – something all people have – crops up in the everyday decisions of life. And,


unfortunately, bias can manifest at work leading to a myopic, homogenous workplace,” Gallup found.

Staffing shortages are top of mind for C-suite exec-utives, with 41% of those surveyed for the Fall 2016 Premier Inc. Economic Outlook calling it their biggest concern and the issue that will have the most signif-icant impact on their system’s ability to deliver care (See chart).

The Premier study also found that 72% of respon-dents said they think that the current supply of pri-mary care physicians will not meet their needs over the next three years, and 51% don’t have enough nurse practitioners, physicians and other health care extenders. A NEW SOLUTION

With the mainstreaming of Big Data and predic-tive analytics, the opportunity to make data-driv-en workforce decisions to build the right team is at hand. Leveraging large amounts of data enables an

organization to objectively evaluate a huge variety of data points about thousands of people – gain-ing valuable signals from patterns in the data in-stead of our emotional, subjective and subconscious perceptions.

A meta-analysis of 17 studies of applicant evalua-tions, first published in 2013 in the Journal of Applied Psychology, found that a simple equation outper-formed human decisions by at least 25%. The effect holds in any situation with a large number of candi-dates, regardless of whether the job is on the front line, in middle management, or the C-suite.

Moreover, the research looked at studies in which the people making the call were highly familiar with the organization and often had more information about the applicants than was included in the equation. “The problem is that people are easily distracted by things that might be only marginally relevant, and they use information inconsistently,” the study authors wrote in a later piece in the Harvard Business Review. “They can be thrown off course by such inconsequential

Factors affecting the ability to deliver careSource: Premier

Staffing shortages

Health reform

Innovation in population health

Other

Emerging technologies

Drug shortages

40%

24%

20%

10%


bits of data as applicants’ compliments or remarks on arbitrary topics—thus inadvertently undoing a lot of the work that went into establishing parameters for the job and collecting applicants’ data. So they’d be better off leaving selection to the machines.”

A solution brought to market by Arena employs this objective, data-driven approach. Arena collects and analyzes vast amounts of application, interaction, and third-party data and matches it to financial and patient outcome data from each client to generate customized predictions for each role in each depart-ment in each location. Arena can measure these at-tributes independently of judgment and hypothesis, in order to develop and apply models that align most closely with success and longevity on the job.

Many times, the outcomes will be a surprise. One or-ganization asked applicants if they had ever been a leader in a community organization. They did so be-cause they believed community leaders made better employees. This client had an acute care facility on one side of the street and a long-term care facility on the other. It hired clinical nurse assistants with the same job description in both and it turned out that leaders in a community organization were more like-ly to stay longer in the acute care setting and leave

earlier in the long-term care setting. As can be seen in the table above, this solution drastically reduces many of the cost centers affected by high turnover and returns significant savings to the bottom line.

ConclusionChanges under way in health care – the shift from volume to value, consolidation of organizations into larger health systems, and new forms of care delivery outside hospital walls – are calling into question the current practices for recruiting, retaining and training health workers.

Many providers are not monitoring these expenses effectively, let alone taking steps to address turnover and vacancies. In fact, the response is often to spend more on overtime, agency staff and travel nurses – costly strategies that can lead to issues with quality, safety, physician satisfaction, employee satisfaction and the patient experience.

Data analytics and predictive modeling offer a means of assessing current and prospective employees based on what has actually worked before as well as what might happen in the future. It replaces guess-work and wishful thinking with evidence-based sci-ence that has already worked in hundreds of facilities.

Factors affecting the ability to deliver careSource: Premier

The ROI of solving turnover in a five-hospital nonprofit health system

The challenge The result of using data analytics to predict best hires

Number of employees >15,000 Three times the RN applicant flow

Average turnover 12.8% 34%

First-year employee turnover in critical role departments, including nursing

18.9% 40% reduction in hiring manager time spent on recruitment

Annual staffing agency and overtime costs

$7.6 million $4.3 million annual savings


Notes: 1. Glied S, Ma S, and Solis-Roman C. “Where the Money Goes: The Evolving Expenses of the U.S. Health Care

System.” Health Aff 2016 35(7):1197-1203 2. NSI Nursing Solutions Inc. “2017 National Health Care Retention & RN Staffing Report.” Accessed at nsinurs-

ingsolutions.com/Files/assets/library/retention-institute/NationalHealthcareRNRetentionReport2017.pdf

3. “Pay, Turnover and Recruitment, Oh My! 2017 Healthcare Results Now Available.” Compdata. July 2017. Accessed at blog.compdatasurveys.com/2017-healthcare-results-now-available.

4. Jones CB. “Revisiting Nurse Turnover Costs: Adjusting for Inflation.” J Nurs Adm. 2008 38(1):11-8

5. National Council of State Boards of Nursing, National Forum of State Nursing Workforce Centers. “National Nursing Workforce Survey 2015.” Accessed at ncsbn.org/workforce.htm

6. Fraher EP. How Can We Transform the Workforce to Meet the Needs of a Transformed Health System? Keynote presentation, AAMA Annual Conference. September 18, 2015

7. PwC Saratoga. “2012/2013 US human capital effectiveness report.” Accessed at content.hcpro.com/pdf/content/285680.pdf

8. Gruzd N. “Attracting, Onboarding and Retaining Employees within the Healthcare Industry.” January 2016.

Accessed at linkedin.com/pulse/attracting-onboarding-retaining-employees-within-healthcare-gruzd/

9. Kuncel NR, Klieger DM, et al. Mechanical versus clinical data combination in selection and admissions de-cisions: A meta-analysis. Journal of Applied Psychology. 2013 98(6), 1060-1072.

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An Arena Briefing - Quo Vadimus Communications · 2019-02-12 · An Arena Briefing: WORKFORCE...

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