The Value Proposition of Nurse Staffing

Transcription

1 The Value Proposition of Nurse Staffing Presented by Mark Stagen Founder/CEO of Emerald Health Services Founder/President of the National Association of Travel Healthcare Organizations ( April 24, 2012

2 Introducing Mark Stagen Founder/CEO of Emerald Health Services Founded Emerald Health Services in 2002 Emerald Health Services ranked number 185 in Inc. Magazine's 2007 'Inc. 500 list' in the category of fastest growing companies in the United Mr. Stagen was awarded Ernst & Young's Entrepreneur Of The Year award in the Greater Los Angeles region in 2007 Founded the National Association of Travel Healthcare Organizations (NATHO) in

3 Today s Agenda A Look at Today s Healthcare Workforce Reviewing the KPMG U.S. Hospital Nursing Labor Costs Study Results Strategies for Optimizing the Nursing Workforce 3

4 Learning Objectives Understand how to successfully blend full-time and contingent labor to achieve financial and patient care goals. Develop proactive contingent staffing strategy to attract highest quality nurses. Leverage new research to understand the impact of contingent staffing on quality and patient outcomes. 4

5 State of the Healthcare Workforce Healthcare employment up 360,000 in last 12 months 1 The average age of a Registered Nurse is 47 2 Nurses looking at job changes 3 42% are not satisfied with their current job 24% plan to seek new employment if economic recovery continues 32% plan to take steps to leave nursing in the next 1-3 years 1 Bureau of Labor Statistics, 2 & 3 AMN Healthcare 2011 Survey of Registered Nurses 5

6 Proactive Planning Hospital executives need to be asking: How do I control my workforce expense budget most efficiently? 6

7 Equation for utilization of Permanent RNs vs. Temporary RNs has changed dramatically Full time wages for Permanent Staff Registered Nurses have increased 17% in the past 5 years 1. Bill rates for Temporary Registered Nurses have increased approximately 5% in the past 5 years. Permanent Staff RN costs are increasing THREE TIMES faster than temporary RN costs 2. KPMG conducted a 2011 Hospital Nursing Labor Cost study which concludes that the total cost of Permanent RN s is now comparable, and in some cases higher, than temporary RN s. 1 Bureau of Labor Statistics, 2 NATHO Member Data 7

8 Hospital Nursing Labor Costs Study Done by KPMG LLC in 2011 Responses from 120 Senior Executives across the U.S. Identified trends and benchmarks related to hospital nursing labor costs 8

9 Key Survey Findings All-in cost of a full-time direct care RN is $98,000/year on average Actual per hour cost is 176% of base hourly wage RN base wages can reach up to $75/hour The study does NOT address one of the biggest benefits of temporary nurses: FLEXIBILTY 9

10 Key Survey Findings Breakdown of costs: Payroll costs/wages 78% (base wages=57%) Non-productivity costs 12% Insurance costs 8% Recruiting costs 1% Other costs 1% NATHO provides a KPMG cost calculator to help facilities determine their loaded labor costs. 10

11 KPMG cost calculator 11

12 KPMG cost calculator 12

13 Key Survey Findings Cost of full-time nurse is comparable to supplemental nurse Survey respondents felt that 90:10 is the ideal ratio of full-time nurses to temporary nurses Key reasons to use temporary nurses: Seasonal needs (45%) Local nursing shortage (41%) Facility growth (28%) 13

14 What the Survey Results Suggest Cost of temporary staff is much lower than perceived Properly credentialed contingent staff do not lower quality of care; in fact, they can improve it Organizations with a strategic plan for using contingent staff positioned for long-term success 14

15 Temporary Healthcare Staffing Industry $8.4 billion industry 1 Surge in demand for travel nurses 25% growth last year 2 As the economy improves and RN s retire in greater numbers, nursing demand will grow rapidly. 1, 2 Staffing Industry Analysts, Staffing industry forecast: April update April 10,

16 A Fresh Perspective A question to examine: When does it make sense to utilize supplemental agency staff? 16

17 A Place for Contingent Staff Contingency labor should be a supplemental resource, not a survival strategy. Of all major industries (manufacturing, technology, communications, etc.) healthcare has by far the lowest % of temporary labor utilization. Recommended ratio is 90:10. Considering the cost and quality of temporary RN s is effectively the same as permanent staff RN s, the primary reasons for lower healthcare temporary labor utilization are now political and cultural. 17

18 Temporary Staff and Joint Commission Make sure that all of your nurse providers (both Travel and Per Diem) are Joint Commission certified. Red flag if agency is NOT Joint Commission certified Your facility is Joint Commission certified why not expect the same from your staffing agencies? 18

19 Travel vs. Per Diem Nurse Usage Bill rates for Travel Nurses vs. Per Diem nurses are now extremely similar in many regions. Per Diem nurses for sporadic staffing needs; travel nurses for consistent staffing needs. 19

20 Travel vs. Per Diem Nurse Usage Examine TOTAL nurse staffing utilization; optimize it based on consistent needs. Consistently using 4-6 per diem nurses every night in your ER? Consider bringing on board 2-3 Travel Nurses Internal float pools are often MORE expensive than agency RNs Use KPMG metrics to compare your float pool total, loaded hourly costs to your temporary RN bill rates. 20

21 Attracting More Travel Nurses Can be difficult to attract highest quality Travelers Economy is recovering Unemployment rate is declining Increasingly competitive market for nurses Make your job openings more attractive to Travelers Attract higher quality Travel Nurses, without raising bill rates An easy strategy: Make Traveler openings 26 weeks in length and 48 hours per week (26x48) 21

22 13 x 36 vs. 26 x 48 Why are Travel Job Orders primarily 13 weeks long and 36 hours per week? 13 week length of assignment was originally based on maternity Leave and minimum length of apartment leases Increase in nurse demand in the last 30 years makes 13 x 36 traditional job order less effective In a supply constrained environment, hospitals should be using scarce RN resources more efficiently By migrating the industry standard job order to 26 weeks long and 48 hours weekly hospitals benefit greatly

23 26x48 assignments cost hospitals the same dollar amount per hour If your contract currently allows a staffing agency to bill you overtime for the 4 th shift in a week, your agency should agree to not charge you that 4 th shift OT for any guaranteed 26x48 job orders. By not charging you any 4 th shift OT, your cost for the 4 th shift is the same as the 3 rd 23

24 An Example: Fewer Travelers, Same Number of Hours Staffed 4 nurses on assignment at 36 hours per week each (4 x 36 = 144 Total Hours) = 3 nurses on assignment at 48 hours per week each (3 x 48 = 144 Total Hours) 24

25 Flexibility and lower administrative costs with 26x48 assignments Hospitals can cancel the 26x48 assignments after 13 weeks Beginning with day 60 of the assignment, you can cancel any 26x48 assignment with 30 days written notice. This flexibility allows you to decide whether to keep Travelers longer than 13 weeks. 26x48 assignments reduce overhead and administrative costs: By bringing on board fewer travelers and keeping them longer, you reduce turnover and save on hard and soft costs by having to do fewer candidate screenings, interviews and orientations. 25

26 26x48 assignments will improve the quality of care for your patients Multiple studies have shown that continuity of care is one of the greatest determinates for quality of care. By having the same Travel Nurse work more shifts per week, for more weeks, you improve the continuity of care and thereby quality. 26

27 26x48 assignments will improve the quality of care for your patients 26x48 assignments attract the highest quality nurses: Agencies can offer nurses higher pay rates and more weekly hours In general, the higher quality Travelers prefer the highest paying assignments and thereby gravitate towards 26x48 assignments. 27

28 Optimizing Use of Contingent Staff Enterprise-wide strategy for use of agency labor Track agency labor consistently Develop a good relationship with your staffing agencies as they are your partner rather than your adversary Streamline workflows Work with high-quality healthcare staffing firms. All NATHO firms are Joint Commission certified and specialize in Travel Healthcare staffing 28

29 Thank you for your time If you would like to discuss any of these topics further, please do not hesitate to contact me: Mark Stagen Chief Executive Officer Emerald Health Services #