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Lead. Solve. Grow.
LABOR MANAGEMENT TRENDSA survey of provider executives about labor budgets,
staffing shortages, and operating expenses
August 2018
2 Labor Management Trends | August 2018
Summary
Overview
Budgets
Change in Staffing Shortages
Reducing Operating Expenses
Labor Management Initiatives
1
2
3
4
5
3 Labor Management Trends | August 2018
According to a Healthcare Financial
Management Association (HFMA)/Navigant
survey of 101 CFOs and operations executives,
over the next 12 months:
• Execs are predicting labor budget increases
and continued shortages of physicians,
nurses, and mental health providers.
• Leadership is targeting labor costs and
supply chain productivity improvements to
reduce hospital operating expense.
Overview
4 Labor Management Trends | August 2018
Labor Budget Growth
0%
14%8%
60%
14%
4%0%
10%
20%
30%
40%
50%
60%
70%
Decreasing >5.1%
Decreasing0.1% - 5%
No Change Increasing0.1% - 5%
Increasing5.1% - 10%
Increasing >10%
How is your organization's labor budget projected to change in the next 12 months?
*Survey of 101 chief financial officers, administration and operations executives
INCREASING
18% by more than 5%
78%
DECREASING
none more than 5%
14%
5 Labor Management Trends | August 2018
Staffing Shortage Volatility – Nurses & Physicians
Which choices best describe your current staffing shortage situations, compared to last year?
5% 6% 5%2%
4%2% 2%
0% 0% 0%
30%
37%
30%
21%18%
20% 18%
13%
8%10%
55%
30%
45%
64%60% 60%
64%
74%
80%
70%
9%
23%
17%
10%
15% 14%11% 12%
8%
15%
1%4% 3% 3% 2% 3%
5%1%
4% 4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Mental healthproviders
Nurses Physicians Laboratoryexperts
Care/Casemanagers
IT-relatedexperts
Coding /Revenue cycle
experts
Imagingexperts
Pharmacists Supportservices
Significantly Worse Somewhat Worse Unchanged Somewhat Better Significantly Better
*Survey of 101 chief financial officers, administration and operations executives
Nurse, physician shortages represent largest
increases, reductions
Nurses 43% say worse,
27% better
Physicians35% say worse,
20% better
6 Labor Management Trends | August 2018
Net Negative No Change Net Positive
(Better)
Staffing Shortage Volatility – Mental Health Providers
Staffing Shortages Compared to Last Year – Relative View
*Survey of 101 chief financial officers, administration and operations executives
Mental health provider
shortages may represent
direst situation
35% say worse,
just 10% better
Support services
Pharmacists
Imaging experts
Coding/Revenue cycle experts
IT-related experts
Care/Case managers
Laboratory experts
Physicians
Nurses
Mental health providers
7 Labor Management Trends | August 2018
7%3%
9%
17%21%
44%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Other Corporateservices
Clinicalvariation
Supply chain Purchasedservices
Laborexpense
Operating Expense Reduction Targets
What is your top priority area for reducing operating expenses over the next year?
Labor costs, supply
chain, and purchased
services represent the
top priority areas
*Survey of 101 chief financial officers, administration and operations executives
8 Labor Management Trends | August 2018
4.163.76
3.44 3.44 3.31 3.15
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
Productivityimprovement
Workflowredesign
Reducingskilled staffing
shortages
Leadershipdevelopment
Premium payreduction
Centralizedservices
Most Important Labor Management Initiatives
Rank the labor management initiatives your organization will focus on for improvement over the next 12 months.
Execs rank productivity
improvement and workflow
redesign as the main labor
management improvement
initiatives
*Survey of 101 chief financial officers, administration and operations executives. Respondents selected top 3 initiatives in order. First choice
assigned a value of 5, second a value of 4, third a value of 3, and unselected choices a value of 1.
9 Labor Management Trends | August 2018
“The need to more effectively manage labor by staffing to demand
will only intensify as operating margins continue to diminish, and
as the pressure to enhance care quality and efficiency increases.
These results magnify the need for provider leadership to
objectively analyze their current practices to better staff
departments and meet dynamic patient volumes.”
— Danielle Dyer, Managing Director, Navigant
10 Labor Management Trends | August 2018
“It’s not surprising that labor expense and efficiency continue to be
top of mind for CFOs. However, the survey highlights the need for
innovation in terms of transforming the cost structure of care
delivery. This is a complex challenge that requires a multi-
disciplinary approach to support high-quality patient care, and
financial sustainability.”
— Chuck Alsdurf, CPA, HFMA
11 Labor Management Trends | August 2018
“Staffing shortages are placing hospital leadership in a paradoxical
situation, both due to the economic theory of supply and demand
and the tendency to maintain surplus with shortages looming. As a
result, reducing labor costs has become even more difficult.
Leveraging predictive analytics, proactively matching staffing to
patient care demand, and more efficient workflows can help
providers address these challenges.”
— Vamshi Gunukula, Director, Navigant
12 Labor Management Trends | August 2018
Navigant Consulting, Inc. (NYSE: NCI) is a specialized, global professional services firm focused on
markets and clients facing transformational change and significant regulatory or legal pressures,
primarily in the energy, financial services, and healthcare industries. Navigant’s Healthcare practice
is composed of more than 500 consultants, former provider administrators, clinicians, and other
experts with decades of strategy, operational/clinical consulting, managed services, revenue cycle
management, and outsourcing experience. Experts collaborate with hospitals and health systems,
physician enterprises, payers, and government entities, providing enterprisewide strategic
development and performance-improvement solutions. More information about Navigant can be
found at navigant.com.
About Navigant