How to Start Trimming Labor Costs

Karen Minich-Pourshadi, for HealthLeaders Media , June 20, 2011

In addition to the scheduling issues, the Kronos analysis of Saint Luke's uncovered a smaller issue, time entry misuse. They found the clocks closest to the points of entry were getting the most traffic because employees were clocking in and then taking their time to arrive at their workstation.

Employees could take extra five to 10 minutes to change clothes, get coffee or do other non-work related activities, all costing the hospital unnecessarily. The few extra minutes in some instances even bumped an employee's time from regular pay to overtime pay, though the individual wasn't engaged in work. By simply relocating time clocks closer to the employees' actual workstations, the hospital could shave several minutes per day off of nonproductive time.

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The study also found that St. Luke's had a large number of manually entered time cards. Upon closer scrutiny, Knasel estimates that at least 7% of their employees may be overusing the manual timesheet option.

"The frequency of the manual editing of time cards tells us that either we are having some issues with people not understanding or it may be an opportunity where when someone is five minutes late they write it down in a log rather than clock in. That tells us we are probably overpaying people," says Knasel.

Though tracking an extra five minutes of employee time may seem knit picky, Knasel says the time adds up. For instance, if each person at a 200-employee hospital takes an extra 10 minutes on the clock daily (that's nearly an hour extra in their check each week. Not factoring in that it may cost additional in overtime pay, annualize that for employees using a low, $15 an hour wage and the cost is $780 a year per employee. If all 200 employees overcharge the hospital by 10 minutes a day, the hospital loses $156,000 annually. That figure is likely significantly higher when the variance in hourly wages is factored.

From a strategy standpoint, Leslie says, management ought to be aware of these seemingly small issues and must address them in action and in written policy. Writing them off as insignificant is a mistake.

Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
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