3 Creative Ways to Cut Nurse Labor Costs

Karen Minich-Pourshadi, for HealthLeaders Media , January 17, 2012

1. Reduce Overtime
Nash, a 38-year nursing veteran, was charged with the task of reducing overall nursing costs at her hospital. After some data analysis, it became clear that the excess use of overtime was inflating costs beyond the budgeted registered nurse average pay rate.

Getting the right staff at the right time was critical to controlling payroll costs, she told me.

At OSUMC, there are union requirements, such as giving overtime to senior nurses first. Although the organization couldn't change the nurse's union contract, managers could reduce the necessity for overtime.

This required a new staffing and scheduling system. In addition, Nash established a staffing pool to supplement staffing needs. She found immediate labor savings.

2. Use Supplemental Labor More Effectively
Pamela Hunt, MSN, RN, vice president of patient services and chief nursing executive at the Indiana Heart Hospital, told me that many healthcare leaders routinely budget for traveling or per diem nurses, but that much of that may be unnecessary. Although there are reasons to use supplemental nurse labor, daily census demands shouldn't be one of them, she says.

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1 comments on "3 Creative Ways to Cut Nurse Labor Costs"

Jackie Larson - Avantas (1/27/2012 at 11:20 AM)
Great article, Karen. Reducing overtime, using supplemental labor more effectively, and reducing turnover should be high on any hospital's to-do lists. Reducing overtime and effectively using supplemental labor (contingency staff) are both invariably tied to reducing turnover and the related issues of staff burnout, decreased morale, etc. We have found that there are no clear cut, across the board answers or strategies that can be applied to everyone. One example being the frequently quoted Workforce Planning goal of 85%. We've found no evidence that the 85% core staff number is an appropriate or financially responsible resource management model. That being said, tailored department and unit specific strategies are effective. The key to any effective change, i.e., changing your organization's culture, is getting buy-in across the entire spectrum of the organization. In order for any initiative to be effective you need managers and the C-Suite to enthusiastically be on the same page.




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