Think Tank Insights: Recalibrating The Response To Clinical Labor Shortages

Labor shortages have reached all-time highs, with Connex Community Members reporting vacancy rates ranging anywhere between 15% in less affected communities, to more than 40% in other areas.

While staffing has always been a concern, this dearth of talent presents a unique and unprecedented issue, driven in large part by wage-based poaching from travelers, insurance agencies, and other care providers. The issues being multifactorial, the only solution appears to be a holistic one: promoting culture, wellbeing, and career development to mitigate turnover; striking a balance between premium labor, increased automation, and labor optimization tools; and reevaluating labor deployment. Community Members met on February 8th for a think tank to discuss these challenges, shedding light on both their struggles with compensation, and the operational changes being made to rise to the occasion.

Compensation: the race to the bottom

While continually raising wages is undoubtedly unsustainable – and according to many different Members, that point of unsustainability was reached months ago – increases still play a critical role in maintaining a competitive edge. This is doubly true for the frontline, as the ever-rising costs of premium labor make relying on third-parties problematic. In fact, Members from various Connex sessions – this one included – have remarked that the costs of hiring staff at previously-ludicrous rates is still often cheaper than relying on locums. Rate increases are key to retention as well, with several Members explaining they’re reexamining their entire compensation structure to make sure existing employees aren’t drawn away by more lucrative offers. Unfortunately, this has given rise to two new challenges: wage compression, and increased neglect for back-office functions.

Compression is a multi-faceted challenge, and this session focused primarily on the ways in which it’s shaping merit increase strategies: the more rankand-file employees are compensated, the more leaders expect to see that trend reflected in merit increases. With costs as high as they are, many are considering reducing or pausing these, but doing so could severely impact leadership retention. A proactive communication strategy is necessary for managing leaders’ expectations, which must be informed by the organization’s risk tolerance: can blows to leadership satisfaction be reasonably soaked if the overarching financial realities require cuts?

A similar balancing act must be performed between front-end and back-end resource allocations. Most Providers reported prioritizing front-end labor funding, but the reality is that each dollar spent there carries the opportunity cost of fewer dollars for functions like IT and Revenue Cycle. These teams play a critical role that cannot be overstated, and in fact, their recent trend towards remote and hybrid arrangements make having competitive employee value propositions more important than ever before. Attendees encouraged frequent, interdepartmental communication between executives and senior leaders to identify the optimal budgetary strategy, spearheaded by the CFO based on their ability to approach the situation from a holistic perspective.

The same concept is being applied to nurse techs, enabling one Attendee to move from a 1:5 RN to patient ratio to a 1:8 RN/NT combo to patient ratio. Even the introduction of administrative resources like scribes can help control costs by shifting documentation volumes and allowing nurses to focus on top-of-license work.

Attendees shared several unique perspectives around recruitment and talent sourcing as well, such as working with PEOs to cast a wider net across multiple states for positions that can be remote like HR, IT, and Revenue Cycle. Recruitment dinners and events with senior nurses in the community have been fruitful for some, both as a means of locally advertising vacancies through word of mouth, and as a way to bring some individuals out of full or partial retirement.

Perhaps most intriguing was one Attendee’s work in creating an expanded, more advanced float pool within their system. In partnership with a vendor, they created a gig-style workforce that could be leveraged to flexibly cover vacancies ad hoc. This not only decreased their reliance on premium labor – and by extension, their expenses – but provided them a valuable recruiting and nurse retention tool. There are many nurses that are attracted to the traveler model not just for the pay, but for the flexibility it provides. By offering an internal alternative, they’re able to more effectively compete against those agencies.

Distance as a leadership strategy

While the case for remote and hybrid flexibility is clear for non-clinical roles, one Member provided some insight into how meaningful it was as a means of maximizing nursing leadership performance. They found that if left onsite, labor shortages too often pressured them into performing tactical work alongside their care teams. While this could be helpful in moderation for building relationships with staff, increasing communications, and improving nurse engagement, it too often pulled focus. By taking them out of the hospital, they could more easily focus on the leadership tasks before them. The distance has the potential to hurt collaboration, but the Member stressed how that can be easily corrected through intentional communication strategies and routine onsite visits to facilitate key meetings and projects. In order for this model to succeed, however, Providers must invest in the necessary tools for monitoring and managing performance at a distance, which could create a challenging barrier to entry.

An uncertain future

While some legislative bodies have attempted to address traveler concerns through recruitment grants and other emergency actions, Attendees reported that the state apparatus is also acting as a competitor. It’s not uncommon for recruiters to reach out to employed staff with opportunities for highly paid short-term projects with FEMA, for example, worsening wage inflation with one hand while they attempt to prevent it in some ways with the other. Attendees stressed this will continue to be a dynamically evolving issue that requires constant pivoting, but the underlying consensus was that something has to give. This crisis could quite possibly be the catalyst for major overhauls in how the healthcare industry operates on the whole, making it more important than ever before to build and maintain close connections with industry peers.