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4 Implications of Current Human Capital Trends in Healthcare

April 13, 2016

hiring-healthcare.jpgA few years ago, we provided a summary of key findings from the PwC Saratoga Human Capital Effectiveness Report. I just ran across the latest version of this useful document: PwC Saratoga’s 2013/2014 US Human Capital Effectiveness Report. It includes data from their most recent year of data collection and represents the single largest dataset of human capital metrics in the healthcare industry. Some interesting findings:

  1. Revenue per FTE - This comparison of total revenue to total FTEs provides a measure of employee productivity. Across all industries, including healthcare, it’s been improving since the recession. In healthcare, it makes sense because of evolving delivery models and continued work to use technology to improve efficiency and productivity. It’s interesting to note, though, that healthcare is a labor intensive service and the revenue per FTE is $192,304 – significantly lower than the “all industry” benchmark of $370,399.

  1. Turnover - Voluntary turnover continued to increase in 2012, now at 9.5% within the healthcare provider sector. (Compared to the 8.4% rate for all industries). With the improving economy, job opportunities are starting to increase, leading employees to explore alternative options. Turnover is specifically rising with nurses and nurse managers)

  1. Filling more positions internally - The healthcare provider sector has experienced a steady increase in filling vacancies with internal talent, demonstrating an increasing reliance on internal pipelines to fill roles. This creates opportunities for current employees, can reduce expenses and ease the onboarding process.

  1. Investment in HR - Healthcare is figuring out that HR is not just an administrative task, but a driver of organizational success. Accordingly, investment in HR is increasing but still significantly lower ($794/employee) than other industries ($1,923/employee). Given that healthcare is such a labor intensive industry, there is still a clear disconnect, here.

Implications for talent strategies:

  1. Looking for innovative, adaptable staff - Just being a solid technician/clinician, is no longer enough. We need to find candidates who will thrive in a culture that’s looking for ways to be more productive. Healthcare’s revenue/FTE will never compete for other industries which are far less labor intensive, but productivity – maintaining and improving quality of care is a real necessity. This means that you need to identify the candidates who, very specifically, are adaptable, innovative, can handle change, and will, pro-actively look for ways to improve the care delivery model and patient experience.

  2. A deliberate approach to turnover - Turnover is complicated. Pay scale, location, culture, supervisor effectiveness, and many other variables impact turnover. It must be addressed on several fronts but the best place to start is by implementing a selection system that targets the right candidates.

  3. Understand the leadership potential of your employees - Hospitals are notorious for promoting the best individual contributor to a manager role without an understanding of their potential. If we are going to look, more often, internally, for staff to fill management roles, then we need to more deliberately understand their potential and provide structured and thoughtful developmental opportunities.

  4. HR needs to continue to show its value - We’ve long been proponents of HR moving from an administrative/transactional role to a strategic one. Now that healthcare organizations are starting down this path, HR needs to show its value and tie its efforts to larger organizational goals. While turnover is an easy to measure metric, as is time to fill, HR needs to implement talent strategies that impact larger goals like the patient experience and the ability to build a dynamic, patient-centered culture, at all levels of the organization.

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Bryan Warren Bryan Warren is the President of J3 Personica, a consulting, assessment, training, and coaching firm, and a guest blogger for PSI. Bryan is an expert in progressive talent strategies, with a particular focus on leader and physician selection and development.