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Three Key Findings About Hospital Human Resources Effectiveness

November 10, 2011

The PwC Saratoga Hospital Consortium recently published its 2011/2012 US Human Capital Effectiveness Report. Key findings:

1) 90 Day Retention has Improved but First Year Turnover Still Lags Behind Other Industries.

This study evaluates “quality of hire” by looking at 90-day turnover rates and notes that many industries have seen an improvement due, primarily, to economic conditions.  In 2008, 1 in 3 hospital employees left within the first year, by 2010, it decreased to 26.2%, but this is still higher than the 22.7% experienced by other industries.Given the importance of the work being performed and the increasing pressure to provide a higher value of care, turnover at this level is unacceptable.  As a side note, we’d also argue that we need to go beyond 90-day turnover as the measure of “quality”.

2) Voluntary Turnover is Expected to Increase.

Looking at trends and economic projections, the report concludes that voluntary turnover is likely to increase through 2013 across all industries, including hospitals.  The report notes that retaining employees, particularly nurses, will require efforts to engage high performers.

We’d add that the most direct way to improve retention is to make sound hiring decisions in the first place.  Defining your culture, the competencies for success, and motivational fit factors, and then building them into a comprehensive hiring process is the most immediate way to reduce turnover.

3) Hospital investments in HR are lower than other business sectors.

The most alarming finding?  Hospitals’ investment in HR lags behind other industries.  Given the impact of turnover in healthcare (recruiting costs, the cost of agency staff, the impact on patient care, the impact on the hospital’s ability to fulfill its mission), this is shocking.

The report rightfully identifies a key source of the problem.  “HR is characterized as more transactional (than strategic) in nature.”  Nothing impacts a hospital’s performance more than the quality of its workforce, yet HR is often seen as filling an administrative function, rather than as central to the organization’s success strategy.

Hospitals are adopting solutions from other industries.  It’s about time they include the HR strategies that support these solutions - the same progressive HR approaches used by the Toyotas of the world.  As Mike Hoseus, co-author of Toyota Culture, the Heart and Soul of the Toyota Way, says in his best-seller, “Most companies miss seeing the blood flow of TPS – the human resource philosophies and strategies that make it work at Toyota.”

Bryan Warren Bryan Warren was the former Director of Healthcare Solutions at PSI. He was responsible for developing and promoting tools and services designed specifically for the unique challenges faced by healthcare organizations.