Buck Consultants Survey Indicates Growing Labor Shortage and Cost Containment Challenges in Healthcare Industry

NEW YORK -- Two out of three healthcare organizations are experiencing labor shortages, up from 55 percent a year ago, according to a new survey by Buck Consultants, a leading global human resources consulting firm.

One of out two organizations reported long-term vacancies of six months or more in key positions, with many of these shortages in specialized fields such as nursing, radiology and pharmacy. The survey findings also indicate that cost containment is a bothering problem, with three-quarters of the survey participants citing it as a key challenge. An increasing number of health care systems have downsized personnel (43 percent this year, an increase from 25 percent a year ago), while putting more emphasis on recruiting and retention efforts. More than 200 hospitals nationwide completed the survey.

"These findings portray an industry with some persistent and difficult issues," said David Hofrichter, principal and national practice leader of Buck's compensation consulting practice. "Healthcare providers are exploring a wide variety of solutions and realize that it takes many different initiatives to address skill shortages and high costs."

The survey findings indicate that healthcare providers increasingly embrace pay-for-performance, and annual incentives in particular, as a strategy to attract and retain talent. One-third of those surveyed increased variable compensation in the past two years to link rewards more closely with performance.

Most organizations report that their definition of "performance" is now more rigorous and quantifiable. With this greater discipline comes an increased willingness to pay below target bonuses -- or none at all -- for mediocre performance. "The corollary is the greater likelihood of above- target payouts for superior performance and employers hope that this flexibility will prove to be a useful retention/recruitment tool," Hofrichter said.

"Performance" increasingly includes measures of customer/patient satisfaction, along with the traditional income/revenue measures. Patient satisfaction is a performance metric for more than 80 percent of the survey participants, a 30-point increase from last year.

Besides downsizing and pay-for-performance, healthcare systems are exploring a number of other solutions to their staffing and fiscal concerns. These include:

-- 71% report increasing their marketing activities over the past year,

compared with 55% a year ago;

-- 76% are engaged in business process redesign and/or computer systems

integration projects;

-- Many participants are establishing new limits on their contributions

to employee benefit plans; 43%, for example, are asking for higher

employee contributions to group insurance plans, while others are

increasing employee co-payment and deductible provisions; and

-- Outsourcing of specialized functions is becoming a more attractive

alternative. One-third of participants, for example, now outsource

laundry services, more than double the 15% of a year ago.

For all the effort invested in finding answers to industry problems, the survey reveals a number of opportunities for further exploration. For example,

-- Just half of the participants use the Internet as an external

recruiting tool;

-- Only 14% use retention awards to reduce turnover in critical

positions; and

-- Achievement/spot awards are utilized by just 38% of the participants.

According to Roger McArt, manager of Buck's Survey Operations, "These results indicate that, while there was a great deal of industry effort to address staffing and cost containment issues, there are still many areas for creative exploration."

Source: PRNewswire