Tuesday, March 16, 2010

Addressing Hospital Labor Costs

A recent study by the American Hospital Association has confirmed some things that we already knew about rising healthcare costs: Growth in labor costs is the most important single factor driving up the cost of hospital care. The good news is that hospital cost growth is at a slower rate than all other sectors of healthcare. The bad news is that hospitals already account for one third of all healthcare costs. And labor expenses for hospitals (salaries and benefits) make up two thirds of their total costs. So addressing this issue remains a major priority.

In addition, hospitals continue to face shortages of needed specialties like nurses, pharmacists and other technicians. Growth in services combined with retirement of baby boomer workers are creating more openings than there are new workers. This supply and demand scenario puts hospitals under further cost pressures. Now to further compound the situation, hospitals will certainly be facing declining reimbursement in the future no matter what happens in the next few weeks with President Obama's healthcare reform plan.

There are things that hospitals can still do to reduce labor costs without sacrificing quality of care or customer service. In fact we routinely find in hospitals we work with that improving care can also reduce overall costs. There is certainly more to this than can be shared on a single blog post. If you are interested in getting more information on addressing labor costs in your hospital, I invite you to join us for a free webinar entitled "Preparing Your Hospital for the Impact of Healthcare Reform". This will be presented tomorrow, March 17 at 1:15pm CST and repeated again on March 31. To sign up, just go to the website for Compirion Healthcare Solutions at compirion.com. Click on the Websites tab and you will find this webinar. I will share specific action steps that hospitals can take to reduce costs and give benchmarks for top performing hospitals.

With all of the threats that hospitals are facing in the future, it is incumbant upon us to be operating as efficiently as possible.

More on this later.

Mark Brodeur

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