Issue link: https://beckershealthcare.uberflip.com/i/1468176
16 CFO / FINANCE Hospitals are bolstering wages. Is it sustainable? By Jakob Emerson, Kelly Gooch, Alia Paavola and Marissa Plescia A s workforce shortages worsened and the pandemic caused widespread burnout, many hospitals and health systems saw their labor expenses significantly rise as they were forced to pay more to attract and retain workers. Hospitals and health systems ramped up wag- es, provided hiring bonuses and offered dif- ferent benefits to ensure they could staff beds. However, it le us with one question: Are these rising labor expenses sustainable? e answer to the question appears to be mul- tifaceted and dependent on an organization's vantage point. For example, unions say hos- pitals can afford wage increases and bonuses, while CFOs argue that there needs to be more sustainable methods. Northwell Health CFO Michele Cusack lays it out very clearly: "Growth in wages more than revenue trends is not sustainable." Moving to a more sustainable method At the start of the workforce shortage, hospi- tals and health systems turned to more im- mediate retention and recruitment efforts: bonuses and pay increases, according to Kaufman Hall Senior Vice President erese Fitzpatrick, PhD, RN, and Managing Director Dawn Samaris. However, now that the staff- ing shortage has stabilized in some parts of the country — though not all — hospitals are turning to more strategic, long-term strategies to ease the labor shortage, they said. "Initially, there was a scramble to find bonus structures and increase everybody's pay," Ms. Samaris said. "Now, folks are stepping back and saying, 'Well, that can't be the only tool. We've got to have other options available.' " New Hyde Park, N.Y.-based Northwell Health, for example, has been focused on bending this unsustainable cost curve of rising labor ex- penses "by focusing on culture, our mission and ensuring that the employees know and recognize their contribution to their commu- nities and that they are special and are making a difference," Ms. Cusack told Becker's Hospi- tal Review. For Andrew Gaasch, CFO of Centennial, Colo.-based Centura Health, a health system with about 21,000 employees, recruitment and retention is about remaining competitive with the market when it comes to pay, while also keeping the sustainability of the organization in mind. "at's paramount for us to be able to deliv- er high-quality, whole-person care across all of our flourishing communities in Colorado and western Kansas," Mr. Gaasch said. "At the same time, we have to maintain a healthy margin to be able to continue to invest in our communities, both from a human capital and physical capital perspective. It really is a tight- rope between the two." He said his health system's motto around this is, "Save where we can to spend where we should." "We need to be able to spend and should be able to spend on employees and in our com- munities," Mr. Gaasch said. Are hiring bonuses in healthcare here to stay? In the fall, Centura Health offered a mar- ket bonus for bedside registered nurses. e $15,000 one-time payment, which was tied to a certain time commitment to the health system, helped reduce RN turnover from 41 percent last October to 28 percent at the end of March. "We took a moment and took a step back and said, 'We have to do something more creative than just adding more dollars just to the av- erage hourly rate. We need to do something different.' So that's why we approached the market bonus for bedside caregivers," Mr. Gaasch said. About 2,500 employees accepted the market bonus and of those, only 19 have le Centu- ra Health. About 850 employees turned down the market bonus and of those, 137 have le Centura Health. One thing that is staying at Centura Health: sign-on bonuses for hard-to-fill positions. Mr. Gaasch said there are different tiers of el- igibility around the sign-on bonuses, which are based on factors such as market conditions and vacancy rates. e range for sign-on bo- nuses at Centura Health is $7,500 to $20,000. Since the start of 2021 to the end of March, Centura Health has invested more than $200 million in additional employee compensation and benefits. Additionally, the health system announced another $31 million investment in employees through market adjustments and benefits including student loan assistance and child care assistance. "We're really trying to listen to the needs of our incredible people because it's not just about base wages, it's about the total package and it's about benefits," Mr. Gaasch said. Unions: Hiring bonuses are great, but more long-term change is needed One of the health systems that offered major sign-on incentives is Providence in Renton, Wash. In September, the health system an- nounced $1,000 bonuses for all caregivers, referral bonuses of up to $7,500 and sign-on bonuses for 17,000 positions. e Providence perks were designed "to re- ward, retain and recruit," amid a lack of staff and rising numbers of COVID-19 patients. ough the perks may be successful at attract- ing more workers, Tyler Kissinger with the National Union of Healthcare Workers says those workers won't stay for long unless un- derlying issues are addressed. "Hospitals were chronically understaffed be- fore the pandemic. Short-term bonus pro- grams might help get more workers hired, but they won't stay if the hospital is chronically understaffed and their patients aren't getting the care they need," Mr. Kissinger said. Mr. Kissinger is an organizing coordinator with the NUHW in Northern California, focused on Providence hospitals located in Sonoma and Napa counties. He believes in- centives like sign-on and referral bonuses only go so far, and improving the workplace itself is key to attracting and retaining employees. "e only way to sustainably attract and retain workers is to increase staffing to sustainable levels so healthcare workers don't burn out trying to do everything they can to care for their patients," Mr. Kissinger said. "Healthcare workers get into this field because they want to help people get better. When they see hospitals skimp on staffing, while paying their CEOs millions of dollars, it's disheartening, and it results in people leaving." e same week Providence announced their incentive programs, a Gallagher survey re- ported a 75 percent increase in average hourly rates for agency RNs nationwide, rising from $75 pre-pandemic to more than $130 in Sep- tember 2021. Despite the major increase in pay, the national RN vacancy rate stood at 19 percent, more than double pre-pandemic levels. To find enough nurses, 75 percent of healthcare organizations are turning to agency and travel RN companies. "We're seeing major healthcare chains like Providence rely more heavily on travelers