Becker's Hospital Review

34 CHRO A structural shift in hospital labor strategy By Kelly Gooch T he hospital staffing emergency has cooled from its pandemic peak, but labor pressure has not disappeared — it has shied. Rather than trying to out-hire shortages or outbid competitors for scarce talent, more systems are treating workforce strain as a strategic pivot point: redesigning work, cutting contract labor and using technology to expand capacity. at shi is showing up in measurable ways. Renton, Wash.- based Providence has reduced agency use, cutting what one leader described as "unhelpful" labor costs such as excessive overtime and unsustainable contingent staffing. Sacramento, Calif.-based Sutter Health returned more than 1 million hours of work in 2024 and another 1.4 million hours in 2025 through digital automation, AI- powered tools, enhanced technology and streamlined workflows. Chicago-based CommonSpirit Health launched an AI Workforce Readiness Academy to support reskilling and upskilling for technology-enabled roles. e backdrop is a cost environment that remains tight, even as labor cost growth has slowed from pandemic-era peaks. Labor expenses rose 4% year over year and 5% year to date through November 2025, according to Kaufman Hall's "National Hospital Flash Report," released Jan. 15. Kaufman Hall data from late 2025 show labor expenses continuing to rise across regions and hospital sizes. Executives say the response to this labor pressure is increasingly less about adding headcount and more about returning time to the workforce already in place through internal staffing flexibility, more disciplined workforce planning and technology that reduces administrative burden. DeLinda Washington, senior vice president and chief people officer of Bloomington, Minn.-based HealthPartners, said labor strategy is also being shaped by broader pressures, including Medicaid and Medicare reimbursement rates that lag behind the true cost of care and sustained high demand for services and medications. "We are hit on both sides," she said, noting HealthPartners, a health system and insurance company, operates both care delivery and a health plan. "We have to rethink how we deploy, attract and develop our workforce. "To address cost realities in how we deploy labor, we are intentionally investing to sustain long-term engagement and productivity. e long term is really important to us." Becker's spoke with Greg Till, chief people officer of Providence; Wayne Frangesch, senior vice president and chief human resources officer of Scottsdale, Ariz.-based HonorHealth; and Ms. Washington about how health systems are rethinking labor strategy for 2026. Reducing dependency on travelers Many health systems have scaled back agency contracts in response to stabilizing workforce markets and the elevated labor costs that emerged during the pandemic — oen by investing in internal staffing pools and more flexible deployment models. Over the past several years, Providence has significantly reduced its reliance on contingent labor. e system reported that agency spending for the fiscal year ended Dec. 31, 2024, was 70% lower than its 2022 peak and that contract labor spend decreased 33% for the Image Credit: Adobe Stock

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