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The Cost of the Healthcare Workforce

Updated on December 9, 2019

Labor Force Costs

The Cost of the Healthcare Workforce

Maintaining a viable and productive workforce within the surgical healthcare sector requires more than the ability to train an employee to complete their job functions. The well-being of the employee as well as the cultural, ethical, financial, and social experiences of the employees must be considered to ensure the workforce is content with their standing in the company. This approach takes time, effort, and vigilance which all create costs within an organization. To be a competitive employer, the organization has to find a way to realistically account for the cost of the workforce in their budgets.

Labor Supply

The most-glaring issue that private companies deal with which increase the cost of the healthcare workforce is the turnover rate. With the labor market looking at an unemployment rate of 3.6% in October 2019 (Bureau of Labor Statistics 2019), the workforce is in a stronger position to negotiate their benefit and pay structure. To maintain the current staff or to attract new talent, the company must be positioned to negotiate a competitive rate. The tighter the labor market, the higher the wages must be (Daly 2019). Therefore, the turnover rate is highly influenced by the ability of a company to continue to connect with their employees in a way which will keep them in their positions. In a market which is offering higher wages and better benefits, an employee can be recruited with the promise of a structure which fits her/his lifestyle in a way that their current place of employment does not.

Technological Advances

Surgical practices are nothing if they are not ready, willing, and able to be innovative. Not only are companies competing to keep employees coming through the door but finding ways to improve their treatment for the patient base requires the integration of new technology into their protocols. Whether that technology is related to a new gold standard of care, equipment, medication, surgical technique, updating electronic health record (EHR) systems, or implementing a new protocol, the availability of the technology means that the company should start to consider it as it relates to their specialty. While these changes can surely improve the costs of healthcare, initial introduction of technology to the workforce can be costly in changing the workflow and in training the physicians and staff to properly implement it can appear prohibitive. However, with the increased use of EHR technology, clinical decisions, diagnosis, treatment, and tracking are all done more quickly and with more accuracy than ever before (Samar 2019). Hedging the technology available against billing and insurance related costs is no small feat. Therefore, improved clinical outcomes are necessary alongside the technology to see positive results for cost savings (Pearson & Frakt 2018).

Productivity Improvement

Surgical productivity is based on the ability to properly book patients for their intended procedures with all prerequisites in place while accounting for the availability of operating rooms and/or operating facilities and the availability of the physician. The surgeon and the team preparing their schedules as such depend upon each other for a constant flow of information. Barriers to production on either end of the spectrum have to be readily communicated with each other so that adjustments can be made. Patient care strongly depends upon the availability of both the staff and the surgeon being balanced with the facility in which the procedure will be performed. Therefore, workforce cost is driven by modes of communication and availability. For a surgeon to have an administrative team ready to relay information from one location to the next and improve productivity, the cost of training and specialized workforce members can be prohibitive.

Industry Adaptation to Cost

The trend throughout the latter part of the 20th century to privatize healthcare has begun to swing the other way. Evidence suggests that the privatization of healthcare did little to defray the cost of labor in healthcare (Peoples & Wang 2007). Therefore, driving labor costs down at this time is trending towards larger conglomerates. The push for universal healthcare has not been forgotten in the political or medical environment. However, driving the cost of healthcare down would also begin to drive the cost of reimbursement in the same direction as well. Looking at the cost of education, labor costs, and general costs of running a company reduction in the incoming reimbursement for services would be detrimental to the workforce.

Conclusion

Surgical practices within the medical community have an obligation to provide quality and innovative care to their patient bases. But that is not limited to the performance of the surgery alone. The workforce behind the surgeon also must be given the tools and opportunities to provide a higher standard of care. While universal healthcare is still a buzzword in the medical community, the structure of the economy and the healthcare market itself will be slow to adapt to such a change. Therefore, at this time, ensuring that the current workforce is trained, has access to needed technology, and improving productivity will incur costs in the short term. The long term, however, indicates that the future of healthcare cost savings depends upon the protection of the labor force (Gottschalk 2007).


References

Bureau of Labor Statistics (BLS). How the Government Measures Unemployment. (2019, October 8). Retrieved from https://www.bls.gov/cps/cps_htgm.htm.

Daly, R. (2019). Hospitals innovate to control labor costs. Hfm (Healthcare Financial Management), 73(10), 22. Retrieved from http://search.ebscohost.com/login.aspx?direct =true&AuthType=shib&db=f5h&AN=139442231&site=eds-live&scope=site

Gottschalk, M. (2007). Back to the Future? Health Benefits, Organized Labor, and Universal Health Care. Journal of Health Politics, Policy and Law, 32(6), 923–970. https://doi.org/https://read.dukeupress.edu/jhppl/list-of-years

Pearson, E., & Frakt, A. (2018). Administrative Costs and Health Information Technology. JAMA, 320(6), 537–538. https://doi.org/10.1001/jama.2018.10819

Peoples, J., & Wang, B. (2007). Privatization and Labor Cost Savings: Evidence from Health Care Services. Atlantic Economic Journal, 35(2), 145–157. https://doi.org/https://link.springer.com/journal/volumesAndIssues/11293

Samar F. Farid. (2019). Conceptual Framework of the Impact of Health Technology on Healthcare System. Frontiers in Pharmacology. https://doi.org/10.3389/fphar.2019 .00933

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