While the options to reduce labor costs in healthcare reflect those available in other industries, choosing one path over another delivers significant secondary effects.
For example, reducing the number of technical support representatives available to provide telephone support to customers may increase on-hold wait times, but reducing nursing staff may lead to an increase in bedsores or higher hospital infection rates. In healthcare, the downstream impact of changes in staffing presents potentially dangerous and expensive outcomes.
To reduce labor costs, managers have just a few levers to work with:
- Decrease staffing levels
- Decrease average cost per hour of staff
- Increase staff productivity
These approaches are easier to implement in industries such as manufacturing and retail. Many of us are familiar with organizations that lay off workers as demand for products decreases, or that replace experienced, higher-paid staff with less expensive employees. For example, the use of robots and information technology drove much of the increased productivity seen over the last two decades in the manufacturing sector. Healthcare, however, does not lend itself to such easy solutions.