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Hospitals & Labor Struggle to Find Common Ground

Learn five variables contributing to the hospital budget crisis and its consequential conflict between labor and management.

The nursing shortage hasn’t disappeared, and nurse managers are feeling the pressure.

Let’s begin with the good news.

Full-time nurses, travelers and locum tenens are in high demand. The economy is booming. The new tax bill offers some significant, immediate relief to hospitals. The Bureau of Labor Statistics projects that healthcare support occupations, practitioners and technical healthcare labor will be among the “fastest growing occupational groups during the 2016-2026 decade.” It estimates that these occupations alone will “contribute about one-fifth of all new jobs by 2026.”

So what’s the problem?

This is a simple question, with many complicated answers. The one common thread is that the pressures accumulating on hospital budgets tend to mostly land on the labor pool. The rising cost of healthcare, increasing demand related to an aging population, and necessary investments into technology and infrastructure are placing an enormous strain on hospital budgets. As a result, administrators are looking for savings anywhere and everywhere. In the middle of the crossfire rests the Nurse Manager, who bears the brunt of patient care, budgetary and administrative responsibilities.

While the debate is indeed complex and layered, and often different from state-to-state, we examine five variables that are contributing to the hospital budget crisis and resulting conflict between labor and management:

  1. Small and rural hospitals struggle to compete.
    Because full-time and temporary labor is in high demand, workers have the ability to migrate to more lucrative areas more than ever before. Small hospitals, particularly in rural areas, tend to have difficulty competing with larger systems in urban areas. But this pain point isn’t exclusive to rural hospitals. Consider Tufts Medical Center in the heart of Boston, for example. According to a
    Boston Globe article: “Tufts has long been overshadowed by larger competitors with more prestigious names and deeper pockets. The disparities between Tufts and its competitors have been thrown into sharp relief by an ugly labor dispute.”

  2. The Nursing Shortage is very, very real.
    Elsewhere in Massachusetts, the labor pinch is being felt in a different way. Baystate Franklin Hospital has been in the throes of a labor dispute since 2016. Last year, the nursing staff staged a one-day walkout that garnered national attention, to protest deep cuts to staffing. Negotiations are still ongoing in 2018, with no reasonable end in sight. Similar scenes played out in Michigan last year at Borgess Hospital, and in West Virginia at Charleston Area Medical Center.

  3. A system where mission success means financial failure.
    It should be noted that the healthcare industry in general is perhaps the only sector of the economy where success equals financial failure. How so? Because healthy patients require less medical attention, which in turn means less money. So behind the very real-world profit and loss scenario is a mission to reduce the source of income.

  4. Loss of the individual mandate.
    The tide has shifted in national policy once again. Individuals are no longer required to carry health insurance, and fewer young, healthy people are joining the ranks of the insured after the massive influx of newly insured patients under the Affordable Care Act (ACA). It should be noted, however, that under the ACA emergency room visits actually increased, despite what many advocates had hoped. So this is not to say the pressure is increasing with the loss of the individual mandate. The pressure on ER staff was always there. But in the coming years, there will most certainly be an increase of uninsured patients, which will leave hospitals bearing the brunt of uncompensated visits.

  5. Costs still going in the wrong direction.
    Perhaps the largest and most unwieldy burden on hospitals is simply the absolute cost of administering care. New regulatory requirements, the implementation of new technology, and subsequent training that is required means larger overhead.
    PWC’s Health Research Institute projects 2018’s medical cost trend to be 6.5%—the first uptick in growth in three years.

As we mentioned, these factors represent only a few pieces of the greater landscape. Finding common ground between the administrators and hospital labor is essential to striking a positive balance between finances and patient care. The smaller hospitals and rural systems in particular will need to find ways to recruit, manage and retain talent. In his interview with Reuters, Ron Moore—former vice president and chief nursing officer at Charleston Medical healthcare system (mentioned above)—may have said it best:
“I’ve been a nurse 40 years, and the shortage is the worst I’ve ever seen it…  [But] it’s better to pay a traveler than to shut a bed.”

To learn how RINGO is helping community hospitals, ambulatory care facilities and small- to medium-sized healthcare systems reduce their temporary labor costs without cutting staff, Contact Us Today. We’re all in this together.