The U.S. Healthcare System is currently wasting an estimated $765 Billion (23% of what is spent) per year due to inefficient operations! Surprisingly, the majority of this waste is not being generated by pricing failures and supply chain issues, but through workflow and labor management deficiencies. Administrative complexity, redundancy, errors, lack of automation, and antiquated processes are a few of the key factors contributing to this problem for organizations industrywide.
ALTIUS’ productivity and performance improvement solutions are designed to help hospitals and health systems eliminate this waste and increase overall efficiency. One of the most wasteful practices plaguing our clients and creating huge bottom-line impacts is overtime!
Quick Fact: The average U.S. hospital spends about $2.8 Million per year in overtime. That’s around 3.5% of total salary expense.
With its high cost (typically 1.5 times an employee’s regular hourly rate) and more healthcare professionals becoming eligible for overtime pay, here are some important benchmarks to keep in mind to control overtime utilization:
- Overtime for Nursing areas: < 4%
- Overtime for Ancillary areas: < 3%
- Overtime for Administrative and Overhead areas: < 0.5%
In addition to the expense, excessive overtime utilization elevates the risk of patient injury/death from medical errors due to the physical and mental fatigue of staff, increased length of stay due to a decrease in the quality of care, and growing employee dissatisfaction.
Incremental overtime generated by poor clocking, hand-off, and other shift turnover processes, pre-scheduled overtime, and weak management oversight are the main culprits behind this expense. The ALTIUS team works with client leadership to develop strategies for minimizing overtime which include:
- Communicating expectations
- Using data to identify trends in overtime utilization to drive operational changes
- Frequently assessing call-back trends
- Creating a float pool for ease of coverage
- Appropriately planning for anticipated retirements/turnover
- Cross-training of staff to provide more scheduling flexibility
- Guaranteeing proper skill mix and staffing ratios are being met
- Ensuring utilization is routinely monitored
- Hiring into the need with per diem, part-time or full-time positions when overtime becomes consistent and the hours are warranted