Healthcare organizations are facing a double-sided labor crisis: a severe labor shortage and rising labor costs. Learn how they can optimize their use of current resources and gain detailed insight into operations and pinpoint interventions aimed to decrease expenses.

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Labor Shortage: Why You
Need the Right Labor
Management Partner Now

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Health Catalyst Editors

3. Article
Summary Healthcare organizations are facing a double-sided labor
crisis: a severe labor shortage and rising labor costs.
Learn how they can optimize their use of current
resources and gain detailed insight into operations and
pinpoint interventions aimed to decrease expenses.

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Labor Shortage
Healthcare today faces a two-sided labor crisis. On one side, labor costs have increased one-third
from pre-pandemic levels, constituting almost 50 percent of a health system’s total expenses. On
the other, healthcare workers are leaving the profession at an unprecedented rate. According to
the 2022 NSI National Health Care Retention & RN Staffing Report, hospital turnover has increased
by 6.4 percent to its current rate of almost 30 percent.
Why You Need the Right Labor Management Partner Now
Hospital turnover of almost 30%

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Labor Shortage
A healthcare labor management solution is
urgently needed. When hospitals are
understaffed, patient safety and quality of
care diminish, and the healthcare workforce
is forced to assume an unsustainable
burden. For example, when the workforce
was overburdened during the COVID-19
pandemic, healthcare-associated infections
rose by as much as 47 percent. Meanwhile,
nursing turnover costs the average hospital
between $2 million to $9 million per year.
Health systems must leverage quality data
and work collaboratively to understand and
proactively approach staffing.
Why You Need the Right Labor Management Partner Now

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Labor Shortage
To address this double-sided crisis, health
systems need a comprehensive data-driven
approach that reduces unnecessary costs
while maintaining high-quality care and
patient and employee satisfaction.
Why You Need the Right Labor Management Partner Now

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Capture Short-Term
Labor Management Wins

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Capture Short-Term Labor Management Wins
As the industry develops long-term labor
management strategies, organizations can achieve
short-term wins by leveraging current resources.
To provide insight into how organizations can
employ their workforce to become more efficient
at serving patients in a high-quality way, short-term
strategies need to leverage data analytics.
Leveraging Current Resources

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Capture Short-Term Labor Management Wins
With data at the core of these efforts, the following short-term labor management strategies can
effectively enable labor management wins, according to A Healthcare Worker Shortage Action Plan:
Short-term Wins and Long-Term Strategy.
 Implement shared governance: Initiatives within nursing and other fields to support workforce
engagement. Known as shared governance, tactics include staff participation with scheduling,
which gives individuals input on the flow and activity in their department.
 Improve patient flow (throughput): Patient flow, or the movement of patients through a
healthcare facility, can hold significant opportunities for improvement, especially when it comes
to optimizing staffing. For example, overscheduling in one area (e.g., elective surgery) will cause a
bottleneck in another (e.g., post-operative overcrowding), leading to staffing strain.
 Find the appropriate setting for each patient (patient aggregation or placement): Determining
how to allocate resources requires understanding the most appropriate setting for patients.
During the pandemic, health organizations created new strategies for increased patient volume
that can inform future patient placement strategies.
 Optimize the nursing skill mix: As the RN vacancy rate continues to rise (currently at 17 percent,
up 7.1 points from last year) leaders must evaluate their nursing roles to ensure an optimal
combination of education and experience. Ensuring that RNs, licensed practical nurses, and
nursing assistants are in the appropriate setting will enable each provider to perform at the top of
Short-Term Labor Management Strategies

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Capture Short-Term Labor Management Wins
 Optimize the nursing skill mix: As the RN vacancy rate continues to rise (currently at 17 percent,
up 7.1 points from last year) leaders must evaluate their nursing roles to ensure an optimal
combination of education and experience. Ensuring that RNs, licensed practical nurses, and
nursing assistants are in the appropriate setting will enable each provider to perform at the top of
their license.
 Create new care models: Telehealth presented new possibilities for provider engagement with
patients. Exploring new models, such as remote work, for nurses and providers will be pivotal to
managing labor demands.
 Enhance workforce flexibility: Provide opportunities for different shift lengths, part-time
positions, and other flexible scheduling practices that can open access to individuals otherwise
not interested in filling available shifts.
Implementing these short-term strategies can help organizations gain a better understanding of
shifting labor dynamics across their organizational departments and teams.
Short-Term Labor Management Strategies Continued…

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Upgrade Labor Allocation Tools and
Services for Long Term Success

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Upgrade Labor Allocation Tools and Services for Long Term Success
Optimizing labor allocation over the long term
requires robust data platforms and AI-enabled
applications, which can help organizational
leaders help understand everything from
predicting patient volumes and matching supply
to demand to optimizing skill mix and scheduling.
Optimizing Labor

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Upgrade Labor Allocation Tools and Services for Long Term Success
One such AI-enabled tool is the Health
Catalyst PowerLabor™ application.
PowerLabor was designed to provide
healthcare organizations with a
comprehensive view of the organization’s
labor cost allocation and the data insights
necessary to identify opportunities to
optimize labor resources. PowerLabor pairs
real-time, actionable data with a robust
analytics platform that offers leaders a more
nuanced overview of healthcare labor data
by system, department, team, and job role,
including special contract and pay categories.
The platform also includes embedded AI
forecasting to predict patient volumes.
PowerLabor™

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Upgrade Labor Allocation Tools and Services for Long Term Success
To gain the actionable insights needed to
optimize the effectiveness of long-term
strategies, organizations are utilizing labor
management experts, such as Health
Catalyst’s Labor Management Expert
Services. This service provides organizations
with a customized analysis to determine
where labor demands are not being met and
are potentially undermining the quality of
care as well as guidance to devise and
implement strategies, structures, and
practices for short-and long-term labor
management success. This approach provides
a tailored approach to each organization’s
unique circumstances and labor challenges,
equipping them to tackle their unique
challenges and create a plan forward.
Health Catalyst’s Labor Management Expert Services

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Labor Management Strategies in Action:
Hawai‘i Pacific Health

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Labor Management Strategies in Action
As one of the largest healthcare providers in Hawaii,
Hawai‘i Pacific Health (HPH) understood that its labor
management strategies were not effectively using budgeted
resources and sought to determine where clinicians and
operational leaders could better accommodate staffing
challenges. To gain insight into its performance, HPH
partnered with Health Catalyst to conduct an opportunity
analysis. The data uncovered opportunities to reduce costs
in healthcare labor management and identified the top ten
areas across four hospitals with the biggest potential to
improve. They implemented the Health Catalyst Data
Platform, along with the PowerLabor application, to analyze
where labor allocation could be optimized. For the first
time, HPH was able to access a detailed overview of the
organization’s labor resources and allocation across four
hospitals, including hours, volume, and budget data from
four different data systems.
Hawai‘i Pacific Health

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Labor Management Strategies in Action
Using a data-driven approach to labor management, HPH now has detailed insight into
operations, supporting the creation of interventions aimed to decrease expenses, while
improving operational efficiency and satisfaction. The health system improved labor
utilization across four pilot facilities in only six months—significantly reducing labor costs.
Building on its initial success, the organization has rolled out the program across its entire
system, resulting in substantial savings and operational efficiencies, including:
 $2.2 million savings in 16 months, while maintaining high-quality outcomes.
 With on-demand, real-time access to data, managers spend 15 minutes—instead of
four hours—proactively managing operations, reducing the administrative burden on
managers. The organization can now answer basic business questions (e.g., the number
of FTEs in a given hospital department) in minutes rather than weeks, allowing
managers to immediately identify budget errors, in terms of where people are assigned
versus where they should be, before making decisions based on faulty data.
 Utilization of the application continues to grow with hundreds of employees using the
tool daily to actively manage their resources.
Hawai‘i Pacific Health

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Data-Driven Labor Management Delivers
Financial and Operational Improvements
With labor expenses making up
approximately 50 percent of hospital and
health system operation expenses and
projected healthcare worker shortages
reaching millions in just a few short years,
the industry is facing a complex labyrinth
of labor-related challenges. And, for any
long-term benefit, efforts to address
these challenges will need to bridge the
widening supply and demand labor gap in
a way that supports high-quality care and
patient well-being, as well as employee
engagement and provider job satisfaction.
Labor Challenges

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Data-Driven Labor Management Delivers
Financial and Operational Improvements
Implementing AI-enabled labor tools will
effectively garner short-term wins, bolster
employee engagement, and provide
organizations with an integrated view of
their labor landscape in order to inform
strategies to accommodate unpredictable
changes in volumes and find the right
balance between quality care, safety,
patient and employee satisfaction, and
fiscal responsibility
Ai-Enabled Labor Tools

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1 Optimize Your Labor Management with
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