Turning Down the Heat on Rising Labor Costs

In a recent edition of Modern Healthcare, three chief financial officers highlight a growing trend that has suddenly spiked and taken a toll on hospital operational expenses -- labor costs.

"We're having more vacancies within nursing and within physician positions across the network," said Todd Keating, CFO for University of Vermont Health Network Burlington. "The problem with that is we have to replace them with (temporary staffing and overtime) costs that are anywhere from 40 percent to 100 percent higher than if we were able to find full-time people to fill those vacancies."

These challenges are evident in specialized aspects of the labor force as well. Steve Filton, EVP and CFO for Universal Health Services in King of Prussia, PA, said their struggles are especially apparent in behavioral health service lines.

"We just can't fill those vacancies, honestly, at any cost," Filton said.

Addressing workforce issues continue to be a priority at many levels of the Texas Hospital Association.. Our policy and government relations team focuses on a variety of solutions to help spur investment in graduate medical education programs to produce more Texas-based physicians, while we also focus on ways to keep our nursing workforce stabilized. Our role in HealthShare, however, is offering market-based solutions that complement policy solutions and tactics. 

In 2017, we realized labor costs would continue to challenge hospitals as workforce shortages and nursing mobility grew. At the same time, we noted the increasing revenues and profits at a variety of the traditional staffing companies that "service" Texas hospitals. Here's a quick look at the three-year trend in the stock price for AMN Healthcare, one of the largest nurse staffing companies in the country. (Source: TDAmeritrade)

This kind of profit indicated to me that workforce struggles for hospitals translated to success for nurse staffing agencies literally at the expense of Texas hospital leaders and the patients their teams served.

We quickly made moves to identify companies that could help disrupt these trends. First, we focused on partnering directly with Qualivis, which was designed by another state hospital association to help their members address the increasing costs associated with solving workforce challenges. This partnership covers a variety of staffing types from temporary and travel nurses to permanent placements. Qualivis pools bids for openings at hospitals from other staffing agencies, forcing them to put the best candidates side-by-side at the most affordable rates. 

Next, we focused on locum tenens. Finding and placing temporary physician staff were not only costly but also hugely inefficient. By partnering with Nomad Health, THA's endorsement through HealthShare meant matching up physicians with hospitals quickly and without the bureaucratic obstacles that come with agency placement. Nomad also makes the hassle of paperwork and malpractice insurance a thing of the past by baking costs and applications into their operations.

While these endorsements are just two examples of how THA and the endorsed partner program are being used to disrupt health care's market forces, they are particularly meaningful because they represent our ability to fulfill the THA mission to help hospitals improve operations and decrease costs. Sustained focus on these kinds of solutions is how we plan to continue growth in HealthShare for the benefit of all THA members.


Lance Lunsford is a published author of hundreds of articles and publications, including his 2006 book The Rainbow’s Shadow: True Stories of the Baby Jessica Rescue and the Tragedies that Followed. He is a former newspaper reporter and editor covering business, politics, and government, crime, courts and community leaders. At 25, he became city editor of a mid-market community newspaper and went on to develop the first digital journalism projects for multiple hospitals throughout Texas. Lunsford has a bachelors degree in Journalism from Texas A&M University and a Masters of Business Administration from Texas Tech University. He currently serves the Texas Hospital Association as senior vice president of marketing and strategic communications as well as president and chief executive officer of THA’s for-profit subsidiary, HealthShare.



About the Author

Lance Lunsford Lance Lunsford is the president/CEO of HealthShare and THA chief marketing/business development officer. In his multifaceted role, Lunsford oversees THA’s member communications, marketing, advocacy communications, and business development. At HealthShare, he leads the for-profit THA subsidiary that collaborates with more than 50 THA-endorsed companies. Prior to joining THA, Lunsford served UMC Health System in Lubbock, Texas, as director of corporate marketing. Lunsford has a master’s degree in business administration from Texas Tech University and a bachelor’s degree in journalism from Texas A&M University.