"The Ronan Report" provides insight about the activities at the Western Maryland Health System in Cumberland, Maryland, and about the changes taking place in healthcare today from a CEO's perspective.

Thursday, October 25, 2012

Effective Use of Labor in Hospitals Going Forward

In the most recent issue of Health Leaders magazine, there is an article, "Labor Efficiency a Growing Tactic."  The article is very timely for WMHS in that it reports on a recent survey of hospital and health system leadership across the country related to cost reduction initiatives, including reductions in personnel.  Thirty four percent of responding hospitals said that the annual savings generated from recently implemented initiatives range from 1% to 3%, twenty four percent said from 4% to 5% and twenty five percent of those surveyed said from 6% to 10%.  At WMHS, those initiatives that we implemented to date this fiscal year will reduce spending by about 3%, so we are consistent with the majority of hospitals reporting on implementing cost and labor reduction initiatives. 

These same hospitals / health systems said that the greatest savings came from cost reduction strategies in the areas of "stuff and staff" just like at WMHS.  Thirty two percent of the savings came from supply chain efficiencies, twenty one percent of the savings came from labor reductions, twenty one percent came from more efficient use of labor and nineteen percent came from revenue cycle improvements; all areas of focus at WMHS this year.  Lastly, the survey reported that those personnel categories targeted for reduction were as follows: 51% non-clinical; 23% clinical; 18% leadership (VP and up), all targeted areas at WMHS, as well.  Hopefully, articles and comparisons like this will help as we try to continue to explain changes in health care now and going forward.

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