Give Me Staff, and I’ll Give You a Million Dollars

Managers in healthcare Human Resources often times feel helpless when attempting to become appropriately staffed. Even though human capital accounts for 63% of every dollar spent, many HR Departments have not been able to develop an effective business plan needed to justify appropriate staffing.

The inability to speak the language of Senior Management has resulted in not enough administrative help, professional recruiters becoming clerical workers taking orders for new employees much like a short-order cook and the recruitment function dissolving into nothing more than a big “Post Office”. Everyone is overworked, less effective and generally overwhelmed. Applications in, sorted and sent on to hiring managers–losing time and many times the best candidates.

Chastity Glover, an Allied Health Recruiter at High Point Regional Health System in Greensboro, NC wrote to ask “How can you convince Administration the need for additional staff to be able to give personal and professional attention to applicants?” The good news for Chastity is that she knows the need for personal attention when recruiting and the better news is that it’s easy to develop an effective proposal to ensure appropriate staffing and budget.

Retail stores can choose not to open a register or work thin if they are down an employee or two, but, healthcare delivery must find enough Registered Nurses to cover the vacancy or missing employee. That means tapping into RNs provided by an agency or travelers group, using the PRN pool or convincing RNs to work overtime—sometimes on a mandatory basis. All forms of covering the vacancies are more expensive in terms of dollars and morale.

It is rare that Human Resources will think of hires in terms of commodities, but that is exactly what they should do when attempting to staff appropriately. A staff RN costs what per hour, day, year and renting one costs what per hour, day, year? What would be the savings if you didn’t need to rent a nurse?

Here is a quick outline for developing a business plan Chastity and others could use incorporating their own numbers appropriately:

• Let’s assume Hospital A is using 17 agency RNs on a steady basis. If they had adequate recruiter and administrative staff it would be doable to hire 17 staff RNs and hopefully work with the managers to retain them for at least a year.

• Hospital A pays their RNs (much like national average) $31.18 an hour. Each RN will work 2,080 hours a year (40 hours times 52 weeks) for a base salary of $64,854 (2080 multiplied by $31.18).

• Chastity will need to remember the base hourly rate is not everything the employee costs, but their benefits (vacation, insurance) must also be included. Each facility will be different, but figuring an employee as “fully loaded” will add approximately 22% of their salary base salary to their compensation package. To figure this, Chastity will need to multiply the annual salary of $64,854 by .22 to figure the increased hourly rate. In this case, benefits will add another $6.86 an hour for a total hourly rate of $38.04.

• Next it is important to know what Hospital A is paying for Agency. Let’s figure Hospital A spends the national average of $63.00. Take the $63.00 and subtract the $38.04 hourly rate for a staff RN and Hospital A is paying $24.96 an hour more for a “leased” RN as opposed to a staff RN.

• If each RN works 2,080 hours each year, and 17 were hired and retained they would represent 35,360 hours (2,080 times 17) being paid at the rate of $38.04 as opposed to the $63.00 per hour for agency. The total saved by hiring and retaining the 17 RNs would be figured by multiplying the hours covered—35,360—by the per hour savings–$24.96.

• The annual savings for 17 less RNs on the open jobs report would amount to $882,586—certainly enough for Chastity to hire adequate staff to become more effective and strategic. What is a recruiter making these days?

With a business plan like that, it should be possible for Chastity to fund effective recruitment and retention programs such as bonus money for mentoring, increased flexibility for accommodating the older RN and allowing for more balance between home and work.

If Administration isn’t impressed with the raw savings of regular hours vs. agency hours, then Chastity should consider the fact that new employees will require 20% more of their salary for training as opposed to 4% for an employee who has at least a year of tenure. With a $64,854 salary that means a new hire will need $12,971 in training as opposed to $2,594. That would figure out to be a savings of $10,377 per employee or $176,409 for 17 staff RNs. Add everything up and you have over a million dollars in savings and we haven’t even touched cost-per-hire, days-to-fill or the impact on patient satisfaction.

The numbers seem big and they are, but every hospital CFO knows what an open position costs every day it remains unfilled. Let the CFO know you have a plan to drive those hard dollars to the bottom line and that you can be a strategic partner. But in turn you need to be treated like the professional you are and provided the tools to do your job.

If you have a question related to healthcare recruiting you’d like me to answer on a future blog, send me an email at askgreta@tmp.com

Related Articles

Thomas Delorme
Written by Thomas Delorme

VP, Digital Products & Strategy

Leave a Reply

Your email address will not be published. Required fields are marked *