Workforce Issues Hinder Hospital & Health System Performance

CHICAGO – October 18th, 2022  Hospital and health system leaders face staffing shortages, rising expenses, and the steady shifting of care to non-hospital settings according to Kaufman Hall’s 2022 Healthcare Performance Improvement Report. The report is being released during what is projected to be the most difficult financial year for hospitals and health systems since the start of the pandemic.

The report found that healthcare organizations have implemented a range of retention tactics to appeal to staff as workforce concerns continue to affect performance. With competition for candidates at a high, 100% of respondents say they have adopted some type of recruitment and retention strategy. Ninety-eight percent report raising starting salaries or minimum wage, with 67% seeing wage increases of more than 10% for clinical staff.

“Long-term staffing shortages create bottlenecks in patient care and increase inpatient length of stay, leading to higher costs and poorer outcomes,” said Kaufman Hall Managing Director Lance Robinson, leader of the firm’s performance improvement practice. “For the rest of 2022 and beyond, hospitals and health systems need to prioritize building out retention strategies and transitioning away from unsustainable levels of contract labor to more stable staffing.”

Kaufman Hall experts say that the pandemic may be a turning point for healthcare and pre-pandemic patient volumes may never return. Innovations in care that have emerged and been refined over the past two years have only accelerated the larger trend of patients preferring to receive care in outpatient centers, online, or in the comfort and convenience of their homes.

“Healthcare leaders must navigate short-term challenges that continue to pressure revenue and expenses, while also adapting organizational strategy to match larger transformations in the way care is delivered,” said Robinson.

Other report highlights include:

  • Almost one-half of respondents (46%) identified labor costs as their greatest opportunity for cost reductions, compared to 17% of respondents who identified labor costs as their greatest opportunity last year.
  • The effect of the workforce crisis extends to performance on volume and revenue. Two-thirds of respondents said that staffing shortages required them to run at less than full capacity over the past year.
  • Oncology is the only area that showed significant volume improvement over last year’s survey, with 40% of respondents saying that oncology volumes were at 100% or more of pre-pandemic levels.
  • Many respondents continue to experience supply chain disruptions, with 71% reporting distribution delays.

The Kaufman Hall State of Healthcare Performance Improvement Report is an annual publication that analyzes the performance improvement and cost transformation efforts of hospitals and health systems. This year’s results are based on survey responses from 86 hospital and health system leaders nationwide, including representatives from all regions of the country as well as from urban, suburban, and rural markets. 

About KaufmanHall

KaufmanHall provides management consulting solutions to help society’s foundational institutions realize sustained success amid changing market conditions. Since 1985, KaufmanHall has been a trusted advisor to boards and executive management teams, helping them incorporate proven methods, rigorous analytics, and industry-leading solutions into their strategic planning and financial management processes, with a focus on achieving their most challenging goals.

KaufmanHall services use a rigorous, disciplined, and structured approach that is based on the principles of corporate finance. The breadth and integration of KaufmanHall advisory services are unparalleled, encompassing strategy; financial and capital planning; performance improvement; treasury and capital markets management; mergers, acquisitions, partnerships, and joint ventures; and real estate.