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Decreased Nurse Retention Part of 6 Hospital Workforce Trends

Written by LeAnn Thieman, CSP, January 15th, 2015

Employee productivity, staff retention/nurse retention and the quality of hires are major issues in the hospital and healthcare workforce, and labor trends related to those issues became apparent, according to the 2013/14 Human Capital Effectiveness Report from PwC.

PwC’s report includes labor data from calendar year 2012 from roughly 60 hospitals and health systems, which represent more than 1 million employees.

Here are six trends in the hospital workforce, according to PwC’s report.

decresed nurse retention1. Employee productivity rose, while labor costs declined.In 2012, hospitals said the average revenue per full-time equivalent was $192,304, an increase from $189,479 recorded in 2011. It is also significantly higher than 2010, when the average revenue per FTE was $180,536. PwC analysts said this is a clear sign hospital employee productivity is increasing to pre-recession levels.

Additionally, as employees worked harder and longer hours, hospitals lowered their labor costs. In 2012, the average labor costs per FTE at hospitals, which included compensation and benefits, was $87,221 compared with $92,712 in 2011. The average across all industries is $101,566, meaning healthcare is already efficient in this area.

2. More hospital employees voluntarily left their positions.Despite higher productivity and lower labor costs, hospitals are still facing a looming long-term challenge: The voluntary turnover rate increased from 8.9 percent in 2011 to 9.5 percent in 2012. Nurses had the highest voluntary separation rate at 9.6 percent.

“With the improving economy, job opportunities are starting to increase, leading employees to explore alternative options,” PwC’s report said. “It is important for organizations to understand the primary drivers of engagement and turnover in an effort to minimize the costly consequences of losing talent.”

3. Hospitals paid larger shares toward employee health benefits.Hospitals and health systems continue to pay more in employee healthcare costs, as is the trend across theentire workforce. PwC analysts said to compensate for higher healthcare costs, hospitals are scaling back other benefits, like pensions and retirement funds.

4. Hospitals improved their first-year turnover rate.The first-year turnover rate for healthcare providers — the number of employees who left or were fired within their first year — decreased from 28.3 percent in 2011 to 27 percent in 2012. The mark is still higher than the 22.6 percent across all industries.

5. Healthcare placed a bigger emphasis on diversity hiring.Hospitals and health systems are creating a more diverse employee population. In 2011, the percent of managers who were considered to be “ethnically diverse” was 8.4 percent, while the percent of ethnically diverse executives was 6.7 percent. In 2012, those figures jumped to 12.5 percent and 8.2 percent, respectively.

6. Investments in human resources continued to lag.Within hospitals, the HR costs per employee dipped slightly to $794 in 2012. Comparatively, HR costs per FTE across the entire market were $1,923 in 2012.

However, PwC said hospitals will increase their investments in HR over time because many are starting to view that department as an arm that can carry out “strategic” internal initiatives, such as succession planning, career management and performance management.

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