The Hidden Cost of Being Understaffed in Healthcare

When the phrase “the new normal” gained popularity at the start of the pandemic, healthcare organizations clung to the hope it didn’t apply to the accelerating staffing shortage.

Unfortunately, staffing headaches have persisted, and with a troublesome addition – inflation.

This one-two punch impacts healthcare organizations like yours on every level, from operating costs to quality of care.

Cost of Unfilled Healthcare Roles

According to McKinsey, “US national health expenditure is likely to be $370B higher by 2027 due to inflation…the worsening clinical labor shortage is a significant contributor to our projected increase in healthcare costs over the next five years. By 2025, we expect a gap of 200,000 to 450,000 registered nurses and 50,000 to 80,000 doctors.”

This makes today’s enduring talent gaps even more concerning given the cost of vacancy for an unstaffed healthcare position can “average $8,000/day and, when left unfilled for three months, go up to $14,000.”

Unfilled roles are costly. That’s obvious. But how costly? The real answer lies in the hidden cost of an understaffed workforce. 

Let’s take a look at the two biggest hidden costs you’ll likely face, and then examine how healthcare leaders like you can use locum staffing to find some relief.

Cost of Physician Vacancy: Two Elements Impacting Your Bottom Line

When roles remain unfilled, the costs related to finding and attracting talent—running ads, staff time conducting interviews, repeated background checks and drug testing for candidates—quickly multiply.

These are direct costs and, while impactful, aren’t the biggest costs healthcare organizations like yours must worry about. It’s the indirect understaffing costs related to billing, reimbursement, and patient satisfaction that you must pay attention to.

RECONCILING UNBILLABLE HOURS

An unstaffed position is an unbillable position. If it’s unbillable, it’s non-reimbursable.

That’s a problem. And, for some roles or types of healthcare organizations, it matters more than others.

In general, community hospitals tend to carry less commercial plan coverage than private hospitals. While Medicare and Medicaid typically round out the rest, for both.

Why does this matter? Because hospitals have the best chance of breaking even with Medicare-related billing, while billing towards Medicaid will likely result in a loss.

This leaves commercial plans to do the heavy reimbursement lifting. And, in many cases, they do.

Here are ten specialties that command 120%-330% higher payments from commercial plans than from Medicare:

• Gastroenterology 120%
• Internal medicine 120%
• Cardiology 130%
• General surgery 140%
• Surgery and radiation oncology 140%
• Orthopedics: 150%
• Radiology 180%
• Neurosurgery 220%
• Emergency and critical care 250%
• Anesthesia 330%

There’s no doubt that reimbursement rates at these levels could help you improve your balance sheets. IF you can bill for procedures within these specialties in the first place.

According to the Bureau of Health Workforce, “The projected supply of physicians across 7 internal medicine subspecialties is expected to be inadequate to meet 2025 demand. Specifically, projections show deficits for cardiologists (7,080 FTEs), gastroenterologists (1,630 FTEs), hematologists/oncologists (1,400 FTEs)”

Understaffing across many of the most billable specialties is already a top concern. In coming years, physician aging and retirement will exacerbate the issue, leaving healthcare organizations like yours to increasingly lose out on potential revenue. 

Finding FTEs for these positions is imperative. But if you’re struggling to staff these roles, consider locums as a way to ensure procedures remain on the schedule, in the interim.

IMPROVING HCAHPS SCORES

Patients are consumers, and they hold more power than ever before.

Service and experience dictate where they are willing to spend their dollars. They can choose to receive care at your hospital, or they can choose to go elsewhere—and their opinion directly impacts your bottom line.

That’s why, regardless of what’s happening with internal staffing issues, you must still provide quality care and an exceptional patient experience. First and foremost, to support the best interests of each patient. But, also, because HCAHPS scores depend on it.

According to cms.gov, “HCAHPS is a survey instrument and data collection methodology for measuring patients’ perceptions of their hospital experience.” Perceptions is the key word here. It’s these perceptions that influence whether HCAHPS scores will contribute to the second hidden cost of understaffing—lack of Medicare reimbursement.

Understaffing at all levels – assistants, nurses, physicians, surgeons – negatively impacts care and your bottom line.

As McKinsey points out, “Labor shortages could stymie growth of individual health systems and lead to access risks from site-of-care closures and increased wait times.” Vital surgeries might get postponed or canceled. ER wait times might skyrocket. In-patient bedside care might suffer. Overworked physicians and nurses may become short-tempered.

HCAHPS scores, which are publicly published, will reflect it all.

Low scores equal:

• Low reimbursement
• Reduced annual bonuses
• Elimination of future negotiating power with all plans (including commercial plans)
• Poor brand reputation
• Negative word-of-mouth
• Lost potential new-patient revenue

It’s a high price to pay for persistent staffing shortages. But there is a way to offset the impact, alleviate the burden on existing staff, and support a better environment for patient care: locums.

Embrace Locums for Interim Understaffing Relief

For most healthcare organizations, the ultimate goal is staff open roles with full-time employees (FTEs). As it should be.

FTEs are often the most financially viable option. And, having consistent talent across specialties fosters a close-knit culture where consultations and second-opinions are both easy to obtain and highly valued.

However, FTEs are hard to come by these days. And will be for the foreseeable future.

In the meantime, there is a way to sustain quality care and strategically fill talent gaps until permanent placements are found—locums.

Compared to the cost of understaffing, using locums is a financially sound option—one that provides immediate relief for short-staffed roles, teams, and divisions.

• Fill nearly any open role, from CNAs to ER physicians to anesthesiologists
• Gain staffing flexibility—eliminate talent gaps for days, weeks, or months
• Have peace of mind that top-notch, licensed, and credentialed healthcare experts will represent your hospital and provide quality care
• When used thoughtfully, locums can become a strategic workforce component and sustainable revenue-driver

According to a Kaufman Hall Flash Report, “2022 was the worst financial year for hospitals and health systems since the start of the COVID-19 pandemic.” So it’s not surprising that an MGMA Stat Poll indicates 20% of medical group leaders expect to increase their use of locums in 2023.

CONTINUE THE CONVERSATION WITH ELITE365

We’ve worked in the industry for decades. Our depth of experience means we understand the value locums offer. But we also understand that the greatest value is derived from using them when and where they make the most sense.

We can help you maximize billing for locum providers, find the RIGHT provider for your specific needs (not just the best available at the time), and ensure quality care remains priority #1 for your hospital or health system.

Understaffing challenges, and their related costs, show no end in sight. Why wait to get them under control? Call us now to get started on a more profitable workforce road.