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Combat Rising Labor Costs With These 3 Strategies From Top Providers


Blog-Combat-Rising-Labor-Costs-In-Senior-Care-With-These-3-StrategiesThe long-term care and senior living industries continue to grapple with rising labor costs resulting primarily from high employee turnover and a growing workforce shortage. According to the annual Cost of Care survey from insurer Genworth Financial, care costs in U.S. assisted living facilities increased 6.67% in 2018. That is more than double the previous year’s hike.

Plus, the national unemployment rate in August 2019 remained unchanged at 3.7%. This is upping the ante for providers looking to attract and hire the staff they need, especially when they’re competing with companies both inside and outside the industry. But changes in overtime pay rules are also contributing to the higher costs and the shallow talent pool has shifted the supply-demand dynamic in favor of workers, even as the health care industry adds thousands of new jobs each month and has made 392,000 new hires over the last year. 

Because the employment dynamic favors workers, providers are casting a wide net in their efforts to curb rising labor costs. Many of the most successful models involve improving engagement among management and staff. This has the added benefit of improving employee retention, and developing a positive workplace culture that can be leveraged to recruit new talent. 

Here are three creative ways providers are addressing rising labor costs in today’s challenging labor market.

Hire A Chief People Officer 

Some providers see labor as an issue requiring a set of dedicated C-suite leaders and are appointing chief people officers to their executive teams. Chief people officers look for ways to expand the pool of qualified talent available to operators, explore avenues to make senior care a desirable career path and expand growth opportunities to current employees.

Two providers on growth trajectories — Fort Worth, Texas-based Civitas Senior Living and Shoreview, Minnesota-based Ecumen — appointed Misti Powell and Melanie “Mel” Sullivan, respectively, to the chief people officer role last March.

Powell told Senior Housing News one of the biggest challenges she sees in recruiting new talent to senior care is overcoming the misconceptions of the industry. To that end, Civitas launched a clinical bridge program with the nursing school at Southwestern Adventist University in Keene, Texas, so that students get a more thorough understanding about the industry. The program, a 12-credit senior living certificate and certification, provides a solid initial immersion for graduates interested in pursuing careers in the industry.

Civitas’ recruiting efforts on college campuses gives the company an advantage over its competitors, and Powell is surprised more providers don’t also do this type of outreach.

Proactively Curb Overtime

Labor is a provider’s largest expense. Due to the the workforce shortage and high turnover rates, many senior care providers are being forced to pay a premium on overtime hours and agency worker usage. Overtime, in particular, accounts for 6-8% of a provider’s labor costs, and a 1% reduction in overtime costs can save a community between $24,000 and $60,000 annually. 

Technology on the market today allows providers to be predictive and proactive when managing their overtime hours. OnShift’s scheduling software helps providers prevent unnecessary overtime with alerts that spot overtime before it happens and recommend cost-effective replacements. Plus, OnShift helps providers eliminate agency usage with real-time insight into staffing utilization and open shift management.

Providers that have leveraged our scheduling software have been able to nearly eliminate scheduled overtime and in many cases, agency usage.

Put An Emphasis On Employee Engagement

The average cost to replace an employee in senior care ranges from $3,500-$5,000. And with turnover rates ranging from 40-75%, an organization with 100 direct-care employees at the top end of the that spectrum is spending upwards of $375,000 in employee turnover over the course of the year. If you have yet to make employee engagement a top initiative at your organization, what are you waiting for?

One of the easiest ways to reduce turnover (and attract new hires in the process) is by creating a culture that employees love. One where they are recognized and rewarded for their hard work, given the opportunity to grow professionally and afforded the work-life balance that they crave.

OnShift Engage, our employee engagement software, uses automated rewards and recognition and pulse satisfaction surveys to keep employees happy and on the path to success. The new hire tracking capabilities within the system allows management to pay special attention to employees in their first 90 days to correct any issues early and prevent turnover.

Learn how one provider reduced turnover by 33% with OnShift.


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