April 29, 2016 | Mike Pumphrey
The minimum wage has been a hot topic across the country in recent months—one that we at OnShift have vigilantly tracked. With large organizations like Wal-Mart looking to raise employee pay over the next three to five years and several states and municipalities making moves to do the same, it’s clear that senior care isn’t immune to the pressures created as a result.
Given the profile of most caregivers in senior care, the prospect of a $15-an-hour minimum wage will be very attractive to employees. That’s a significant amount of money, and it’s gaining momentum amid a national “Fight for $15.” At least five states and nine cities are expected to consider proposals in 2016, according to the National Employment Law Project.
Such an increase would make a huge positive impact on their lifestyles, but it also has the potential to draw them away from jobs in long-term care and senior living.
Rising wages combined with an imminent caregiver shortage makes for quite the perfect storm, and operators need to ask themselves what they’re going to do to defeat the “Wal-Mart Effect.”
There is no magic wand. This is senior care’s new reality.
Generally speaking, there isn’t much room to adjust resident rates in order to pay those higher wages. Instead, it really comes down to identifying inefficiencies within your business. Taking action from there is crucial, as even a $1.50-per-hour minimum wage increase would reduce net operating margins by 3.4% and boost total expenses by 4.5%, according to a financial sensitivity model conducted by Moore Diversified Services, a Texas-based organization that provides operations analysis, marketing development and investment advisory services.
Three strategies providers should employ to unlock funds and remain competitive include:
First, even when providers say they don’t have an overtime problem, we’ll peel back the onion and frequently find discrepancies. Maintenance and dining staff might have an overtime rate around 1%, for example, but the care staff’s overtime rate has crept up to around 4% or 5%.
Look at how you’re deploying full-time and part-time workers. Perhaps you have some full-time employees at 120% of capacity, but part-time at just 40%. Therein lies an opportunity for improvement, to lower overtime across the board.
Workers not punching in and out on time is another area that merits some attention. Most providers have a rounding out rule at seven minutes, meaning an employee can clock in for an extra half an hour each shift, tipping people into excess compensation or unnecessary overtime.
OnShift’s scheduling software provides a solution to show who is punching in early and out late. Taking advantage of this technology can drive down costs, simply because employees know you’re tracking their actions.
Finally, providers tend to excel at flexing up to accommodate new residents, but aren’t so great at flexing down when occupancy changes. Yet staffing levels should be based on a community’s census. When you adjust schedules based on move-ins and move-outs, along with residents’ acuity, not only are you saving money in the long run, but you’ll also see staff burnout go down and employee satisfaction on the rise.
When all is said and done, the only way to effectively manage labor is day in and day out, shifting your stance from reactive to proactive. That way, you’ll be ahead of the curve when wage pressures become an even more pressing concern.
See for yourself why thousands of providers rely on OnShift’s innovative software for recruitment, hiring, workforce management, pay and engagement. Request your personalized demo today.
