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3 Signs That Employee Overtime Is Costing You More Than Just Money

October 3, 2018 | Mike Pumphrey

Signs employee overtime is costing you more than money

We all know that labor is generally a senior care provider’s largest expense. And a good portion of that cost is the result of employee overtime, which can easily account for 6% or more of the industry’s labor costs. However, in many cases, overtime is preventable, given providers have the insights needed to prevent it before it occurs. And considering that just a 1% reduction to a community’s overtime rate can save annually $24,000 to $60,000, the financial impact can be great.

But the impact overtime can have on your senior care operation is greater than just money, as excessive OT creates a strain on staff, potentially diminishing quality of care.

Here are three signs that overtime is costing you more than just money and how to fix it:

1. There's a lack of collaboration between team members. 

In many ways, collaboration is the lifeblood of senior care. Caregivers collaborate with doctors, nurses, family members, their fellow caregivers and even residents.

But when caregivers overextend themselves by working too many overtime hours, that crucial component of collaboration can take a hit. A study published in May of 2018 by the Journal of Nursing Administration found that overtime is common and growing more frequent, leading to fatigue-fueled breakdowns in collaboration.

“It’s been well-documented for many years that nurses’ shifts don't end when they are scheduled to end, but it's interesting to note that this is a chronic problem," Amy Witkoski Stimpfel, co-author of the study, told Modern Healthcare.

An assistant professor at NYU Rory Meyers College of Nursing, Stimpfel noted that the study’s findings suggested a negative impact on collaboration, adding that overtime leads to problems in patient safety and quality of care. Chenjuan Ma, lead author of the study and assistant professor at NYU Meyers, noted that the study’s findings are applicable to other clinicians, noting, "working overtime is a common theme across disciplines."

2. Your turnover rates are on the rise. 

For an industry already facing its share of turnover problems, overworking caregivers and creating further physical, emotional and mental strain is a recipe for disaster. And there are financial implications to turnover, of course. A 2012 study by the Center for American Progress showed just how costly turnover can be for companies, noting that for workers earning less than $50,000 annually, a typical cost of turnover is 20% of that person’s salary. In senior care specifically, it's estimated that rehiring costs are upwards of $4,000 per employee.

High turnover can also mean lower levels of resident care and service. First-hand knowledge of residents' needs and preferences is linked to higher care and service levels; and turnover can cause a discrepancy in those levels. It takes time for new caregivers to learn the ropes of a community and earn the trust of the residents they serve. Plus, fewer caregivers on the floor due to being short staffed means less one-on-one time with residents.

3. Schedulers are spending more time on managing last-minute call-offs & no shows. 

A 2011 study by the Aragon Institute of Health Sciences concluded that a person who works more than 40 hours a week is six times more likely to burn out than a person working less than 35 hours--leading to a viscous cycle of staffing issues. 

When burnt out employees call off work at the last minute, it sends the scheduler into a frenzy to get the shift filled. This takes upwards of hours per call-off and often results in the scheduler assigning the person who fills in into overtime. 

Need to take control over overtime? You need to proactive, not reactive. Here are four ways to accomplish that:

      1. Set and communicate realistic overtime goals. Leaders must identify the causes of unnecessary overtime and set achievable goals to eliminate it. Once established, communicate the goals to your schedulers.
      2. Proactively identify overtime. To proactively reduce overtime, start with your scheduling processes and move away from manual scheduling, which does not provide insight into potential overtime. Effective schedulers are alerted of potential overtime traps during scheduling, not after.
      3. Keep tabs on clock-riders. To curb “clock-riding” — caregivers punching in early and punching out late to add extra time to their paycheck — compare punch reports against staff schedules. You can then change their behavior by discussing the trends with them and/or their managers.
      4. Create a call-off plan of attack. To adjust on the fly when someone cannot work, schedulers often rely on a select few staff members to fill shifts, frequently resulting in overtime. Trim the excess cost associated with call-offs by implementing a process schedulers can use to best fill those shifts by giving them real-time visibility into which staff members are eligible, available and not at risk for overtime.

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About Mike Pumphrey

Mike Pumphrey is Vice President of Product Marketing at OnShift. His expertise in staffing and labor management strategies in long-term care and senior living is foundational to his role leading OnShift’s Product Marketing team. Mike works hand-in-hand with state and national associations, senior care providers, and with OnShift’s Customer Success and Product teams to create impactful best practices aimed to help solve the daily workforce challenges in senior care. Mike shares insights, research and recommendations to improve clinical, operational, and financial outcomes through regular blog posts and conference speaking engagements.

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