5 Strategies to Reduce Human Resources Costs at Surgery Centers
1. Optimize benefits and compensation. To optimize employee benefits, employers should understand their medical loss ratio, which requires insurers to spend at least 80 or 85 percent of premium dollars on medical care under PPACA. Employers should also encourage employees to have healthy lifestyles, such as quitting smoking, to reduce costs.
To optimize compensation, surgery center employers should conduct a compensation and benefits analysis to determine the fair market value in the area. Compensating employees for less than fair market value may lead to higher turnover. "Going about a rigorous analysis to make sure you have a good compensation strategy in place is critical," Mr. Jacobs said.
Employers should also consider pay-for-performance initiatives, such as giving bonuses to high-performing employees. Another aspect of compensation is scheduling. Having flexible schedules attracts employees, Mr. Merski said.
2. Hire and retain "A" players. High turnover rates can result in considerable costs to employers in lost productivity and training. In fact, for every $10,000 in salary of a departed employee, the employer loses about six days of productivity, according to Mr. Merski. To avoid high turnover without increasing costs significantly, surgery centers should conduct ongoing evaluations of employee satisfaction and provide non-monetary benefits to make employees happy.
While an excessive turnover rate is costly, so is an excessively low turnover rate over an extended period of time, according to Mr. Merski. He says a healthy retention rate is roughly 85 to 90 percent of employees.
3. Improve training and mentoring. Appropriate training and mentoring is key to reducing HR costs. One common issue is appointing a supervisor with poor or no training, which can cause difficult internal issues. Supervisors need to train employees in customer service, as patient satisfaction can affect performance and revenue. In addition, supervisors should cross train all employees so that when someone is on vacation or on sick leave, another employee can fill in effectively.
Employers also need to have a strategy for disciplining employees. When a surgery center is considering suspending or terminating an employee, MedHQ holds a disciplinary conference. In the conference, the supervisor presents the issue to a third party and the employee has the opportunity to respond. Then, a report is given to the supervisor to determine a strategy that can mitigate the problem. Having an objective, third party can help supervisors identify the root cause of the problem and work with the employee to fix it, Mr. Merski said.
4. Manage risk. Risk management can prevent insurance coverage cost increases. Areas of risk that employees need to manage include employee injuries, employee arguments, hostile work environments, sexual harassment, handwashing and the use of cell phones in restricted areas.
5. Automate processes. Another HR cost-saving strategy is automating manual processes. Providing an employee portal can help streamline processes related to requests for paid time off and tuition reimbursement, tax forms and complaints. In addition, digitizing documents such as employee handbooks can eliminate copying costs.
These five strategies can save surgery centers a significant amount of money. For example, a typical $5 million net revenue surgery center can realize the following savings, according to Mr. Jacobs:
• $55,000 by reducing turnover 25 percent
• $110,000 by improving productivity 3 percent
• $45,000 by reducing employment practices risks 50 percent
• $40,000 by reducing costs of benefit plans and gaining efficiencies from an effective IT system
In total, a $5 million net revenue surgery center can have a $250,000 increase in operating income, Mr. Jacobs said.
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