3 Steps to Control Labor Costs

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At the 11th Annual Spine, Orthopedic & Pain Management-Driven ASC Conference on June 15, Thomas Jacobs, president and CEO of Westchester, Ill.-based MedHQ, shared three strategies for controlling surgery center labor costs.

1. Hire and retain 'A' players. To build on a surgery center's success, it's essential that ASCs recruit the best people and keep them with the center for as long as possible, Mr. Jacobs said. The cost of replacing a high-performing employee is estimated to be 12 weeks of productivity, he added. Compensation is a necessary component in retention, especially for top talent, but ASCs must be careful to avoid overpaying employees.

He recommended identifying the responsibilities of each position and quantifying each with a point system. After tallying up the points, an administrator can determine the value of each position based on its actual worth, not simply on how the position has historically been compensated at the center. Modifiers should be applied to account for experience, education and other credentials. This gives an objective guide for how much to pay employees in these roles and can be used when negotiating salary for new and current staff. Being transparent with compensation is also a powerful negotiating tool.

Money is not enough to retain some people, and it is certainly a finite resource. Mr. Jacobs said rewards and recognition are key to creating a warm, welcoming climate in which staff bond and develop loyalty to the organization.

2. Performance management. ASCs can make the most of their staff's talent with effective, meaningful coaching and mentoring for frontline supervisors, who will set the tone for organizational culture and be the most powerful driver of retention. Developing staff professionally can also mitigate risk factors by training employees in best practices and reducing the rate of error in both patient care and workplace safety, Mr. Jacobs said, generating a lot of savings potential.

"How many times have you held your breath and crossed your fingers hoping to avoid safety issues like OSHA injuries, hand washing incidents, cell phones in restricted areas, or disciplinary infractions such as harassment, hostile work environments, and sexual relations at work?" Mr. Jacobs asked the audience? Proper training of staff and regular reinforcement, especially through frontline leaders, will help best practices stick and reduce contingency costs.

"If you have a [group purchasing organization], a practice management system, and you're using preference cards with physicians, then from a supply standpoint there's not  not many cost savings opportunities left," he said. "We believe employee costs are the last juice to squeeze" to save surgery centers money.

3. Automation of human resources processes. From scheduling to benefits information, the more HR-related processes that can be automated, the better, Mr. Jacobs said. It's worth an investment in such software so that employees have a reliable, always available resource to use that eliminates error, waste, labor costs and offers convenience to employees.

Among the best features such systems is that they allow employees to see how much is being paid for in their health plans so they can see the value that the organization is providing them. "You want your employees to know all the things you're paying for them and all the value you're giving them," he said.

Also, removing the need for human discernment regarding HR requests like scheduling or day off requests can provide an objective tool workers will consider fair, he said.

More Articles on Management and Labor:

10 Steps to Immediately Improve Surgery Center Profits: Cost Reduction & Benchmarking
Structuring a Joint Venture Between Hospitals and Surgery Centers: What Works?
ACOs: 5 Ways They Matter for ASCs

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