Cost containment in healthcare involves reducing expenses without compromising patient care. This is an ongoing challenge for many organizations. HR service providers can contribute to cost-containment strategies by implementing various solutions. These include HR service sharing, flexible staffing, and cross-training. HR services can also play a role in helping to manage labor costs by providing analytics and support for workforce planning.
Outsourcing
The trend for businesses to outsource non-value-adding administrative business functions is a growing global phenomenon. One such function is human resources. Outsourcing HR allows companies to focus on their core business and to save money by transferring some or all of the work to an outside provider. However, it is important to ensure that the HR service provider has the necessary experience and expertise to ensure strict compliance with workforce laws, proper workplace policies and thorough recordkeeping. Failure to do so could result in costly fines or even lawsuits. Outsourcing providers have the experience to manage the complexities of the law and can help you avoid potential litigation by providing best practices guidance. There are multiple options for outsourcing HR services, ranging from using an online employee self-service system to hiring a professional employer organization (PEO). A PEO enters a co-employment relationship with your company and is responsible for payroll taxes, workers’ compensation, and other liabilities. This option is ideal for smaller businesses with limited budgets. Balancing rising healthcare costs is not about cutting expenses but optimizing costs without compromising patient care. To do this, it is important to understand the factors influencing healthcare labor costs. This includes analyzing employee productivity data and identifying opportunities for savings. A strong HR department can also help healthcare organizations manage their workforce to improve efficiency and reduce costs.
Shared Services
Shared services involve centralization or consolidation of service activities within an organization to eliminate duplication of effort, improve efficiency and drive cost savings. Unlike outsourcing, an external transaction, shared services involve internal departments becoming service providers to other departments (or business units). A healthcare example of a shared-services entity would be a national centralized procurement and finance team serving all regional healthcare organizations. These teams might have a common IT platform that supports all hospitals. The goal is to reduce operational costs by leveraging economies of scale and optimally leveraging purchasing power and processes.
To maximize the benefits of a shared-services initiative, the process should be carefully managed to avoid disrupting other industries and enterprises that can benefit from streamlined back-office operations. For instance, a major overhaul of back-office functions could distract from reshaping frontline systems and processes impacting patient experiences and outcomes.
Additionally, a shared-services program must be able to rely on the financial support of its internal customers to fund ongoing process improvements. That is why some shared services organizations choose to charge for their services. The right charge-out methodology can help ensure the customer is vested in forecasting and managing its service demand, reducing unnecessary waste and driving continuous improvement.
Flexibility
HR teams must be willing to adapt and make the necessary policy changes to contain costs. This is particularly important when working with international assignments where local conditions may impact a global policy and require exceptions. This involves collaboration with managers to determine what safeguards should remain in place and avoid false barriers that prevent flexibility (e.g., process rigidities that can delay or prevent an assignment). Flexibility is the capacity of muscles and joints to move through an unrestricted range of motion without pain. Unlike other fitness components, such as aerobic endurance and muscular strength, flexibility is highly specific to the individual joint. As such, linking flexibility to one or more health outcomes is challenging. This is especially true because the physiology of flexibility differs among individuals. Achieving cost containment in healthcare requires HR to analyze labor costs and identify areas where savings can be made. This is particularly important in staffing, where healthcare organizations depend highly on agency/traveler professionals. Developing effective staffing practices to meet demand and improve efficiency will help reduce these costs. This could include implementing hybrid work models or reducing the number of traveler professionals on contracts. It can also be achieved through technology, such as telehealth programs, which can help reduce transportation and hospital stay costs.
Integration
HR professionals are often the champions of change and resiliency. They provide compliance guidance and help shape the firm’s strategy while minimizing business risk amid rapid change. They are also responsible for ensuring that the firm’s people practices are aligned with its long-term goals. To effectively manage costs, HR must identify the root causes of inefficiencies and find ways to optimize the company’s resources. One way to do this is by reducing the use of agency/traveler professionals, which can be expensive. Another is by implementing flexible staffing models that can adapt to changes in patient demand. Finally, by analyzing labor data, HR can identify areas where the organization can reduce expenses without compromising patient care. Many Hawai’i residents face precarious economic circumstances due to the COVID-19 pandemic and are concerned about their future financial stability. To mitigate these concerns, it is essential to understand how Hawai’i residents prioritize healthcare access, food economics, ‘aina care, and a culturally informed community. Understanding these priorities can help inform policy actions that support public health.
