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Desperate to trim your labor budget? Start with overtime.

Labor costs consume most of a healthcare organization’s operating budget, so when it’s time to reduce costs, that’s usually the first place to look for savings. In fact, nearly half (44%) of CFOs and executives say reducing labor expenses is their No. 1 priority, according to a joint survey from the Healthcare Financial Management Association and Navigant.

Yet, for many healthcare organizations, typical cost-cutting measures, like layoffs or widespread hour reductions, just aren’t possible because they’re already short-staffed. For years, the healthcare industry has been up against a pretty critical staffing shortage. A lack of nurses, which make up the largest segment of the health profession, is a big driver behind the shortage. So much so that the U.S. Bureau of Labor Statistics projects 11 million additional nurses are needed to avoid a further shortage.

As a result, more nurses are working more overtime, as are physicians, mental health providers and support staff, and it’s pushing healthcare organizations’ labor budgets to the brink.


Overtime is a budget and quality killer

It’s simple math: In most cases, an hour of overtime costs more than a regular work hour, and an increase in overtime is undoubtedly contributing to the rise in labor costs. That’s why it has become a key metric for executives to monitor and why managers feel pressured to rein it in.

It makes sense to do so. Overtime is expensive and it’s been tied to employee fatigue and burnout, medical errors and lower patient satisfaction, all of which cost the organization in some way, even if it’s hard to quantify the losses. To look at it another way, it means your organization could be paying much more for lower quality work that could have a long-term impact on the bottom line.

All that said, decreasing your reliance on overtime is often the most effective way to drive down labor costs. That requires taking a closer look at scheduling practices, and more specifically, how overtime is being used and misused.


Offer managers more visibility and insight to curb overtime

Sometimes overtime is unavoidable. Often, however, it is a mistake that occurs because managers don’t have real-time visibility into what’s happening within their departments. They’re working with spreadsheets or other outdated scheduling processes, and they’re making split-second decisions without much data to go on when staff calls off or a unit is full.

That’s where a tool like ABILITY SMARTFORCE® Scheduler can be invaluable, offering overtime management with real-time, pervasive staffing visibility. For example, with a few taps on any mobile device, a manager can immediately see which employees are already in or nearing overtime. That insight can help inform initial scheduling decisions, fill open shifts and even prioritize who to send home during a slow shift.

By tapping on the employee’s schedule, the user can drill down further and receive a breakdown of the employee’s shifts. In some cases, a shift that will push an employee into overtime may be on the schedule, but it hasn’t yet occurred. That offers managers an opportunity to find a replacement for any hours that exceed 40 before the employee racks up overtime.

Overall, it offers managers more control over their schedules and a simpler, quicker way to manage shifts.


Gain the insight required to address overtime misuse

With Schedule Management, your managers have at their fingertips the data they need to make better staffing decisions and reduce costly overtime.

In addition, the executive team also benefits from in-depth overtime reports that break down both overtime hours and costs, by location or region, on a weekly, monthly, quarterly or year-to-date basis. That insight can allow you to pinpoint where overtime is costing too much, so you can troubleshoot the issue. Plus, the report will also forecast expenses for the next month, so you can proactively work with managers to reduce potential costs.


Keep overtime costs in check

With the highly affordable Schedule Management, you gain the visibility and insight to dramatically reduce overtime. If you want to see firsthand how much time Schedule Management can save you, request a demo now.

Inovalon and design®, Inovalon®, and ABILITY SMARTFORCE® are trademarks of Inovalon, Inc.

By Inovalon