Labor shortages spark innovation: an interview with Gerald F. O'Neill - Executive Insights - Holy Family Hospital and Medical Center's senior vice president and CFO - Interview

Healthcare Financial Management, Jan, 2003

Labor shortages in both clinical and nonclinical areas are plaguing hospitals and health systems around the country. In Methuen, Massachusetts, Holy Family Hospital and Medical Center is pioneering new ways to fill nursing and other staff vacancies with permanent, experienced personnel who already are loyal to the hospital Holy Family's senior vice president and CFO, Gerald F O'Neill, discusses his organization's creative efforts to battle the healthcare labor shortage and other challenges facing healthcare organizations.

HFM: What is the greatest challenge your organization is facing in the next five years?

O'Neill: I can think of three key challenges-continuing to maintain profitable operations, accessing capital to meet the expected ongoing increase in patient demand, and attracting qualified staff. I think we are successfully meeting those challenges. Holy Family Hospital historically has operated profitably despite the fact that Massachusetts hospitals, collectively, have incurred a $1 billion operating loss over the past six years. Holy Family has enjoyed profitability because it has experienced continued growth in patient demand, has always operated efficiently as measured by standard benchmarks, and has strong commitment from its medical staff, employee workforce, volunteers, and trustees. We also enjoy broad community support.

HFM: How is the nursing shortage affecting Holy Family?

O'Neill: Holy Family was significantly affected by the nursing shortage during the fiscal year that ended September 30, 2002. During FY02, the hospital incurred $1.5 million in temporary agency costs, compared with only $400,000 in the previous year. The nursing component of that cost was $1.2 million in FY02, compared with only $200,000 the previous year.

To address this problem, we hired two nurse recruiters and have reduced the nurse vacancy rate from 10 percent in FY02 to 3 percent currently Because we are committed to retaining a competent nursing staff, we have engaged a national nurse-retention consulting firm, which has focused on creating a favorable environment for nurse practice.

We also have instituted a program with a local community college, in which our patient care assistants can attend nursing classes, work 24 hours a week at the hospital, and be paid for a 40-hour week. The program was written up in one of the national nursing journals.

To identify candidates for the program, we ask our nurse managers to recommend patient care assistants who exhibit the potential to become registered nurses, but who probably would not be able to achieve that goal on their own. We make tuition assistance available to these people. We want to support them because they have shown a commitment to the hospital, and we want them to stay here once they graduate. We're looking for a three-year commitment, and we think that they will find it to their benefit to stay.

We currently have 16 patient assistants enrolled in the program, and the first class of patient care assistants will complete their course this spring. They can sit for the Massachusetts registered nursing licensure examination,

HFM: How are you handling labor shortages in other departments?

O'Neill: We've had particular problems with hiring radiation therapists and medical record coders. Some positions in those areas have been open for two years. We've had a very aggressive recruitment process over the past year, and that has helped us reduce vacancies.

Like most other hospitals, we have had to rely on agency staffing and premium pay to cover shortages. But we also are trying to address the shortages by creating an environment that truly demonstrates that we value the employees' contributions and are sensitive to their needs. That includes providing a flexible work schedule and a competitive compensation package.

We also have done everything we can to understand and accommodate patient concerns during this labor shortage. Our staff has been working over and above the call of duty to make sure that we're able to deliver caring service to patients and meet all their needs, particularly in peak areas of demand.

To fill coder positions, we currently are identifying nurses who are interested in making a transition to the coding profession. The most likely candidates are nurses who no longer feel physically able to do floor nursing, but who also do not yet want to retire.

It makes sense to retrain them to learn the coding profession, because they already have the clinical background, and that should help them to pick up the necessary knowledge quickly.

As with the nursing education program, we have asked our nurse managers to be on the lookout to identify good candidates for this kind of transition. We want to keep those people here, because they are good employees, they are familiar with the hospital, and--most important--they know the physicians, which is very helpful because it often is necessary for coders to talk to physicians about medical records.

HFM: What are some of your key service areas?