It hardly seems possible-indeed, news reports might suggest the contrary-but the era of wholesale shedding of hospital labor could be drawing to a close, or at least a hiatus.
A new poll of roughly 10% of U.S. hospitals reveals that significantly fewer institutions are planning to trim their staffing in 1997 than were planning to do so in 1996 or in 1995. Likewise, significantly more hospitals foresee that their work force will remain constant next year.
But the good word apparently eludes hospital employees, whose morale, in contrast, is still curving downward to record lows.
The results are contained in a human resources and benefits survey taken by the national consulting firm of Deloitte & Touche in October, in conjunction with MODERN HEALTHCARE.
"Things seem to be stabilizing," said Bill Chafetz, Deloitte's project manager for the survey. "They're not good, but we see evidence of stabilization."
The work-force diet. For several years, hospitals have been shedding labor like dieters getting rid of unwanted pounds. The degree of downsizing varies by region, of course, depending on degree of managed-care penetration, unionization and hospital consolidation.
Some places, such as California, Minnesota and Arizona, have already slenderized to a maintenance weight. Other places, like Texas, are barely feeling the pinch (Nov. 11, p. 64). Still others, like New York City, are poised for a free fall once the state's hospital rate-setting mechanism ends.
Yet at the peril of generalizing about the United States, Deloitte & Touche's survey of 600 hospitals found that only 28% intend to reduce staffing in 1997. That compares with 36% that planned to reduce in 1996 and 34% that planned to do so in 1995. In 1997, 62% of respondents intend to hold staffing constant, compared with 55% in the 1995 survey and 58% in the 1994 survey.
A slightly higher percentage of hospitals plan to expand their labor force next year than in either of the preceding years, but the difference is probably not statistically significant. Ten percent plan to expand in 1997, compared with 9% in last year's survey and 8% in the 1994 survey.
The survey doesn't show which respondents actually carried out their plans, or how many heads they chopped off, but it indicates how hospitals view their labor needs.
Confirming this trend, only one-third of hospitals list "reduction in staff" among their most pressing human resources issues. In last year's survey, it was 46%, and in 1994 it was 40%. The impact of downsizing, however, is still a major issue, cited by 55%.
Of those hospitals reducing staff, the majority-68%-will cut 5% to 15% of positions.
This time the nonexempt positions-those covered by federal wage-and-hour regulations-aren't on the firing line to the same degree they were in past years. In 1994, 40% of hospitals intended to trim their ranks in 1995; in 1996, only 34% plan to do so next year. This could be a sign that hospitals have squeezed everything they can out of the nonskilled positions. Instead, therapists, pharmacists and technicians are more frequently targeted for elimination. This strikes Chafetz as counterintuitive because for several years it's been known that technicians and therapists are hard to come by. Indeed, in some parts of the United States, they are still in acute shortage.
Morale morass. But the major human resources issue this year, same as last year, is morale. Where 67% cited it in 1994 and 81% in 1995 (Dec. 11, 1995, p. 52), this year, 86% think of it as their most serious problem-a record high. For all intents and purposes, that's every hospital.
It's been a serious problem since at least 1989, when it registered 79%. After a dip to 62% in 1991, it has risen remorselessly.
The reasons for that decrease in morale include uncertainty about healthcare reform, changes in job duties and lack of effective communication. But where last year the fear of layoffs ranked markedly higher than compensation as a reason to get depressed, this year those factors have exchanged positions. Stalled salary increases now are a bigger downer than the fear of losing one's job.
That demonstrates a subtle shift in thinking, Chafetz said, from "What is this industry going to be?" to "What's happening to me within my hospital?"
At the same time, compensation issues are rising to the fore. Among the most pressing human resources issues, pay-for-performance and control of overtime pay both were listed more frequently as problems.
Yet hospitals seem to be gaining control of salary increases. It's a major issue to 36% this year. That's 10 percentage points less than the year before. By accident or coincidence, the difficulty of retaining employees rose slightly at the same time. It was cited by 51%, compared with 37% two years ago.
"When you have exhibited a lack of loyalty to employees, they are exhibiting a lack of loyalty to you," Chafetz said.
Religious restructuring. Typically, at hospitals of every revenue size, from 10% to 30% of the jobs are being redesigned. Those doing the largest amount of restructuring are religious hospitals.
In fact, the profile of religious hospitals stands out by comparison with investor-owned, government and secular not-for-profit institutions. About 46% of religious hospitals are planning to reduce their work force. Only 25% of for-profit hospitals are making reductions.
Among for-profit facilities, 64% are going to hold the work force steady; among not-for-profits, 61% are; and among governments, 65% are. But among religious hospitals, only 48% will make no change.
"We've seen this for two or three years," Chafetz observed. "Our hypothesis is hospitals with a religious mission would do their cutting a little bit later. They'd postpone until the market forces them to. Now the market is forcing them to." As would be expected, religious hospitals are doing the least expansion of their work forces.
Sixty percent of hospitals offer flexible benefits. Typically, 76% of a hospital's employees are full-time. For part-time employees, the biggest group of hospitals-some 44%-offer reduced benefits based on time worked. Yet that percentage was 59% in 1995. In contrast, more hospitals are offering the same benefits as full-time employees but at higher cost to the employee.
By a wide margin, more and more employees are being asked to rate their own performance in their annual evaluations. By a narrow measure, employees are more likely to be evaluated by their peers, subordinates, other departments and even patients. All these results are consistent with the introduction of "360-degree performance appraisals," a human resources innovation that is catching fire in hospitals. Under such arrangements, employees are critiqued by a much wider circle of people than direct managers. There also has been a noticeable jump in training offered to evaluators.
The percentage of hospitals that purchased physician practices rose slightly this year, as did the number of practices each facility purchased. Thirty-nine percent bought practices in 1996, compared with 35% in 1995 and 31% in 1994. The average number of physician practices bought rose to 3.5 per hospital in 1996 from 3.1 the year before.
Next year, however, hospitals intend to put on the brakes. They're planning, on average, to buy 2.7 practices in 1997.
In 1996, hospitals bought fewer physicians per practice: 6.7 vs. 8.8 in 1995. The average purchased practice employed 22 people. That comes out to about three support staffers for every doctor.
Religious hospitals are the only ownership category in which the majority of respondents (58%) are planning to buy physician practices next year. Forty-four percent of not-for-profits intend to do so, compared with 37% of investor-owned and 23% of government hospitals.
Religious hospitals also have the most aggressive plans measured in terms of number of physician practices they intend to purchase. They plan to buy an average of 3.3 practices next year, compared with 2.1 by the investor-owned group. Not only that, but the typical practice purchased is likely to be much larger (11.3 physicians) than that purchased by the for-profit group (3.4 physicians).