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Data-Driven Labor Management Delivers Financial and Operational Improvements

Article Summary

Managing and retaining a talented workforce represents approximately 60 percent of hospital costs. In a rapidly evolving healthcare environment, hospitals and health systems are under tremendous pressure to improve efficiency and reduce healthcare costs, making it critical to accurately monitor and adjust labor resources.

In an effort to improve staffing efficiency, Hawai‘i Pacific Health (HPH) sought to realign its staffing practices to better manage and predict its labor needs. Although the health system had a culture of flexing staffing to fit volume, it based staffing decisions on latent, retrospective data, resulting in less accurate planning than it desired. Utilizing its data platform, HPH was able to forecast its workforce needs and effectively manage staff schedules—two changes that led to significant cost savings.


healthcare labor management
Featured Outcomes
  • $2.2 million savings in 16 months, while maintaining high quality and positive clinical outcomes.


As hospitals and health systems face tighter margins, reduced cash flow, and increased competition, they are under immense pressure to improve efficiency and reduce costs. One of the major drivers of healthcare operating expenses is labor management, accounting for approximately 60 percent of hospital costs.1

The demand for nurses, clinicians, and healthcare-support professionals is projected to increase along with the aging population, creating labor shortages that can drive up wages and lead to the increased use of contract workers and staffing agencies.2The problem is further complicated when patient volumes are lower or higher than expected and place a strain on the budget.

Managing labor costs while meeting the demands for ensuring adequate and qualified staff is a top concern for healthcare leaders who recognize that tight management of labor utilization is essential to maintaining financial health. Successfully managing labor costs requires a system that can track and benchmark labor expenses.3Effective healthcare labor management requires the right balance between quality care, safety, patient and employee satisfaction, and fiscal responsibility.






Leaders then had to review and reconcile multiple, differing reports to understand their labor utilization. Since the reports were based on payroll data that was weeks old, leaders were forced to manage labor costs by looking in the rearview mirror. The health system sought to improve its labor management, but it lacked the ability to enable labor analysis and interventions on a systemwide level.


Analysis pinpoints opportunities

To gain insight into its performance, HPH partnered with Health Catalyst to conduct an opportunity analysis. The data uncovered opportunities to reduce costs in healthcare labor management and identified the top ten areas across four hospitals with the biggest potential to improve. To tackle the challenge, HPH leveraged the Health Catalyst® Data Operating System (DOS™) and a robust set of analytics applications—including PowerLabor™, an analytics application that helps managers facilitate more efficient labor force utilization by understanding basic operation and staffing indicators.

Using data from its data platform (including hours, volume, and budget data from four different data systems) HPH was able to access, for the first time, detailed information about its labor management practices in one place. Leaders can use PowerLabor to visualize labor management and understand productivity and identify hours detail versus the budget and full-time equivalent (FTE) utilization compared to budgeted FTE.

The organization assembled a meaningful representation of labor utilization with an easy-to-use interface to explore various dimensions of labor productivity, including staffing budget variance, the variance between actual and budgeted pay, and unnecessary variation in labor metrics.


Engagement sets the stage for success

Leveraging its culture of financial transparency, the health system engaged leaders from all departments at the start of the project. HPH listened to managers, leaders, and clinicians; validated the data; and addressed the underlying variation before implementing changes. The collaborative approach facilitated widespread support and adoption of the processes and tools as they were rolled out.

First, HPH conducted a pilot to evaluate the use of the analytics application and discover what widespread adoption throughout the system would require. It quickly realized that there were many differing meanings and assumptions ascribed to volume statistics and that data were not consistent.




Collaboration and innovation produce wins

HPH知道,劳动力管理不仅仅是减少开支,而是优化资源,寻找创新和协作的方式来实现其劳动力管理目标。Successfully improving labor management required collaboration, financial transparency, and accountability.

The organization has seen many examples of managers thinking outside the box to address labor needs and manage employees within the budget. For example, managers on a very busy medical unit strived to improve patient satisfaction while staying within their staffing limitations. Data demonstrated that the unit could still meet its staffing goals while adding one additional staff member for the first four hours of the shift—the busiest time—to help answer call lights and respond to patient needs. This innovative four-hour shift started to yield an increase in patient satisfaction scores.

As the census has rebounded, HPH uses the tool to inform strategies to accommodate unpredictable changes in volumes and explain variances:

  • 组织中其他人认为工作人员过多的单位使用这些数据来证明需要增加额外的FTE。
  • Another unit analyzed the amount of overtime and double-time employees were using and converted those high-expense dollars to regular hours by adding one staff member. In many cases, a re-allocation of positions improved staffing without adding additional costs.
  • The emergency department (ED) had been working on different ways to manage its staffing, making incremental gains. Following respiratory therapy’s example of using on-call staff, the ED manager decided to trial on-call staff to manage unpredictable volume variation. The small change helped the ED meet its goals, without compromising high-quality outcomes.
  • The pharmacy department had experienced unexpected absences and turnover and noticed that it was over budget in training dollars. By drilling into the data, it was able to better design training and orientation to skill mix, eliminating unnecessary training costs.


HPH provided additional training for employees interested in providing one-on-one patient monitoring. They also trained the staff in housekeeping, transportation, and respiratory therapy to successfully and safely fulfill the patient monitoring role, when needed.


通过使用数据驱动的方法进行劳动力管理,HPH现在对作业有了详细的了解,支持制定干预措施,以降低费用,同时提高作业效率和满意度。卫生系统仅在6个月内就改善了4个试点设施的劳动力利用率,显著降低了劳动力成本。Building on its initial success, the organization has rolled out the program across its entire system, resulting in substantial savings and operational efficiencies:

  • $2.2 million savings in 16 months, while maintaining high-quality outcomes.
  • With on-demand, real-time access to data, managers spend 15 minutes—instead of four hours—proactively managing operations, reducing the administrative burden on managers.
  • The organization can now answer basic business questions (e.g., the number of FTEs in a given hospital department) in minutes rather than weeks, allowing managers to immediately identify budget errors, in terms of where people are assigned versus where they should be, before making decisions based on faulty data.
  • 随着数百名员工每天使用该工具积极管理他们的资源,该应用程序的利用率继续增长。


Art Gladstone, RN, MBA, FACHE Chief Executive Officer, Straub Medical Center and Pali Momi Medical Center, Chief Nursing Officer, Hawai’i Pacific Health


HPH is continuing to refine its capabilities to optimize and manage labor expenses and is in the process of incorporating labor dollars into its labor-management analytics, giving leaders detailed insight into the financial impact of their decisions.


  1. LaPointe, J. (2018).Hospitals target labor costs, layoffs to reduce healthcare costs.RevCycleIntelligence.
  2. Bannow, T. (2018).Health systems find unique ways to cope with rising labor costs.现代医疗保健。
  3. Becker’s Hospital Review. (2010).8 ways to cut labor costs in your hospital.
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