4 Ways Hospital CFOs Can Remain Competitive Despite the Kaiser Permanente Deal

Kaiser Permanente has announced a tentative agreement with its union and it may have large financial implications.

Kaiser Permanente's recent announcement about a tentative agreement with its union and the proposed 21% wage increase for its workforce over four years may wreak havoc on 2024 budgets across the county as other organizations will likely feel the need to compete.

Competing with an organization that has implemented a substantial wage hike for its employees can pose both challenges and opportunities for CFOs. Many organizations may not be able to compete with large wage increases, so to effectively respond and remain competitive, there are several key strategies CFOs should place focus:

Analyze your own compensation structure

Start by conducting a thorough analysis of your hospital's current compensation structure. Understand how your wages compare to the new, higher wages offered by competitors. This analysis should encompass all levels of employees, from entry-level staff to specialized roles.

Evaluate your financial health and offerings

Assess your hospital's financial health and budgeting capacity. Determine whether your organization can support a wage increase of a similar magnitude without compromising sustainability. Evaluate your revenue streams, cost structures, and overall financial performance.

If you can't match a competitor's wage hike, focus on creating a work environment that fosters employee satisfaction, professional development, and work-life balance. Offering competitive non-monetary benefits can help retain and attract talent—especially since high employee turnover can be costly in terms of recruitment, training, and productivity losses.

''With increased burnout among healthcare workers and market competition, we recognize that efforts to retain employees are of high importance,'' Alice Tang, DO, MPH, MBA, CMO at Sentara Northern Virginia Medical Center told HealthLeaders.

''For example, in 2022 we implemented a 5% pay increase, and we added enhanced benefits such as increased paid time off, paid parental leave, and increased tuition reimbursement.''

Health insurance, retirement plans, childcare assistance, flexible work arrangements, and educational opportunities are valuable perks that can make up for lower base salaries.

Keep monitoring labor relations

Keep a close eye on labor relations and employee sentiment within your organization—and nationally.

It's clear that labor issues—and the cost of that labor—will continue to be a prominent concern for healthcare organizations moving into 2024. As a handful of various industries have participated in massive strikes this year, the trend in healthcare is likely to continue.

Effective communication and engagement with your workforce can prevent dissatisfaction and the potential domino effect of these labor actions.

Leverage telehealth and technology

Embrace technology, such as telehealth, to optimize operational efficiency and reduce staffing needs in nonclinical areas. Technology investments can free up resources for competitive compensation in critical roles.

While competing with an organization that has implemented a 21% wage hike for its employees may present financial challenges, hospital CFOs can respond strategically by optimizing their compensation strategies, enhancing non-monetary benefits, and investing in talent retention and development.

The key is to create a competitive advantage in ways that align with your organization's financial capabilities and long-term sustainability goals.