Drive an Innovative and Flexible Pay Strategy at Your Organization

Nearly 1 in 5 healthcare workers quit their jobs during the pandemic, many driven by the desire for more pay. There are ways healthcare organizations can combat this trend, but it requires thoughtful care.

(Editor's note: This is the fourth article in a series on the healthcare labor market from the CFO perspective.)

The desire for more pay and better opportunities have generally topped the lists of why workers leave a job. But in the healthcare sector, this trend appears to have reached near crisis point, as nearly one in five healthcare workers have quit during the pandemic.

Indeed, according to a recent survey of 1,000 healthcare workers by Morning Consult, 18% have voluntarily left their jobs since February of 2020, while another 12% were laid off. Making matters worse, another 31% of healthcare workers say they have considered leaving their current job, and an additional 19% have considered leaving the field entirely.

The COVID-19 pandemic certainly has a lot to do with these statistics. It was the No. 1 reason given for leaving a job or wanting to, cited by 54% of those polled. That was followed by the desire for higher pay (50%) and better job opportunities (50%). The fourth most-cited reason was job burnout or being over-worked (49%), and the fifth reason was desired career growth (44%).

With statistics like these, the immediate message is that many healthcare organizations need to reevaluate their pay structures. Healthcare CFOs need to find ways to be innovative and flexible in how their organizations compensate healthcare workers if they are to retain them and stay competitive.

But there is a downside here. Being more innovative and flexible in awarding compensation could come at the expense of other financial needs at an organization. Healthcare CFOS must adopt flexible compensation policies with thoughtful care.

The healthcare labor market is changing, and so must the industry

"Healthcare has seen significant changes. Whether it is the great resignation, or what some see as the great retirement coming, there has been a fundamental shift in our labor market and we must adapt," says Brad Haws, chief financial officer at Emory Healthcare in Georgia, part of Emory University, and one of the leading health systems in the country. Emory Healthcare has a net patient service revenue of approximately $5 billion.

The result is that "the simple economic principles of supply and demand are driving changes in the financial models and expectations," Haws continues. "Burnout, fear for one's health, and even macro-aggressions against staff all have a role in the way someone views the jobs that are available. Many employees are reevaluating their individual situations and making new decisions. Some of those decision involve compensation."

There are steps that healthcare organizations can take to compensate individual healthcare workers fairly and creatively. But from a big picture perspective, this greater thirst for compensation by workers is a difficult challenge for the industry.

"One thing that is difficult to understand at a macro level is the driver of the market. As we all compete for staff, we are, in some ways, driving our own market cost increases," Haws says. "Again, fundamental economic principles are at play. When staff can leave a role and become a temporary or traveling resource in the same market they were in previously, all we have done is raise the cost of the same resource. I don't know how to address a cycle that continues to spiral toward increased costs."

This is not a good trend, Haws says.

"At some point, these costs will drive difficult decisions within all of our organizations. If revenue remains inelastic, we will have to make tradeoffs regarding the use of our financial resources. Capital, equipment, staff, etc., all are required for the services we provide and will have to be balanced," Haws says.

Exploring employee needs to keep them engaged

At Emory Healthcare, time is of the essence in terms of addressing the concerns and fears of healthcare workers during the pandemic. The organization wants to head off worker departure to the best of its ability, and that includes understanding new ways of compensating workers for their time, efforts, and contributions. Haws is actively involved in the efforts.

"We have developed a systemwide response team to the issues that is second only to the incident management effort that the COVID pandemic required clinically," Haws explains. "We have many teams focused on a variety of work streams, with parallel efforts and regular report outs." The teams are:

•            Retention and engagement

•            Recruitment

•            Care model reviews

•            Leadership development and support

•            Analytics

•            Communication

•            Human resources

"Each team is working on its own work stream and bringing back solid ideas. But it is a heavy lift," Haws acknowledges.

Success with innovative pay involves creativity, and a lot of 'trial and error'

As healthcare CFOs explore innovative and flexible compensation practices, it is important to remember that the answers don't always involve just cash, Haws stresses. As noted in the Morning Consult survey, career opportunities are a top driver for job change as well. Haws knows this from experience, having joined Emory Healthcare in August, coming from the University of Iowa Health Care, where he was associate vice president and CFO.

Still, it is on the compensation front that healthcare organizations have more ability to control the dynamics.

"We are, by necessity, trying to keep close tabs on the market and make compensation adjustments as needed," Haws notes. "Some of those adjustments are outside the normal cycle. However, we need to remember that pay is only one of the variables that staff are looking at when they evaluate a job. Other things, like flexibility, learning and training, career growth and the workplace environment also play a role. I recently had an interesting conversation with our CHRO wondering if we are headed back to an environment of a 'cafeteria type' model where staff can choose what matters to them."

To best implement innovative and flexible pay practices, Haws says an organization needs to embrace "creativity, paired with trial and error. I don't think all of our strategies will be successful, but you don't know until you try. The key is being able to measure the impact."

Top tips for driving a successful innovative and flexible pay strategy

To other CFOs looking to spearhead innovative and flexible pay practices at their healthcare organizations, Haws offers three tips:

• "Understand where the market is going—skate to where the puck will be, not where it is.  Demographics are changing and the market is changing. Staff may value things other than pay (such as flexible schedules, educational opportunities, service-related activities). There may be generational differences in the relative valuing of retirement," Haws says.
   
• "We need to have metrics that track the effectiveness of the compensation plans that we choose. My experience is that we believe we know what the market wants (we might even have some market data or focus groups), but do we track the effectiveness of what we do? Market comparators often lag, so those are not always the best. Turnover metrics are common, but there are many variables that might drive turnover," Haws advises.
   
• "Partner with operations to understand their needs and drivers. We need to marry the financial impact to those. If possible, healthcare systems might consider pilots or small-scale experiments," Haws concludes.

Haws also offers a personal anecdote of an innovative and inexpensive recruiting effort that paid off for both a healthcare provider and potential hire.

"One of my daughters is graduating from nursing school with her BSN in December. She is attending school at Brigham Young University in Provo, Utah, and we have had many conversations about her future," Haws says. "She was recently invited to an open house to a highly reputable system on the East Coast. This open house turned into a remote interview and a job offer for a great position in a cardiac step-down unit with a great system starting next spring, once she has passed here licensure exams."

"I have been impressed by a creative recruitment strategy and wondered what the ROI has been on those efforts. It is interesting to recruit all the way across the country, and I wonder how many candidates are considering that type of a move, but it worked in at least one situation," Haws says.

Related:

• Hospitals Face Pressure to Pay Market-Competitive Salaries
   
• Manage a Successful Remote Work Model at Your Health System
   
• COVID-19 Fears and Frustration Add to Recruiting Challenges for Hospitals

Brad Haws is a HealthLeaders Exchange member. The HealthLeaders Exchange is an executive community for sharing ideas, solutions, and insights. Please join the community at https://www.linkedin.com/company/healthleaders-exchange/. To inquire about attending a HealthLeaders Exchange, email us at exchange@healthleadersmedia.com.