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Healthcare Underinvests in its HR Systems and Processes: Podcast

HealthStream’s Second Opinions Podcast series features industry experts and leaders and their take on issues impacting healthcare today and tomorrow. We recently interviewed Elliot Clark, Chairman and CEO of SharedXpertise Media and HRO Today, a magazine focused on Human Resources leadership.

For healthcare, “HR in the future has got to be innovative… entrepreneurial… creative, but most of all they have to be talking about business impacts. In this episode of Second Opinions, Elliot Clark provides strong evidence why healthcare leaders must adopt the mindset of industries that see HR as an investment in the future and in better outcomes, not just a cost center and risk manager. In order to begin this transformation, Elliot says that HR needs to be able to talk the language of business, which includes understanding not only the traditional metrics of time to fill and cost per hire, but also the business impact of the cost of not hiring. “If you think of it that way, you automatically transform the concept of HR as an expense to HR as an investment.” 

Below is an edited excerpt from the recording with HealthStream’s Brad Weeks, our host:

Brad Weeks:

We’ve seen you present and speak about the link between human resources and business outcomes in hospitals and health systems, and you’ve actually been a part of some really interesting research that has examined that link in quite a bit of detail. What can you tell us that you learned through that research about how HR can impact the bottom-line?

Elliot Clark:

Probably eight years ago we began doing research on the connection between HR and business outcomes. We published a pretty significant study about five years ago that got picked up by a number of mass media publications called “Counting Success.” In that study, we were able to show the linkage between analytics and better performance. Don’t know whether better HR practices made companies perform better, but we knew the ones who knew their numbers performed better than those that did not,. About two to three years ago, we were approached by one of the providers in the healthcare space and said, “Could you tell us how HR functions in the healthcare world?” Really what this company was concerned about, they were looking at the market, trying to decide was this a good place to invest time, effort and financial resources. What they were worried about was, is HR so underinvested in the healthcare industry that they really weren’t going to have the opportunity to have a business there.

Guess what we discovered? That yes, HR is woefully underinvested. The question that troubled our research staff is, how do we actually build a case that the CEO and CFO could look at and say, “Wow, we need to invest more in HR.” We came right back to this idea of connecting it to business outcomes.

In the first study we showed how the inability to fill jobs impacted vacancy rates. If you’ve got 500 beds in a hospital, but on any given day you might only be able to fill 400 because you don’t have the staff available to maintain your patient to nurse ratios, for example. That could endanger your JCAHO accreditations and HCAHPS scores and all those other regulatory and accreditation bodies that you’ve got to deal with. That’s going to hurt your business.

Basically you’re paying for the rent, the electricity, the heating for a hundred beds that you can’t fill because you just don’t have enough people in the building and we found that HR did not have not only the investment in enough recruiters—they didn’t have very good tools. They were behind the commercial world and by the way, this was not about whether they were for-profit or not-for-profit. This was about being in healthcare. There were for-profit systems that were also underinvested in HR. I did a presentation yesterday. One of the things that we pointed out is that the spend in the healthcare industry for HR overall is less than one percent of annual budget. They actually spend more in most healthcare systems on maintenance than they do on people.

Listen to the full podcast here.

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