Hospital chief financial officers must focus on labor cost--both from staff and executives--and ask relevant questions in order to keep costs under control.
That's hospital financial consultant Rich Miller's assessment in an opinion piece for Healthcare Finance News.
Labor represents up to 60 percent of all healthcare operating costs, and it "is the one expense over which organizations have direct influence," according to Miller.
In order to actually exert this influence, Miller suggested that CFOs use the data they have and manage those expenses in real time. "Both hospitals and private practices benefit from tracking compensation costs by service area in order to determine profitability," he said.
Among the biggest factors: Determining how much time and effort ithe organization needs to calculate the cost of payroll and overtime. Oftentimes, complicated work schedules can lead to the manual input of time cards, which can lead to "an astonishing amount of time" expended for each payroll period, Miller said. Physicians often receive on-call and other incentive pay.
Indeed, physician labor costs can often exacerbate an institution's difficult finances, Hospitals & Health Networks reported. However, executive compensation costs are also coming under greater scrutiny, leading to some changes in how organizations tabulate them.
However, obtaining the correct pay and labor data is often difficult. "CFOs need access to high-quality data. In most organizations, those data are simply not available," Miller said.
To learn more:
- read the Healthcare Finance News article
- check out the Hospitals & Health Networks article