Chrissy Yamada is chief financial officer at Evergreen Healthcare (Kirkland, Wash.)
Could you talk about labor issues for a hospital like Evergreen?
We’re a public district hospital in Kirkland, Wash., we have 275 licensed beds with 15 skilled nursing beds. We employ about 140 physicians, and we have roughly 3,200 employees total. CFOs are always focused on money. Labor and benefits make up about 60 percent of our total operating expenses. So we look closely at staffing ratios and staffing productivity. Because a large proportion of our labor force are nurses, we often look at the cost of hiring agency nurses and how that would impact the organization. Another big area of concern is the use of overtime. All the extra pay for shift differential and on-call service is important to a CFO. And scheduling is also a major concern. We want to know how effective we are at scheduling, so we’re not doing too much overlapping.
Has the recession had a particular impact on labor costs?
If anything, hospitals are holding the line on labor costs because nobody can afford to give raises. That’s happened in many areas, except where we have labor contracts. We’re obligated to honor the contracts and we do. We didn’t lay off anyone last year. We wanted to make sure we could address the downturn in our volumes. Our volumes were soft last year. We did have more scrutiny in hiring. For instance, our management team has usually been allowed to replace people automatically. What we did last year was have our committee that reviews all new FTEs look at replacement FTEs as well, to make sure that we really needed to replace an FTE.
A few years ago you implemented an automated staffing system. How is that working?
When I arrived at Evergreen, I had control of the payroll department. I had staff running all over the hospital collecting timesheets from 3,200 employees, running back to payroll to key them in manually, and then calculating pay. It was such a laborious, time-consuming exercise. I knew automation would be a much more efficient, and accurate, way to capture payroll. Anything done manually is more susceptible to error. It was going to be expensive, but I knew that it was the right thing to do long-term. We ended up with the API system. We’ve been using it since October 2006.
How much employee time did you end up saving?
We use the same number of staff, but we approve timecards online. Efficiency on the floors and clinical areas has improved. It takes the managers time to approve the payroll, but I really believe the savings are in the accuracy and better monitoring of overtime. We’ve saved a lot on paper too, because the vacation requests are all done electronically now.
How about training people on the new system?
It took months, because we had to train every single person. We rolled it out over a six-month period. We rolled it out in functional groups. All managers have to approve time, even the vice presidents. We said that we have to set an example.
Do you anticipate that 2010 will be better financially for hospitals?
I still think it’s going to be a tough year for hospitals. In January of this year we didn’t see much improvement. Our volumes are still very soft, admissions are down, surgeries are minimal. We saw that all last year. Where the hospitals get hit hard is when the patients who come in can’t pay their bills. People still get sick and need surgeries, but last year more people than we ever expected couldn’t pay their bills. When people get back to work, and get health insurance, then the hospitals will see an improvement. Last year, we had a lot of requests from patients to write off bills because their COBRA coverage ended. We’ve planned for bad debt and charity care to increase in 2010.