Creating a “Way of Life” Around Healthcare Labor Management

Group Of Medical Staff Meeting Around Table In Hospital
Mar 05, 2024

Creating a “Way of Life” Around Healthcare Labor Management

Betsie Sassen

Written by Betsie Sassen

Category: Workforce

Most clinicians in healthcare do not enter the field of healthcare to focus on labor management. Yet, they often land in positions of leadership in their areas of clinical expertise without the skills and experience to run the business side of their operation, including labor management. This is unfortunate because labor expenses typically account for about half of a hospital’s budget (Costs of Caring | AHA) and is often the most poorly managed expense. How can we equip our front-line leaders, the ones who make staffing decisions daily, with small business owner mindsets?

Organizations that take a “bottom up” approach often see the most success. This involves educating front-line leaders, providing timely labor management reports, equipping the managers with tools that will provide pathways for achieving targets, and promoting accountability. It’s truly about creating a structure, common language, and culture around labor management and productivity. Each one of these three concepts is discussed in detail.


One cannot manage what one does not measure and there needs to be a structure and a cadence around labor management. Managing labor and variances is not any different than managing one’s weight. To do so, you should get on the scale on a regular (if not daily) basis and track your consumption to your (calorie) target. Hours should be logged daily, as well as volume, to understand how an operation is tracking to its hours per unit of service target. In addition to this daily management, there should be bi-weekly “Huddles” for Nursing, Ancillary, Perioperative, and Support Services where front-line managers review the prior pay period with their leadership. In this setting, they should state their variances but more importantly, present a plan about what they are doing to address them. The daily tracking will allow the unit manager to understand what caused the variances from the prior pay period and inform what steps they should take to course correct.

Additionally, there should be an Executive Hospital bi-weekly Huddle that includes the CEO, CFO, CNO, HR, and VP of Ancillary. VPs report out on progress or lack thereof within each of their departments. If necessary, deep dive areas are addressed to see if further action items need to take place. The goal is to track and ensure progress toward established targets. If the hospital is part of a larger system, then there should also be a bi-weekly Huddle that takes place with the CEO and CFO minimally from each system.


If everyone is singing from the same song sheet, there will be a much greater chance of success around labor management initiatives. There should be no more than three Key Performance Indicators (KPIs) that everyone is focused on. Remember, if everything is important, then nothing is. At Impact Advisors, we structure our reports and our tools around Worked Hours Per Unit of Service, Paid Hours Per Unit of Service, and Cost Per Unit of Service. This creates a common language and focus for everyone. All reports, tools, huddles, and action plans revolve around those three KPIs and how to drive those variances to zero. This truly creates a level playing field with front-line managers and the C-Suite.


Culture is defined as “the way of life, especially the general customs and beliefs, of a particular group of people at a particular time.” If an organization invests in creating a defined structure and a creating a shared language around labor management and they are consistent, chances are strong that it will become embedded in the culture. The cadence of meetings as described above should be non-negotiable and managers need to be held accountable for their action items stated in the previous Huddles. End-of-year incentives should all be tied to labor management goals. When it is time for budget preparation, “productivity gains” should be locked in to promote a culture of continuous improvement as well.

To be successful, labor management should be ingrained into every aspect of the organization’s culture. In other words, it must become a way of life.

Our proven patient-focused staffing approach can help your organization. We use a two-pronged approach: teaching managers and directors how to effectively manage the relationship between staff and patients (patient-focused staffing) and empowering them with the performance targets and tools to do it. Our approach is about proactively managing to best practices, and not cutting. This provides lasting results and continuous improvement.