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SullivanCotter has released findings from its 2022 Workforce Metrics Benchmark Survey.

Health care organizations are in an ongoing workforce crisis, and they continue to struggle with high turnover, employee burnout, wage pressure and other recruitment and retention challenges – all of which have driven up the cost of labor, increased the competition for talent and forced organizations to consider the relationships between workforce design, talent, compensation and performance management.

Year-over-year comparisons indicate that annual base payroll expense, which constitutes the vast majority of an organization’s overall yearly expenditures, has gone up almost 10% from 2021 to 2022. Further analysis shows that 7.1% of this is not attributable to full-time equivalent (FTE) headcount increases which have grown only modestly between 1.9% and 2.6% for the overall health care workforce. For the average participating organization with an annual base payroll expense of $1.6 billionthis has added almost $115 million dollars to the bottom line.

Diving deeper into these findings – including data reported on multiple job families and demographic groupings throughout different career level stages – provides insight into how organizations may need to adjust their planning and distribution efforts to help offset rising costs and create a more affordable and sustainable workforce architecture.

Assessing Workforce Cost and Structure

Although this past year has seen almost double-digit growth (9.3%) in base salary expense for Individual Contributors, driven in part by minimum and living wage increases, many hospitals and health systems are experiencing potentially unsustainable growth across multiple career stages. Salaries for Managers and Directors have grown by 13.7% and 14.8%, respectively, which has added to overall cost concerns. Additionally, headcount growth for the overall leadership structure – particularly in newly identified roles such as population health, value-based care and health equity – is far outpacing that of Individual Contributors by increasing at rates between 3.5 times and 5.5 times higher.  

“While the significant growth and diversity of expertise in Manager and Director ranks may produce positive results in some clinical settings, it also requires greater investment. Organizations are going to have to rebalance the size and shape of their workforce to help create a more sustainable model. For instance, we see many organizations focusing more on leadership roles in order to optimize oversight ratios, expand the span of control, and isolate areas of role and title inflation that have been occurring since 2020,” said Tim Pang, Principal, SullivanCotter. Nearly 70% of survey participants have formally reviewed, or soon expect to review, the size, structure or management spans of control of their leadership group.

Understanding workforce growth and distribution across different job families is also important and can play a key role in effective workforce planning. From 2021-2022, Nursing and Human Resources saw the most notable drops in headcount at the largest organizations (those with more than 30,000 FTEs) with decreases of 8.8% and 8.3%, respectively. Legal and Compliance, conversely, has seen large increases in their populations at smaller and mid-size organizations with 20%-25% growth.

Workforce Demographics – Gender, Race and Age

As important diversity, equity and inclusion (DE&I) initiatives remain a top priority for health care organizations nationwide, many are looking for greater insight into the diversity of their employee populations as represented across race, gender and other demographic characteristics.

Across the 10 job families included in the survey, gender representation is highly skewed with females representing 75.3% of the workforce in 2022. This is highest in Financial Services, Nursing, and Care Management – with all three job families at over 80% representation. While the three job families with the highest male populations are Facilities, Information Technology and Emergency Medical Services, these are more evenly split and range from 47.3% – 56.2% males.

When analyzing by career stage, female representation at the Manager level is strong at 72.4%, but steadily declines to just under 50% for Executive roles.

“Demographic shifts will create an opportunity to impact workforce diversity and equity. By the end of 2023, a significant number of leaders at all levels will become retirement eligible. With the added focus on broader workforce diversity in race and gender, organizations are being more deliberate in tracking and sourcing wider representation in their candidate pools as they look to support strategic DE&I initiatives,” said James Roth, Managing Principal, SullivanCotter.

Although minority representation by race from 2021 to 2022 remains stable across all career stages – including Individual Contributors (up 0.3%), Managers (up 0.7%), and Directors (no change) – year-over-year growth is highest at the Executive level with a 1.6% increase.

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