Financial Strategies for Hospital Operations in Addressing Nursing Shortages and Supply Chain Disruptions

QUESTION

Your business operations skill is important for being able to identify risks associated with various financing options and projects for capital projects that fund growth, purchase equipment and inventory, hire additional staff, and build new facilities.

Scenario

You have been promoted to CFO at your hospital. The hospital’s CEO has requested that you present an evaluation of budgetary options for future purchases based on industry competition to the board of directors. In the presentation, focus on budgetary financing strategies and solutions in the operations of the hospital.

Preparation

If you address nursing shortage, supply-chain disruption, or outsourcing in your assessment deliverable presentation, review and consider using the following articles from the “Summative Assessment: Business Operations Presentation” section in the Week 5 University Library as the primary resources for your presentation.

• Nursing shortage topic resource: “As COVID-19 Worsens Nursing Shortage, Madison Hospitals, Schools Step Up”
• Supply-chain disruption topic resource: “Inflation Rattles Hospital Supply Chain and Labor Pool With no End in Sight”
• Outsourcing topic resource: “Research and Markets Adds Report: Medical Billing Outsourcing Market” and “The Good, the Bad and the Outsourced”

Assessment Deliverable

Microsoft PowerPoint^® presentation in which you:

• Evaluate effective financial options for outsourcing operations of key departments, such as information systems, medical billing, and human resources (HR).
• Evaluate how you would implement just-in-time inventory management (e.g., in the OR, central sterile supply, or pharmacy departments) to optimize inventory management.
• Analyze the advantages and disadvantages of using a flexible budget to meet the organization’s staffing needs.
• Describe the decision-making factors when determining whether to lease or buy equipment (e.g., Should I buy or lease an MRI or CT scan?).
• Describe the effect of financing strategies on the cost of capital.
• Identify and describe the benefits and risks of debt financing (e.g., how to manage working capital through accounts payable)

ARTICLE TO USE>>>>>>>>

Apr. 3 As the COVID-19 pandemic has led some nurses to retire early, find other work or join high-paying staffing agencies, exacerbating a nursing shortage in Wisconsin, SSM Health has taken a step it hopes will help in two ways.

The health care system created an entry-level job, of clinical support assistant, to guide patients to rooms, deliver lab specimens and clean spaces between visits, offloading the tasks from busy and burned-out nurses and nursing assistants.

“That’s a huge satisfier, taking that off the plate of our point-of-care staff,” said Kathi Glenn, interim regional vice president of patient care services for St. Louis-based SSM Health, which owns St. Mary’s Hospital in Madison.

The new role, created in October, could for some people become a stepping stone to a nursing career, helping to boost the future workforce. “Once they’ve experienced this, so many of them want to come on and be nursing assistants or be nurses,” Glenn said.

SSM Health’s new clinic-based job is one of many ways nursing employers and nursing schools in the Madison area are trying to address the nationwide nursing challenge. But obstacles remain, including a scarcity of nursing school faculty, which limits the ability to admit more students even as demand for slots is holding steady or is on the rise. More than 1,000 qualified applicants are turned away from the state’s nursing schools each year, according to the Wisconsin Center for Nursing.

“We consistently have many more students petitioning to get into our nursing programs than we have seats available,” said Lisa Greenwood, associate dean of nursing at Madison Area Technical College. “To increase student enrollment, we would need to increase faculty.”

Even before the pandemic, Wisconsin faced a projected shortage of about 11,600 nurses by 2030 as an aging population is expected to need more care, according to a state Department of Workforce Development report in May 2020.

As the pandemic intensified last year, 10.8% of hospital nursing jobs became vacant, the highest level since 2005, according to a Wisconsin Hospital Association report last month. For nursing assistants, the vacancy rate was 17.2%, the highest of any health care role, up from an average of 9.7% the previous five years. For licensed practical nurses, the vacancy rate last year was 11%, up from about 7.3% in recent years.

For some older nurses, caring for expanding numbers of very sick, infectious patients became too much, leading to early retirements, said Gina Dennik-Champion, executive director of the Wisconsin Nurses Association. “The physical demands of the job caught up with a lot of nurses,” she said.

Others left as nurses, hailed as heroes when COVID-19 first hit, later became targets of verbal and physical abuse from patients or family members opposed to mask or vaccination requirements, said Barbara Nichols, executive director of the Wisconsin Center for Nursing. In a Wisconsin Nurses Association survey in November, nearly a third of nurses reported eight or more episodes of verbal abuse in the past year.

“Here you are trying to give care, and people are yelling, screaming and swearing at you,” Nichols said.

A bill making assaults or threats of violence against health care workers a felony, passed by the Republican-led Legislature and signed by Democratic Gov. Tony Evers last month, should help, Nichols said.

New incentives

In an effort to retain and attract nurses, UnityPoint Health-Meriter is offering 75% higher pay for shifts considered “critical,” plus “thank you” bonuses of up to $1,000, and $3,000 bonuses to nurses who refer other nurses after the new hires work for a year, spokesperson Nicole Aimone said.

UW Health provided $700,000 in tuition reimbursement for its nurses in the past year and has created a nursing care partner job, spokesperson Emily Kumlien said. The role is like an inpatient version of SSM Health’s clinical support assistant.

UW Health’s rolling 12-month turnover rate for nurses is 13.8%, compared to the national average of more than 21%, Kumlien said.

Meriter and UW Health this spring are increasing their minimum hourly wage from $15 to $17, though the move doesn’t affect most types of nurses, who make more.

UW Health nurses have been trying since December 2019 to revive a union lost after former Republican Gov. Scott Walker’s Act 10 in 2011 stripped collective bargaining rights for most public employees. The nurses say UW Hospital can voluntarily recognize the union for collective bargaining under the law, but administrators say they can’t. Both sides have interpreted nonpartisan state memos as supporting their opposing stances.

SEIU Healthcare Wisconsin, the union trying to organize UW Health nurses again, represents nurses at Meriter. St. Mary’s nurses don’t have a union.

At the SSM Health Outpatient Center next to St. Mary’s, Jacob Walton has been working as a clinical support assistant for three months, giving COVID-19 self-test swabs to drive-by patients, taking blood pressure and other vital statistics of clinic patients and entering basic information into medical record systems, among other duties.

“It’s really cool that I can take off a load and make (nurses’) job easier,” said Walton, 21, from Verona, who graduated from UW-Madison in December and plans to apply to medical school. “They’ve been working their tails off.”

Kelsey Skare, a former bartender, became a medical assistant at the SSM Health clinic in 2020 and is going to nursing school. After a traumatic birth experience with her daughter, now 2, Skare spent more than a month as a patient at UW Hospital. The care she received inspired her to explore nursing.

“They were awesome and helped me through it, so I was like, ‘I want to be like you,'” Skare said.

SSM Health, to attract more nursing assistants, in November 2020 started a facility-based certified nursing assistant training program in Madison in collaboration with MATC, said Glenn, the vice president. The program is now expanding to Baraboo.

This spring, the organization plans to open a training center at St. Mary’s for the system’s new nurses throughout the state. Peak COVID-19 demand caused some new nurses to care for complex patients before they had completed full orientations, Glenn said. With simulation training and other technology, the new center “will really increase the confidence of our nurses,” she said.

In January, SSM Health announced $5,000 “stay bonuses” for nurses who continue at their jobs for another year. “We had nurses that left to go be travelers, based on the high rates of pay,” Glenn said, referring to staffing agencies that may send nurses anywhere in the country.

With nurse staffing agencies reportedly doubling or tripling their rates since the pandemic began, Congress members and the American Hospital Association have called for an investigation of travel nurse price gouging.

For nursing schools, the increased salaries working nurses have commanded during the pandemic make finding faculty even more of a challenge. Nationally, nursing faculty earned $83,520 a year in 2020, when working nurse practitioners made $113,030, according to the Wisconsin Center for Nursing.

“Keeping the wages competitive can be a challenge,” said Kevin Foley, interim associate dean of nursing at MATC, also known as Madison College.

The school, which has 56 faculty, is trying to hire four more just to teach its regular load of students. Despite the openings, the school trained 150 National Guard members as certified nursing assistants in January and February to ease COVID-19 staffing crunches at nursing homes. An additional 84 are coming in April.

Margaret Noreuil, nursing school dean at Edgewood College, said she’s been trying to fill two tenure-track faculty positions, which require doctorate degrees in nursing, for five years. The school has about 30 faculty, a dozen of them on a tenure track.

“Every school is trying to attract those graduates,” Noreuil said.

To accommodate students in its accelerated nursing program, for people with other degrees who want to become nurses, Edgewood is looking at providing an online option, she said. The school is partnering with Meriter to launch a phlebotomy, or blood-drawing, program in May, another move that could increase the nursing pipeline.

“We can hopefully get people into an entry-level health care field and get them interested in maybe going on to be a nurse,” Noreuil said.

Linda Scott, nursing school dean at UW-Madison, said she doesn’t have enough faculty to add students.

To meet pandemic demand, the school expanded its accelerated program, which started in 2018, more quickly than planned, Scott said. But its traditional nursing program is limited to 160 new students a year, even though it gets two or three applicants for each spot, she said.

Last year’s state budget added $5 million for grants and loan repayment assistance for nurse educators who commit to teaching in Wisconsin for three years, an effort Scott said should expand.

She and other nursing leaders said they hope Evers will sign a bill the Legislature recently passed to create a separate nursing license for advanced practice nurses. Doctor groups opposed the bill, saying it could undermine quality of care and efforts to curb opioid abuse. But proponents say it would expand access to care and lower health-care costs.

The pandemic has highlighted challenges of some nurses, from having to wear protective equipment to helping families say goodbye to dying loved ones remotely, nursing leaders said. But it has also helped the public better understand how important nurses are, not only at hospitals and clinics but also at nursing homes, schools, public health agencies and other settings, Scott said.

Overall, that may increase the appeal of the profession, she said.

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