If there’s one constant in the complex world of hospitals, it’s that delivering excellent care is powered by people. Coordinating patient care, operating high-tech devices, and managing tons of supplies—almost every aspect of hospital operations relies on skilled professionals performing at their best.
This focus on manpower is critical for improving operational efficiency and patient outcomes.
Labor costs dominate hospital budgets.
Labor: The Biggest Piece of the Budget Pie
Labor costs aren’t just a line item for most hospitals—they’re the main event.
A staggering 50% to 60% of a typical hospital’s operations budget is spent on labor. This includes the salaries and benefits of doctors, nurses, technicians, administrative staff, and those working in vital but less visible support services.
Hospitals continuously strive to improve operational efficiency and implement automation while enhancing patient outcomes through judicious management of these costs.
Why is it so high? Healthcare is an inherently labor-intensive industry. From bedside care that directly impacts patient outcomes to running detailed diagnostics in labs, humans are at the core of delivering the precision and empathy patients expect.
Consider this:
- Frontline Staff: Nurses, physicians, and other clinical staff are indispensable for patient care and improving patient outcomes.
- Support Services: While less visible, support services—housekeeping, patient transport, supply chain teams, and more—keep the entire hospital running smoothly and contribute significantly to overall operational efficiency.
- Specialized Roles: Hospitals also employ a wide range of specialists to manage advanced equipment, ensure regulatory compliance, and handle growing administrative workloads.
Support Services: The Often Overlooked Component
When discussing labor costs, frontline healthcare providers understandably grab the spotlight.
Yet operational efficiency in support services can lead to significant cost savings and enhance hospital performance and patient outcomes. These unsung heroes of hospital operations account for a significant portion of those labor expenses.
Although these roles might not involve direct patient care, they greatly impact hospital operations and patient experiences. These teams contribute to operational efficiency and improved patient outcomes by streamlining processes through automation and ensuring smooth patient flow.
Some common categories of support services include:
- Transport Services: Essential for moving patients, blood samples, medications, and supplies across departments to ensure efficient patient flow.
- Environmental Services: Cleaning, disinfecting, and ensuring facilities meet hygiene standards, especially post-COVID.
- Facilities Maintenance: Critical for maintaining HVAC, plumbing, and equipment systems.
- Catering and Food Services: Play a role in patient recovery by providing balanced nutrition.
Why Labor Costs Are Rising
Hospitals everywhere feel the pinch of rising labor costs.
And while these increases have been years in the making, the COVID-19 pandemic accelerated them dramatically.
Here’s what’s driving the trend:
- Staffing Shortages: Fewer nurses and support staff mean paying a labor premium. Travel nurses, for instance, can cost three times as much as regular staff.
- Rising Patient Volumes: An aging population and delayed care from the pandemic have increased patient demand.
- Operational Complexity: Specialized roles are required to manage advanced medical equipment and IT systems.
- Inflation and Wage Growth: Economic pressures have forced hospitals to reevaluate wages and benefits.
What’s the Difference in Labor Costs for Support Services?
Support services labor costs aren’t evenly distributed across hospitals—several factors come into play, such as:
- Hospital Type and Size: Larger hospitals have more complex operational efficiency challenges.
- Technology Adoption: Automation in logistics reduces reliance on manual labor.
- Geography and Wages: Regional differences affect labor costs.
- Outsourcing vs. In-House Teams: Many hospitals outsource services to third-party providers.
On average, labor for support services can account for 15% to 25% of total labor expenses.
How Hospitals Can Manage Rising Labor Costs
As labor expenses rise, hospitals are exploring automation and other strategies to manage these challenges.
Here are a few approaches:
- Investing in Automation: Systems like pneumatic tube networks automate repetitive tasks.
- Streamlining Workflows for Efficiency: Implementing Six Sigma methodologies.
- Retention Over Recruitment: Valuing existing staff reduces recruitment costs.
- Analyzing Support Services Costs: Identifying areas for efficiency improvements.
Why Understanding Labor Costs Matters
Labor is not only a significant expense for hospitals but also the driving force behind patient flow, patient care, and operational efficiency.
Understanding which departments or services consume the most resources gives hospitals the clarity they need to balance cost management with enhanced patient outcomes.
Support services often go unnoticed, but their contributions are essential.
By better managing these costs, hospitals can reduce the strain on their budgets without sacrificing service quality or positive patient outcomes.
Is your hospital seeking ways to reduce operational costs while supporting your labor force? Aerocom’s pneumatic tube systems are designed to streamline workflows, boost operational efficiency, and help hospitals operate more efficiently—all while positively affecting patient outcomes. Contact us to learn how we can help.