BY Lariza Hebert, Associate, and A. Kevin Troutman, Partner, Fisher Phillips
A Flash Survey on Economic Uncertainty[i] conducted by Fisher Phillips LLP analyzing the views of employers during the country’s economic volatility showed that only 13% of employers plan on shrinking their workforce, but among that 13% segment, healthcare was one of the top three most likely industries to reduce employee headcount.
Based on responses received from employers in the industry, healthcare employers are twice as likely to contract their workforce in 2022 compared to the average of all respondents, and they have the second-highest rate of planned reductions among all industries, exceeded only by the tech sector. However, because of the healthcare worker shortage across the country, many organizations are left wondering whether there are other steps they can take – short of a reduction of force – to tighten their operations in the face of a possible economic downturn. Healthcare employers are of course no strangers to changing economic tides and the resulting belt-tightening that is often required.
This article highlights some key issues that healthcare employers should consider in the face of the grim economic outlook being espoused by many experts.
Looking to Technology
To prepare for more tough times that could lie ahead, many employers plan on using even more technology to identify or mitigate operational inefficiencies (43%), manage cash flow more aggressively (38%), and cross-train employees for different roles (37%). 43% of the healthcare employers surveyed intend on taking such steps and further increasing the use of technology to reduce labor costs. Healthcare organizations are obviously well-attuned to rapidly evolving medical technology, but they may also consider emerging technologies to better manage payroll costs, staff scheduling or to further streamline repetitive daily tasks, thus enabling workers to focus on more advanced or time-consuming work. Creative scheduling platforms may, for example, give medical facilities better ways to compete with costly staffing or gig agencies that tout such systems in their efforts to lure nurses and other critical workers away from traditional employment settings.
Reducing Physical Footprint
Another belt-tightening tactic used by all employers, including healthcare organizations, is a reduction in the physical footprint of facility space. The survey found that 25% of healthcare employers plan to reduce their physical footprint. This is not only consistent with the overall increasing remote workforce that has developed in response to the pandemic, but it is also consistent with the healthcare industry’s trend toward continually offering more telemedicine and outpatient service options.
Alternative Work Schedules
The survey also revealed that healthcare employers are more likely to implement alternative work schedules compared to other employers. This is likely due to the healthcare industry’s historical issues with staffing shortages and their storehouse of experience in responding creatively. Employers must of course always remain mindful to ensure that all new staffing (and associated compensation) systems comply with applicable wage and hour laws.
Employers have been innovative in the way they have responded to shortages and scheduling since the pandemic. Many employers have of course scheduled temporary or part-time workers to supplement their workforce during periods when it might not be prudent to hire full-time staff. Some employers have also increased their use of independent contractors to supplement staffing needs; however, due to various legal risks, which can be particularly challenging in this context, employers should contact legal counsel if they are considering any assignments of independent contractors.
Employers can also consider flextime, compressed workweeks, job-sharing, and other arrangements. Of course, like contractor relationships, these solutions require legal review to ensure necessary compliance before implementation.
Holding Workers Accountable
Healthcare employers stated that they are almost twice as likely as other industries to increase scrutiny of their workers’ job performance. In addition to the monumental medical responsibilities, they shoulder daily, healthcare organizations are also receiving increased attention from various regulatory agencies including the Centers for Medicare and Medicaid (CMS) and the Occupational Safety and Health Administration (OSHA); thus, it is not surprising that healthcare organizations may need to increase attention to their workers’ job performance.
There is some risk that comes with increased worker accountability, however, especially if it results in adverse employment actions such as terminations or demotions. Moreover, if the economic downtown continues or deepens, workers’ ability to move between jobs would likely decrease, naturally resulting in a terminated employee seeking legal counsel rather than simply moving on to a new employer.
Thus, accountability measures should be implemented with thoughtful planning to reduce potential legal exposure down the road. Initially, employers should ensure their policies and handbooks are up-to-date and consistent; employees have reviewed and acknowledged all policies and handbooks; and documentation exists showing clearly that work standards were communicated to employees. Further, internal audits (performed with counsel) can ensure all policies and standards are compliant, current, and communicated to employees in effective ways. Critically, management training is vital, to include Human Resources staff, to go over updated policies, procedures, expectations, discipline, and more.
Supporting Employees
Finally, during this period of rising prices and economic uncertainty, workers are undoubtedly concerned about what to expect in the future. No one has a crystal ball, but not surprisingly, healthcare employers rightfully tend to be responsive to employee concerns regarding these issues, including but not limited to concerns like potential layoffs and the impact of rising prices. This is often because healthcare employees are long acquainted with staffing and retention issues, which predated but were exacerbated by the pandemic.
The survey identified various ways healthcare employers are currently providing assistance to employees:
- 50% of healthcare employers are increasing mental health resources for their workers, compared to just 24% of all employers.
- 21% of healthcare employers are offering gas subsidies (compared to 10% overall);
- 11% of healthcare employers are providing savings matching programs (compared to 6% overall); and
- 18% of healthcare employers are offering short-term loans to their workers, compared to just 6% of all employers. (This can be a particularly thorny issue that certainly merits conferring with counsel.)
Accordingly, another priority for employers is once again to focus on maintaining effective lines of communication with employees by holding town hall meeting and generally responding to employee concerns regarding the organization’s plans for dealing with today’s economic uncertainties. Maintaining a successful line of communications with employees is almost always worthwhile in efforts to build trust and loyalty.
Conclusion
Healthcare employers have long endured tough times and by now, employers are well-adapted to operating through tight economic circumstances. Regardless, healthcare employers can place themselves in better practical (and legal) positions by anticipating and taking preventative measures to prepare more gathering storms in today’s economic climate.