The hidden costs of hospital employee health

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Hospital chief financial officers are always scrambling to reduce costs while increasing, or at least preserving, quality. They scrutinize supplies, nurse registry use, equipment leases and 10,000 other variables that can be jiggered to beef up the bottom line.

However, a recent study suggests they should take a closer look at their own employees.

The study conducted by Truven Health Analytics, formerly an affiliate of Thomson Reuters, examined the relative health of about 350,000 employees at 200 hospitals nationwide. They were compared against the health of 12 million workers in other sectors.

The results were sobering: Healthcare spending for hospital employees was 9 percent higher than in other job sectors. Hospital employees also had higher emergency room utilization rates and were 5 percent more likely than other workers to wind up hospitalized themselves. That's despite the fact they are on average two years younger than workers in other sectors.

And that led to huge financial consequences for hospitals. According to the study, the average mid-sized community hospital spends an average of 4 percent of all operating revenue on healthcare benefits for their employees and dependents, and 68 percent of all operating profits.

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The reason for the bold health disparities are fairly clear: Hospitals are relatively hazardous places to work. Employees are exposed to bushels full of bacteria other workplaces do not foster. As a result, many workers regularly get low-grade colds or the flu  ("galloping crud" was the clinical term used by my parents' generation).

And if you know enough nurses or aides, you know someone who's wrenched their back moving a patient--or even had their face at the receiving end of one of their punches. For all the jobs being generated by hospitals these days, a large number of them are replete with hard-bitten tasks.

So it's not surprising that according to Truven, hospital employees are more likely than other employees to be diagnosed with chronic conditions such as diabetes, obesity and asthma that are costly to treat.

Yet those numbers also present a big opportunity for savings at the hospital level: For every 1 percent reduction in health risk a hospital system with 16,000 employees can introduce, it will save $1.5 million a year, according to Truven.

Of course, achieving this is not easy. According to a 2011 study by the American Hospital Association, participation in employee wellness programs are fragmented at best.

But the possibility for savings are there. However, it will require CFOs and other C-suite level employees to not only push these programs, but also participate in them as well. If a hospital CFO is showing up at the stress reduction or yoga class for the nurses and cafeteria workers, it sends a huge message regarding buy-in. It also means finance executives are reading more into the bottom line than stacks of numbers and easily exchangeable bodies. - Ron (@FierceHealth)