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How Healthcare Organizations Can Remain Competitive Among Workforce Shortages

August 10, 2023

A recent American College of Healthcare Executives survey revealed that workforce shortages are healthcare CEOs’ number one concern, surpassing financial challenges for the second consecutive year.

However, labor challenges and financial issues are inherently linked. Hospitals and health systems compete for staff and face pressure to spend more on recruitment, salaries, and benefits packages. Additionally, the burden of workforce shortages falls on the shoulders of existing staff, accelerating turnover and further straining budgets.

Amidst these dynamics, healthcare leaders have an opportunity to support existing staff and streamline processes while still maintaining profitability. Leaders can drive cost savings and efficiency by navigating cultural and operational shifts that address the industry’s evolving demands.

The Urgent Need for Primary Care Practitioners and Nurses

According to the Health Resources & Services Administration, the U.S. is short more than 17,000 additional primary care practitioners, and it is common knowledge that the nursing shortage is at crisis levels.

Additionally, the uncertain status of noncompete legislation may encourage future employee mobility, making it increasingly challenging for hospitals and health systems to retain their workforce. Hospital and health system leaders must stay informed about legal developments and adapt strategies to ensure a stable and skilled workforce.

Strategic Compensation: Fostering Retention and Market Competitiveness

Taking a proactive approach, healthcare organizations should regularly review and ensure that their compensation packages are competitive. They should conduct regular compensation assessments, ideally annually or at least every one to two years. This applies to provider compensation and all staff members, aiming to maintain fair market values and adhere to legal standards.

Organizations can minimize unexpected turnover and changes by applying these principles and ensuring competitive compensation. They can also stop the bleeding of existing staff by focusing on retention. Ensuring that bonus and incentive compensation are aligned with health system goals can help ensure everyone is working toward the same vision, which can help foster unity and loyalty. Cultural change has an outsized role here, especially when competitive compensation packages and benefits aren’t enough.

Inspiring Loyalty and Boosting Productivity

The transition from fee-for-service to value-based care was designed to encourage organizations to reduce costs and minimize waste through improved outcomes. But the increased documentation tied to changing reimbursement can add to clinical burnout. Physicians and nurses, often overwhelmed by administrative duties, can benefit from technologies that streamline documentation. Automating processes and fine-tuning workflows can improve efficiency and also reduce provider burden, helping to retain clinical staff.

Leaders may also want to consider encouraging employee buy-in. For example, nurses that link a portion of their compensation to company performance or outcomes may feel a sense of ownership and belonging within the organization. This can strengthen the commitment to the employer, fostering a sense of shared responsibility and incentivizing improved performance.

Well-Executed Succession Planning and Focused Recruitment

In addition to burnout, the retirement of baby boomers further compounds workforce shortages. Succession planning can help. By gaining a comprehensive understanding of the market and proactively initiating recruitment efforts before physicians retire, hospitals and health systems can effectively plan for future workforce needs and ensure a smooth transition.

Finding Efficiencies

As staff shortages further eat into organizations’ bottom lines, health systems can address the resulting financial strain by adopting proactive measures such as right-sizing operations, optimizing resources, and addressing supply chain redundancies.

Where shortages persist despite proactive efforts, developing contingency plans and exploring alternative solutions to mitigate the impact on patient care and overall operations becomes crucial.


Persistent workforce shortages only exacerbate healthcare’s financial challenges. To combat them, hospitals and health systems must adopt strategies to retain existing employees, implement effective succession planning, and ensure their compensation packages are competitive.

Whether it’s helping with service line optimization, resolving operational concerns, or structuring compensation plans, contact your KSM advisor today for tailored solutions that align with your healthcare organization’s specific needs.

George Batalis Partner, Healthcare Consulting

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