hospital impact

by Jeff McKune

It is interesting to visit with those at other hospitals and see commonalities between institutions. One of the first of these commonalities that I noticed was the five pillars. Sometimes the pillars are expressed as part of an organization's values, and other times they serve as a means of categorizing strategic plans. Perhaps your hospital has these same pillars, or something similar: People, Service, Growth, Finance, and Quality. Each time I have heard of these pillars, the "People" pillar is listed first, and often someone will say something like "Our People pillar is first, because we put our people first."

A quick glance at an income statement will certainly confirm that people costs - salaries and benefits - typically comprise 55 to 60 percent of a hospital's operational expenses. But do those expenses really count as investments in those all important human resources that make healthcare work? Fundamentally, healthcare, at least in the context of a hospital, is delivered by people. I won't downplay the importance of facility expansions and technology purchases that keep a hospital in the forefront of quality care. But let's remember that it is not the facilities or the technology that are actually delivering the care - it is our people.

We can look back at our institutions and remember a timeline of growth. It often goes something like this: "We added our East Addition in 1990 at a cost of $20M, increasing our capacity by 50 beds. In 2000 we added two 16-slice CT systems to our imaging department at a cost of $3M. Our new Cardiology Department has allowed us to provide new services to our community at a cost of $25M."

These are all good things, but when was the last time you heard a healthcare leader say "In 2002 we recognized a need to improve staff retention and maximize the productivity of our human resources, and we invested $3M in our new leadership development program. Seeing significant improvements in several areas, including employee satisfaction and patient satisfaction, we continued our investment in our people in 2005 by establishing an in-house university, improved tuition reimbursement for academic education and professional certifications, and mandatory annual HR training for all leaders at the director level and up - all at an initial cost of $7M with annual operational expenses of $2.5M. In addition, all of our senior staff are actively involved in our leadership development efforts, participating both as students and instructors on a regular basis."

There are ample research studies to demonstrate the benefits of this kind of HR focus in an organization. Would it make a difference in our hospitals if we really took that first pillar seriously?