With 60 percent of the average hospital's budget earmarked for labor costs, it isn't hard to understand the savings potential for organizations that automate employee-related information such as scheduling. Automating this labor-intensive, time-consuming task can save a hospital hundreds of thousands of dollars each year.

But what about hospitals that already have automated scheduling? Is there anything else they can do, or have they maxed out on their financial return? Covenant Health System of Waterloo, Iowa, learned that implementing new applications to replace antiquated automation can really pay off.

Covenant Health System Inc. is an integrated network of nonprofit hospitals, physician clinics, for-profit retail pharmacies and home medical services. Its three affiliate facilities include Covenant Medical Center, Sartori Memorial Hospital in Cedar Falls, and Mercy Hospital of Franciscan Sisters in Oelwein. The health system is a member of Wheaton Franciscan Services Inc. and has more than 3,000 employees.

Like most healthcare organizations, we faced ongoing challenges of labor cost control, recruitment and retention, and maintaining the appropriate staff levels necessary to maintain high levels of patient care. Covenant had been using an antiquated application to manage staffing and scheduling for several years; the software was outdated and no longer fulfilled the staffing needs of the organization. For example, the increasing employee base led to a large number of schedule codes, but the old staffing application was not scalable and could not accommodate any new codes.

We wanted a new employee scheduling system that was flexible and scalable enough to accommodate continued organizational growth. The system had to integrate with an existing time and attendance system so information could be shared between the two systems and benefit from these economies of scale. We also wanted to get a handle on our data in real time, not 14 days after the pay period. Additionally, the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) requires high levels of tracking and reporting, so the organization had to find a way to deal with these reporting expectations.

In September 2001, we replaced the existing staff scheduling system with the ActiveStaffer employee staffing/scheduling solution from API Software Inc., of Hartford, Wis. The selection committee consisted of representatives from IT, human resources, patient care, payroll and staff scheduling. They selected ActiveStaffer for three reasons:

* Having been an API customer with the Payrollmation time and attendance product since 1991, Covenant already had a positive relationship established with the vendor.

* ActiveStaffer would be integrated with Payrollmation, which would save the time and costs associated with interfacing the two systems.

* The software was more cost-effective than other applications being reviewed.

Covenant purchased the software license in March 2001, and employee training ensued throughout the summer. By December, Covenant had completely retired its former solution.

Benefits Abound

The organization realized a 145 percent return on investment and full system payback in 12 months. Time and cost savings making up this impressive total included:

Improved production of scheduling staff. Patient care managers are saving, on average, 15 hours each month because of faster scheduling.

Reduced paper and printing costs. By replacing a series of manual staffing and payroll processes, we have saved more than $14,000 annually in paper and materials costs alone.

Internal agency program reduced costs associated with agency labor. A bonus-pay program motivated employees to work extra shifts that otherwise would have required using external agency labor. With this program, Covenant saves between $200,000 and $300,000 annually.

Ten scheduling/staffing representatives use the system to do all the data input for employee demographic information, repeating schedules and tables to determine need throughout the organization. This group of users appreciates the fact that all the information they need to do their jobs is contained in a single database. Not only do they have all this information available at their fingertips, but also they can see what other schedulers are doing in real time. A census is reviewed three times a day, and staffing modifications happen day to day and even shift by shift, so schedules are based on actual patient-care needs.

Our staffing practices are programmed into the system, so there is never a discrepancy between policy and practice. Either there is a sufficient patient load to necessitate bringing in more R.N.s for a shift or there isn't. Schedulers and managers can better manage census changes and quickly identify the best employees to fill open spots in the schedule based on skill mix and how close they are to approaching overtime.

Reporting functionality built into the software helps provide a bigger picture view of the organization to managers and executives, as well as quick and easy access to information for regulatory and JCAHO reporting. For example, with just a few keystrokes, the hospitals now have information such as how resources can be tied to census and how patient care can be tied to potential errors.

Agency Labor Costs Slashed

Like other U.S. hospitals, Covenant felt the pressure of the nursing shortage throughout 2002. Numerous staff openings and a high census meant we had a difficult time filling positions and scheduling holes. The organization was torn: Should it fill vacancies by requesting that staff pick up extra shifts or should it use costly agency workers? Both options carry a price in terms of dollars spent, as well as their impact on employee morale.

Because of ActiveStaffer's flexible architecture, we were able to immediately implement a program that would manage an "internal agency" for the organization. This program offers bonus pay to internal employees for any extra shifts they agree to work that would have otherwise been filled by external agency labor. The program motivates part-time employees while not discriminating against full-time employees.

We used the program throughout the organization wherever staffing needs increased, including medical/surgical, skilled nursing, emergency room, intensive care, operating room, mother/baby and respiratory therapy areas. Positions eligible for this program include R.N., L.P.N., C.N.A, student nurse techs, OR scrub techs, and C.R.T., R.R.T. and ER paramedic positions.

The internal agency program operates in three-month rotations. Managers identify holes in their schedules and what type of staff they will need in the upcoming quarter. Employees can sign up for the internal agency in their current area, with the option to float. Employees participating in the program must choose at least one additional weekend shift during that three-month time frame. In addition to a premium hourly pay rate, employees earn a $20 bonus for every four extra hours worked.

Success Leads to Changes

Clinicians now know there will be appropriate staff support available for appropriate care assignments, so stress from being overworked is reduced. Employees have a choice of when they work, and they have greater control over their schedule and their pay, which we believe is a boon to employee morale. Calls to employees' homes to have them work on their days off have all but disappeared.

This internal agency program has fulfilled its goals of filling vacancies, stabilizing staffing ratios and improving employee morale. The success of the program has been linked to an overall reduction in the number of open clinical positions throughout Covenant Health System. Since the number of open positions has dropped drastically, the number of people required to fill extra shifts has also dropped.

When the program began, 190 staff were needed throughout all departments to cover the open shifts. Currently, only 19 employees are needed to fill the minimal number of vacancies. Additionally, only the OR and mother/baby units have holes to be filled, so they are the only departments needing to use the program at this time. The flexibility of the staffing system allows the organization to quickly and easily modify the program, even as the staffing landscape changes.

Once healthcare organizations make the initial leap from manual processes to automated processes, the savings in terms of costs, time and overall efficiencies are dramatically improved--but that doesn't mean the organization's work is done. Organizations should strive to improve processes and stay on top of the latest technology. Implementing increased technology improvements can significantly impact an organization's bottom line. It certainly did at Covenant.

Nancy Weber is vice president of patient care services of Covenant Health System, Waterloo, Iowa. Contact her at webern@covhealth.com.