A Customer-Centric Victory and Success Story….in the Embattled Healthcare Industry. What Does This Mean for All Organizations?

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Because of runaway costs and implications for society, healthcare management and healthcare reform has received a great deal of attention over the past few years. In the healtcare industry, there’s a tendency to talk about ‘patient-centricity’ as if all stakeholders – patients, their families, and all caregivers and those supporting them – can be addressed in abstract, almost clinical terms. Healthcare is more than about costs and treatment, it’s about people and culture and the individual and collective journeys they represent. One area of healthcare which has gotten relatively little focus and discussion is the critical shortage of nurses. The following is a nursing, employee ambassadorship, and customer-centric healthcare success story, and one which has implications for any enterprise culture.

It seems that everywhere we look in HRD publications and commentary, there are pessimistic forecasts regarding the shrinking availability of skilled workers. This has caused many companies to aggressively court, or even financially lure or poach, the most attractive employees from these ever-declining pools. Nowhere is the ongoing war for talent in the United States more evident than in the critical shortage of Registered Nurses (RN’s). About ten years ago, American Hospital Association study showed that there were 168,000 unfilled hospital positions, 126,000 of which were nurses. This equated to one in seven hospitals reporting a severe nursing shortage, with more than 13% of RN positions vacant overall. Until recently, the nation’s nursing schools were not providing newly educated graduates at a rapid enough replacement rate, so this had caused a further thinning of the RN ranks over the past several years.

Hospitals, ever-watchful of their bottom lines, have been trying to counter the turnover and vacancy among precious nursing staff. Some are having to maintain staffing levels through high-cost temporary and agency-provided nurses, even getting them from international recruiters. Others are attempting to ease the pressure by increasing the frequency of nursing staff raises, offering tuition reimbursement, flexible scheduling, and providing other incentives.

One particularly negative effect of the nursing shortage is mounting evidence of non-urgent surgery cancellation, closing beds or units, and diverting of emergency room patients. All in all, the nursing employment picture for America’s hospitals is very gloomy indeed.

An increasing trend among hospitals, rather than endeavoring to build and support a culture which would help maintain high staff loyalty levels, has been to attempt more tactical and direct remedies. These hospitals have decided to do battle by offering attractive ‘signing bonuses’, not just to new RN’s, but to those who would leave their current employer and work, full-time, for a competitive facility. This is the story of one such attempt at poaching, why it failed, and what lessons it represents for companies of any size and in any industry.

The Baptist Health Care Organizational Customer-Centric Culture

Though a moderate-sized metropolitan area, Pensacola, located in Northwest Florida, is among the ten most competitive health care markets in the country. There are three health care systems in the marketplace; however, only one of them – Baptist Health Care (BHC) – is nationally recognized as one of the nation’s truly outstanding health care organizations, for both staff and patients.

In its advertisements, BHC leads with the headline: “Happy Employees. Happy Patients.” As they state, “…In health care, happy employees lead to happy patients.” This only begins to inform their patients, employees, and the community at large about how well BHC understands the linkage between staff loyalty and patient loyalty.

BHC is ranked among the fifteen best companies to work for in the U.S., according to Fortune Magazine’s annual “100 Best Companies To Work For In America” list. The companies on this list are selected from a large national pool of candidate organizations, and ranking is based principally on how a random selection of employees respond to a survey which measures the quality of their workplace culture. Completing the patient-employee connection, Baptist Health Care has been in the top one percent in perceived patient satisfaction, from research conducted among hospitals nationwide, for the past several years.

Baptist Health Care’s culture is so advanced and unique that, during the past several years, thousands of healthcare groups and healthcare professionals from across the U.S. have come to Pensacola to learn about the strategies and guiding philosophies that have yielded its best practice results. In fact, BHC has set up a Leadership Institute to help others learn how to achieve similar success, which is, itself, an attractive profit center for the organization. For two days each month, key BHC department leaders hold seminars in Pensacola in which the curriculum includes presentations on the operational and service initiatives which continue to drive such impressive results for the health care system.

Baptist Health Care has one of the lowest hospital annual staff turnover rates in the nation (just over 14%) and one of the highest levels of employee morale for any company in any industry.

As mentioned earlier, Pensacola is an extraordinarily competitive health care market. Of the three health care systems there, BHC and its principal rival account for close to 80% of patient admissions, with Baptist having a slight share advantage. Baptist Hospital, the system’s 492-bed flagship facility, has low RN turnover; however, its major competitor cannot make the same claim. Consequently, the competitor was using costly part-time and agency-supplied RN’s and seeking to find a quick, efficient solution to that problem.

Following RN raid concepts used in other markets, the weekend just prior to July 4th, 2002, the competitor ran newspaper ads offering an aggressive ‘signing bonus’ inducement to RN’s in the community. The financial offer was an extra $500 per month over a 24 month employment period. Further, if one of the competitor’s employees made a referral which resulted in the hiring of an RN, that staff member would also receive $12,000. Thus, a maximum of $24,000 could have been paid out, per RN hire, by the competitor. This, in sum, was an attempt to ‘buy’ RN’s.

The Monday after the ads ran, Baptist Hospital was already abuzz with activity. Nurses at the competitive health care system were calling BHC nurses, because there was an attractive immediate payoff for them if they could get Baptist nurses to jump ship. There was lots of rumor and gossip throughout Baptist Hospital, with calls to HRD from nursing supervisors. After all, there are 377 nurses on Baptist Hospital’s staff, representing almost one-fifth of all hospital employees, so there was a great deal at stake.

Senior staff quickly began meeting with nurse leaders to get their direct reactions. Baptist’s HR Director did an assessment of staffing, turnover and vacancy rates, employee morale, and customer loyalty levels. Her conclusion was that, overall, staffing, morale and customer service levels were at the high levels BHC had come to expect. She also did a direct comparison of what Baptist Hospital, and the competitor, were offering nurses regarding pay (including weekend, overtime, and holiday compensation), benefits and retirement.

Baptist Hospital’s President, COO, and Vice President of Patient Care, started ‘doing rounds’, talking and listening to nursing staff, finding out firsthand how they felt about the offer. What they learned was that there was some concern over this among the nurses.

Addressing the issue head-on, the execs looked at what they could do, financially and otherwise, to counter the competitive offer. They did ‘what if’ scenario projections if they decided to raise salaries and/or weekend or holiday pay. Also, they checked with hospitals in south Florida, which had experienced a similar financial incentive battle situation between multiple healthcare facilities. This was a situation where rival hospitals across town both advertised $15,000 incentives for RN’s. Baptist wanted to learn exactly how it worked and if either hospital made any substantial nursing employment gains (or losses) as a result. What they discovered was that the two hospitals ended up just swapping a few nurses, i.e. a lot of turmoil and expense with little positive result on either side.

The COO was meeting with his staff twice a day to devise a strategy. Baptist’s HRD group even did a little intelligence gathering on their own to help with the plan. After much consideration, Baptist Hospital decided to offer RN’s modest pay raises, in addition to regular merit increases, based on years of service, called “Loyalty Pays”. Weekend pay rates were also increased, and some limited referral and sign-on bonuses to match the competitor, were announced.

Emails were sent to everyone, explaining what management had heard from nurses, what they’d elected regarding a response, and reinforcing their belief in the Baptist culture. Then a department head meeting was called. Although RN’s represented the largest single staff group, other key support departments – pharmacy, ultrasound, radiology, physical therapy, etc. – naturally wanted to know “How come them and not me?” Some felt that they weren’t valued as much as the nurses, and the reasons for management’s decisions and actions were carefully explained and discussed. Department heads were then instructed to carry the message to their staffs. Calm and efficiency were quickly restored.

Every Battle and War Has A Conclusion………and Lessons For The Combatants

Forty-five days after the competitor placed its ad, the result of their having spent all that money on the attempted raid was that only 9 RN’s left Baptist Hospital to take full-time employment with the rival hospital. Another 7 took employment with the competitor, but stayed as ‘relief’ nurses at Baptist, working weekends. They wanted to maintain their ties with friends and co-workers. In the same time period, by the way, Baptist hired over 20 new full-time RN’s.

One of the defecting nurses came back to Baptist Hospital almost immediately, and several others ‘bounced back’ somewhat later, because of the competitor’s work environment. As the Vice President of Human Resources at BHC noted at the time: “We’re all partners. We live our values every day. We have people leave thinking they’re going to find greener pastures, but they come back.” When all the dust had settled, the net effect was that only a couple of Baptist RN’s actually left the hospital and stayed with the competitor.

The reality is, of course, that at Baptist Health Care very few employees want to leave, and very few did, even with an extremely attractive monetary offer dangled in front of them. There’s a culture of inclusion and participation at BHC which employees desire and appreciate. Money’s always a part of the value employees see in their job, to be sure; but, it’s the environment, training, plus the daily and long-term experience, that are so much more important to them.

At Baptist, employees respect each other’s professions. It’s well understood, for instance, that nurses are the direct link to the patients. They’re at the bedside, the first line of patient-employee contact, like customer service reps. In a shared value and climate of ‘patients come first’, everyone pulls together. That’s a central reason why BHC’s rate of staff turnover continues to go down.

Just as lower pricing, alone, is both a one-dimensional strategy and historically poor ploy for marketers, employers have to realize that salary and benefits, alone, are only a small part of the employee’s ‘value equation’. Employees want enrichment. They want inclusion. They want communication and participation. They want training. They want recognition. They want to have pride in where they work. They want management to lead by example. At Baptist Health Care, this all exists; and the benefits of a stakeholder- and customer-centric culture are realities that everyone can see, everyday. If customer-centricity can be created in healthcare, it can be created anywhere.

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