NOTE: This message was emailed to all Ballad Health team members from Alan Levine, President and CEO of Ballad Health, on Tuesday, July 26.
Dear colleagues,
The national nursing shortage, and shortages of other clinical and nonclinical healthcare professionals, continues to be a chronic problem for hospitals, nursing homes and other sites of care. Ballad Health and our post-acute facility friends continue to be impacted by these shortages – all of which impact our patients, availability of beds and our ability to discharge patients to post-acute facilities.
In fact, just yesterday, I read a national story in U.S. News which cited that 87% of nursing home providers are facing shortages with half citing severe shortages; 98% are struggling to hire staff and 73% are concerned they will have to close their facilities. More than 400 nursing homes could close this year, according to the American Health Care Association/National Center for Assisted Living.
Hospitals are not immune. Just this week, dozens of hospitals and health systems, from Denver Health to regional systems throughout the nation, have announced they are anticipating closing services, including labor and delivery, psychiatry, some surgical services and even emergency services – all due to the pervasive staffing shortages they face in their communities. Today, another article highlighted some of America’s most recognizable hospitals are routinely closing their operating rooms due to staffing issues. Hundreds of rural hospitals are projected to close due to the significant cost growth resulting from inflation after the pandemic – with wage costs being the largest component of their losses.
While the current nursing shortage began to materialize before COVID, the reality is that the pandemic has accelerated the problem. In 2018, the American Association of Colleges of Nursing projected that retirements and workforce exits would amount to creating almost 176,000 nursing openings each year through 2029. This projection occurred before the pandemic. I think we would all agree the pandemic made matters much worse, much faster.
You may recall in May 2019, Ballad Health increased our hire-in rates for nurses, and gave compression adjustments (increases) to our bedside nursing and support staff. Subsequently, over the past two years, we have made additional adjustments, with our hire-in rates increasing to $22/hour, plus compression increases for existing staff nurses and support staff. Our efforts to increase pay, along with other initiatives, such as special bonuses and other initiatives described below, have helped reduce our turnover, generally in our smaller hospitals, although it remains high in our primary referral hospitals (Johnson City Medical Center, Holston Valley Medical Center, Bristol Regional Medical Center and Johnston Memorial Hospital).
Ballad Health has responded aggressively over the past two years by investing $120 million on wage increases, and other initiatives. These are new annual dollars, which are now a permanent investment. Other initiatives include:
- Up to a $37 million investment in new childcare centers throughout the Appalachian Highlands to meet the needs of our team members, with those efforts aggressively underway;
- The development of our new Nurse Ambassador program intended to recruit newly graduated nurses from outside our traditional geographic region;
- The creation of our own internal staffing agency, offering higher rates of pay and flexibility similar to national staffing agencies;
- Investment in nursing and allied health programs at several local colleges and universities to help increase the pipeline of new nurses and other needed professionals;
- The expansion of the Employee Assistance Program (EAP) throughout the system;
- Creation of a new affinity program, the Balladeer Children’s Program, which has now enrolled more than 1,600 of our team members’ children – feedback on this program has been very positive;
- Most recently, a special two-part bonus provided to all team members, including parttime team members. The second part of this bonus was paid out on July 15;
- Despite that healthcare costs have increased for Ballad Health team members by more than $6 million, Ballad Health is not passing on any of these costs in the form of premium increases. Team members will experience zero premium increases in the coming FY23 plan year;
- Hiring additional educators to increase the number of certified nursing assistants by more than 100;
- Investment of $10 million to create the Tennessee Center for Nursing Advancement at ETSU to help develop accelerated pipeline programs to increase the number of new entrants to the nursing profession.
Clinical leadership and the human resources department are actively listening to recommendations from team members to help identify opportunities to mitigate the impact of these shortages. In fact, several of the ideas we have implemented (above) were the direct recommendations by frontline team members. Your ongoing input and participation in these efforts is incredibly important.
It is important for me to be transparent with you about the impact of all this to Ballad Health financially. Prior to the COVID-19 pandemic, Ballad Health generated approximately $36 million in operating income on revenues of $2 billion a 1.8% operating margin. The wage adjustments we have implemented, alone, are over $100 million more than the operating income we generated before the disruption from the pandemic. As you may recall, Ballad Health reported an operating loss of $37.5 million in the last quarter. I cannot speculate on information we have not released yet, other than to say the challenges impacting hospitals due to the labor shortage and wage inflation have not subsided in the current quarter. Some hospital systems are reporting losses in excess of hundreds of millions of dollars just in the last quarter.
What new steps is Ballad Health taking?
While not all our efforts to improve recruitment and retention are compensation-based, we are continuously evaluating our compensation structure to ensure we remain competitive for new nurses and improve our opportunity to retain the incredible nurses we have. I am sharing with you the following actions we are taking now, which are in addition to the steps outlined above:
- Doubling the annual team member wage increase for all team members from 2% to 4% — Like previous years, this increase is tied to annual performance evaluations, which will be conducted in the fall. If eligible, this increase will be applied the first pay period in January 2023.
- Doubling on-call rate of pay – We are increasing the on-call rate of pay for those departments systemwide approved and utilizing on-call from $1.50/hour to $3/hour, which will be applied effective the pay period beginning Aug. 14.
- Increasing base wages for high-turnover and high-vacancy bedside and perioperative nursing Our biggest staffing challenges have consistently been at the bedside and in perioperative services at our major referral centers – Bristol Regional Medical Center, Holston Valley Medical Center, Johnson City Medical Center and Johnston Memorial Hospital. The lack of staffing in these positions at these facilities has created significant pressure on our emergency rooms as patients wait for bed availability, delays in necessary transfers from community hospitals, and longer-than-usual wait times for elective surgeries. The shortages in these receiving hospitals cascade throughout the system, creating a necessity to target these facilities as an urgent priority. The acuity of the patients in these facilities far outpaces the norm, creating additional pressures for the staff. Patient safety necessitates that we focus first on addressing this core problem, which, if successful, will help reduce the intensity of the shortages throughout the system.
- Beginning Aug. 14, the starting rate for bedside and in perioperative services RN positions at these four facilities will increase from $22 to $27 an hour and currently employed RNs will receive a base wage increase to account for compression, which will vary depending on role and current pay. If team members choose to transfer into one of these roles at these facilities, they will receive the requisite pay increase, as will the float pool at these facilities. Communication regarding the team members impacted will be provided to the departmental manager and a letter to the impacted team member will be sent to their home.
Besides nursing, there are some other positions we have identified which are appropriate for some wage adjustments. Individuals will be notified directly as any adjustments are made.
I know this is a challenging time. As I’ve shared with you, this is a national, and even international, phenomenon. I wish I could tell you there was an immediate solution for this crisis, but unfortunately, the reality is that the pipeline to create additional nurses takes at least two years. For us, the most important thing is to stabilize our existing staffing to help reduce turnover, and continue to make gains with new hires. We remain committed to this process.
Thank you for all you do!
Alan
