The Cost of Premium Labor in a Skilled Nursing Environment


The cost of operating a SNF varies from state to state and program to program but labor is the key variable cost that impacts every facility in the country. Nearly 70% of skilled nursing costs is labor related and the use of premium labor can drive this cost higher, risking the financial stability of the facility.

Nursing homes and skilled nursing facilities have a higher portion of labor problems than other health care providers as a result of high turnover, staff shortages, low paying jobs, physical job requirements, and volumes of unskilled workers. The use of contract labor or overtime to address these issues may fill the short term needs of a facility but at a higher cost than most administrators realize.

Recruitment costs are rarely considered when evaluation premium labor but it can be a significant portion of a program’s outlay. The average cost of the turnover of a bedside RN ranges between $36,000 and $48,000. Each resignation creates another staffing gap, most often filled with premium labor.

The use of overtime to address staffing needs can create additional problems. Overtime above 5% of total worked hours per pay period is associated with increased medical errors and patient falls, which can leave your skilled nursing facility vulnerable to malpractice claims.

The Impact of Premium Labor on Your Program
The average length of stay in a long term care facility is over 800 days and for a skilled unit it averages about 23 days. For residents, the skilled nursing facility is their home and, like most people, they don’t appreciate strangers wandering around in it.

The reliance on contract labor can create a revolving door of unfamiliar faces within the program, resulting in resident and family dissatisfaction. If the facility has residents with issues of dementia or Alzheimer’s, the continued use of contract staff can exacerbate the sense of disorientation among this population.

The excessive overtime hours can also create problems for residents as overworked staff tend to be short tempered. For a group of people who have physical limitations and therefore extensive care needs, the attitudes of the people assisting them can make their experience positive or very unpleasant.

Most residents are already uncomfortable asking for help and that discomfort is increased when they know that they will be treated like a burden or problem, rather than a person.

The Cost of Unfilled Positions

  • When your skilled nursing facility relies on premium labor to address gaps created by unfilled positions there are several costs that are not obvious on a balance sheet, including:
  • Lower moral which can result in staff turnover.
  • Increased patient falls and other care-related issues.
  • Increased need for education and training of contract employees to assure compliance with facility policies and regulatory requirements.
  • Shifted responsibilities from unfilled positions to employed staff, adding to the employee workload and taking time from their primary activities.
  • Reduced employee loyalty and engagement in the goals of your facility.

The negative impact of premium labor usage on your facility’s staff and residents can damage the perception of your program in the marketplace.

Skilled nursing facilities need to fill vacant positions as effectively and inexpensively as possible but they are in the business of geriatric care, not staff recruitment.

Using an expert in this field who has the resources and experience to fill your positions with quality staff is a smart choice. PPR Talent Solutions is a leader in workforce recruitment and can help you reduce your premium labor costs while improving resident care and satisfaction.

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