Introduction
Reform of the healthcare sector is a constantly evolving process, even when it’s not at the forefront of the news. Healthcare reform ranges from the creation of Medicaid and Medicare in the 1960s and the passage of the Affordable Care Act (ACA) in 2010, to the failure of the American Healthcare Act (AHCA) in 2017 to Medicare-for-all proposals. Other reforms occur constantly at the federal, state, and institutional regulatory level. Hospital systems have become very powerful players in the industry and a driver of reform themselves. Ascension Health, for example, a non-profit, operates 76 hospitals and would have ranked number 139 on the Fortune 500 in 2015 (Bricker, n.d.).
The ACA touched every part of the healthcare sector with the goal of extending insurance to all uninsured individuals as well as making substantial regulatory changes to the industry (Arnold, 2013). Insurance marketplaces were created where individuals could not be denied coverage based on health status, expansion of Medicaid to all adults making up to 133% of the Federal Poverty Line was offered to states and a variety of taxes and other financial assistance for the previously uninsured were created. The ACA cut Medicare spending and encouraged payments based on quality of care. The ACA also left a substantial amount of discretion to the executive branch to make changes to the law, especially under Section 1332 waivers for states (Singer, 2017). The ACA has extended healthcare to over 20 million uninsured and has substantially increased the demand for healthcare.
The constant change and potential changes to the overall healthcare sector produces many evolving challenges that healthcare institutions must be equipped to handle. One challenge is managing human resources (HR). Human resources are the present and potential future people contributing to the organization (Fottler, 2015). HR managers manage the contributions of these people. Managers must stay up to date with legislative and regulatory changes and alter their practices and procedures appropriately. Adapting compensation, credentialing, recruitment, diversity practices and workforce planning requires vigilance beyond following the news cycle and in depth monitoring of occurring and potential reforms. Failure to do so could result in the loss of competitive advantage of the organization, a reduction in quality of care, breaking the law, not honoring regulations or even closure of the organization.
Compensation and Benefits
Compensation and benefits offered by healthcare organizations are disproportionately driven by, perhaps ironically, health benefits. Broadly speaking, compensation is a financially direct reward such as a salary and benefits are financially indirect rewards such as health insurance or a retirement plan (Fried & Smith, 2015). Market information plays a role in determining appropriate compensation and benefit packages for employees in order to recruit and retain the needed talent.
181 million people in the United States are covered by employer sponsored insurance (ESI), including many in the healthcare industry (Bivens, 2018). The tax exempt status of ESI drives down wages and encourages employers to allocate compensation towards health benefits and away from wages and salaries. The ACA added a tax on certain health plans which implementation of is delayed every year by congress, showing that changes in major legislation are not implemented and affect compensation structure. The failed AHCA would have driven up premiums in 2018, 2019 and 2020 while reducing them after, depending on the actions of different state governments (Congressional Budget Office, 2017). This illustrates two challenges for HR managers. First, benefits will be changing every year due to legislative reform. Although the trend has been increasing premiums for decades, more uncertainty would have been added, making it harder to design packages. Second, the law was projected to produce radically different results in different states, making following regulatory changes at the state and federal closely essential and hiring across state lines more difficult. The fact that passage of the law looked likely for half of 2017 and ultimately failed illustrates the uncertainty.
Even without the passage of the AHCA in 2017, Section 1332 waivers (for state changes to federal regulations in the ACA) have created disparities in benefits between states and accelerated regulatory changes (Butler, 2017). Indiana, for example, received a waiver to prefund Health Savings Accounts (HSAs), which have exploded in popularity and are primarily used by older and middle aged, higher income individuals, including physicians and healthcare professionals (Beaton, 2018). This type of regulatory change, which isn’t unique to Indiana or headline worthy, alters benefits from state to state and year to year in what seems like a small way, but one that has the potential to change retirement saving benefits, tax savings and insurance premiums. Additionally, there have been changes to the employer contributions, meaning employers’ compensation and benefits packages change, especially if hiring high income and middle aged and older earners like physicians.
Under a Medicare-for-all reform, employer provided health benefits would be rendered obsolete as everyone would be covered by the government. Some economists believe that this could raise wages and salaries for everyone (Bivens, 2018). The multitude of potential outcomes under all reforms, potentially in the future as well as the present, make designing a competitive market price salary, wage and benefit package difficult for HR managers. In order to remain competitive or gain a competitive edge, the best HR managers will be able to stay up to date on all of the reforms and plan for the future. HR managers must also consider non financial incentives to attract talent such as flexible hours and leave time. Failure to remain competitive could result in reduced retention and difficulty recruiting, as better prepared organizations will out-compete for talent. Retention and recruiting are difficult challenges managers face and the best organizations will be prepared in the face of reform.
Credentialing and Privileging
Healthcare reform also has a profound effect on credentialing both currently and in the future. Credentialing ensures that providers have the required license, education and training and experience to perform their duties (Hyde, 2015). There are several aspects to this issue, the first and foremost being the shortage of primary care physicians. One potential solution to help mitigate the need for physicians is the increased use of physician extenders, such as nurse practitioners and physician assistants. The Institute of Medicine (2011) reports that by 2020 80% of nurses should have Bachelor’s degrees and their organizations should be utilizing their education in allowing them to practice as broadly as possible. From 2003 to 2014 the number of physician assistants grew by 75% while nurse practitioner growth was nearly 300%. The American Nurses Credentialing Center is an organization that credentials both individual and organizations in the nursing field, including continuing nurse education, allowing nurses to perform more procedures and alleviate the workload of doctors who report being overworked. Half of all physician assistants and nurse practitioners work in primary care with primary care physicians, providing a major boost to primary care capacity to organizations who utilize these extenders. Challenges with utilizing additional personnel still exist. Some organizations that have fully accepted the medical home model (which emphasises teamwork by providers to increase quality and is championed in the ACA) and added additional licensed individuals, such as case workers and counselors, to their networks have experienced a decrease in patient capacity (Huff, 2016). HR managers should therefore study successful organizations as they try to implement a wider range of personnel into their organizations.
While much attention has been paid to the need for additional primary care physicians due to an increase in insured individuals under the ACA, further attention needs to be called to the type of patients being insured. Many of the newly insured are insured through guaranteed issue, where patients cannot be denied coverage due to preexisting conditions. These patients are likely to have conditions that require speciality care and indeed, as an example, need for vascular surgery is projected to be 16% higher than primary care by 2025 (Parente, Feldman, Spetz, Dowd, & Bagget, 2017). Recent advancement in medical technology has made credentialing and privileging of surgeons more difficult and risky. In 2013 a lawsuit was filed against a surgeon who had performed over 100 open prostatectomies with good outcomes over a decade (Pradarelli, Campbell, & Dimmick, 2015). When a new technology that could enhance the surgery came out, the surgeon completed the required one day manufacturer training and procedure observations required for privileging by the hospital. Despite this, the surgeon made a medical error when using the new technology on his first unsupervised surgery. This error led to a lawsuit that was settled for an undisclosed amount. Had the surgeon had more training with the new technology before being allowed to operate alone, the lawsuit and adverse impact on the patient could have been avoided. The family of the victim of the error also sued the manufacturer of the device for not establishing rigorous training. The court ruled in favor of the manufacturer and wrote that the onus was on the hospital to credential the physician based on the hospital’s standards. In the future more advanced treatments and complicated cases will come before physicians with the influx of sick patients seeking treatment for the first time. Privileging and credentialing must be taken seriously and thoroughly reviewed in order to ensure quality care and avoid legal issues.
The need for doctors and the aging population has created another credentialing and privileging issue. By 2025 ⅓ of physicians will be over the age of 65 and treating a rapidly aging and sicker population (Huff, 2016). As pilots age, they undergo additional evaluation and finally a mandatory retirement age and it has been suggested that a similar approach should be taken with doctors. Pelletier (2018) reports that HR must work with legal and quality teams to determine a strategy for evaluating the continued effectiveness and ability of older physicians. Every organization should create a policy for privileging and credentialing older physicians, although most do not currently have one and are ill-prepared for the coming changes to the workforce. Failure to create and implement a policy can lead to quality problems, failure to compete in the physician market and legal issues.
Recruitment and Retention
HR managers frequently rate recruiting, which is the ability to attract the desired employees to the organization, as the most difficult challenge they face (Fried & Gates, 2015). Recruiting in the constantly changing reform environment is even more of a challenge. Organizations have had to become creative in order to meet organizational needs and remain competitive in the marketplace. One group of organizations has struggled the most with recruiting since the enactment of the ACA: rural hospitals.
The ACA created a source of distress for rural hospitals as well as a lifeline. The ACA expanded Medicaid for all those previously not covered by Medicaid earning up to 133% of the Federal Poverty Line while simultaneously changing and cutting Medicare reimbursements (H.R. 3590, 2010). Rural hospitals have benefited from payments from Medicaid for previously indigent patients but have suffered from Medicare payment changes. Rural hospitals have been closing since 2010 when the ACA was passed and only 28.9% of rural hospitals are now rated with a low risk of financial distress (Holmes, Kaufman, & Pink, 2017). With uncertainty around payments and financial health, it can be difficult for these organizations to recruit. Compared to urban centers rural hospitals have several disadvantages. These include limited resources and technology, making any drop in reimbursements particularly difficult to handle. Additionally, the scope of treatment provided at rural institutions tends to be much broader because there aren’t other options for patients in these communities (Rohatinsky, Udod, Anonson, Rennie, & Jenkins, 2018). Healthcare providers are often targeted for recruitment by rural hospitals because they either currently live or previously lived in rural areas. However many professionals who previously worked in a rural area leave for more populated areas because of lack of resources, perceived lack of advancement opportunities and isolation. Once an organization begins to struggle, it becomes a less desirable opportunity for professionals, exacerbating its struggles. For example: a rural hospital in Georgia (a state that did not expand Medicaid) begins to struggle with Medicare reimbursements, leading to a reduction in resources and a few departures in staff. That hospital is now at a higher risk of financial distress and a less attractive destination for potential staff.
Mentorship is a proposed solution for rural hospitals to attempt to recruit healthcare professionals (Rohatinsky et al., 2018). Mentorship is beneficial in almost all provider relationships but can be a selling point for a rural organization attempting to recruit and retain. Research indicates that if a hospital can operate a mentorship program that creates a connection in the community while allowing for communication with providers in more populated areas, employee morale increases. The primary challenge identified by the same research was a lack of support from administration, who cited recruitment as a more pressing issue than retaining employees in a mentorship program. Even though there are creative solutions with promise, HR managers need to pay attention to all of the resources for recruiting (including intelligent workforce planning which is discussed later) and retaining employees.
The ACA, through its coverage expansion, has exacerbated the nursing shortage in the United States by increasing demand for healthcare. Some employers are looking for international solutions to the nursing shortage. 20% of the employed nurses in the world reside in the United States (Arnold, 2013). This demand creates the potential for a “drain” of nurses to the United States to keep up with demand. Since 2002, admission rates to nursing schools in the United States have decreased, with more applicants rejected, contributing to the shortage and allowing for foreign trained nurses to fill the void. Hospitals have found a surprising benefit to hiring international nurses: cost reduction. When organizations compete for the same limited pool of domestic nurses, wages and benefits are driven up, increasing costs to the organizations. Not all American organizations are attempting to hire international nurses, leading to more buyer power for the organizations that do and lower costs. Retention can be an issue for international nurses, as they are in a new country and have to go through processes before and during employment such as acquiring visas. There can also be friction between American nurses and international nurses but many organizations are recruiting out of country to address the nursing shortage.
Workforce Diversity
The United States is also undergoing constant demographic changes that will make the country majority minority within 30 years (Frey, 2018). Healthcare organizations are moving to create workforce diversity, which is thought of as either individual uniqueness or differences related to race and ethnicity (Evans Sr., 2015). Diversity is an extremely important component for healthcare managers when considering healthcare reform. While the ACA was designed to eliminate the uninsured population, 27.3 million people lacked health insurance in 2016 (Berchick, 2017). The uninsured population is disproportionately made up of underrepresented groups. Whites and Asians are insured at a percentage higher than their representation in the population. Whereas Hispanics and blacks are uninsured at disproportionately high rates, given the racial makeup of the country, leaving them at a greater risk for health problems. According to the 3Ds model (Social Determinants, Health Disparities, and Health-Care Workforce Diversity), quality can be improved by increasing diversity among providers and developing a workforce that best reflects the population being served (LaVeist & Pierre, 2014). Already the healthcare workforce doesn’t reflect the population it serves. Social determinants are factors such as race and socioeconomic status that can affect your health. Workforce diversity has the impact to either exacerbate or mitigate the negative effects of social determinants. The idea of the 3Ds model is that social determinants affect health disparities, usually negatively. However with workforce diversity, an organization can disrupt that linear relationship, reducing health disparities as workforce diversity increases.
The United States already doesn’t have a workforce diverse enough to make up for the demographic changes of the population being served (LaVeist & Pierre, 2014). Assume that a Medicare-for-all proposal granted access to healthcare to all of the uninsured individuals, who are already disproportionately poor minorities that the workforce is currently incapable of serving adequately (Berchick, 2017). The influx of patients would see doctors that don’t reflect the population and quality of care would suffer. Matching the workforce to the population being served increases the quality of care being delivered. As more underserved populations gain access to healthcare, being able to recruit a diverse workforce will be an issue that HR managers will be forced to address.
This is a problem that addressing a nursing shortage can assist with. Hiring international nurses increases cultural diversity and tolerance among employees, as well as increasing the amount of languages spoken (Arnold, 2013). The mix of languages is sometimes thought as a negative in the workplace, causing friction between employees. However, the potential benefits of diversifying a healthcare workforce outweigh other risks. Practically speaking, in the aftermath of Hurricane Maria, thousands of Puerto Ricans moved to Central Florida, where there was already a substantial Spanish speaking population. Many of the new arrivals did not speak English. Rege (2018) writes that Florida Hospital in Orlando targeted recruitment of Spanish speaking and bilingual nurses to improve quality of care and be able to care for a larger share of the population, retaining market share at the strategic level.
Organizations can work to diversify their clinical staff, which, when matched with the patient population, has observable benefits (LaVeist & Pierre, 2014). Patients report higher levels of satisfaction when seen by a physician of the same race (Livingston, 2018). Patients believe that their physician cares more about their health outcome when they see a doctor of the same race. There is evidence that increasing diversity in clinical staffs can drive healthcare reform itself as patients are more likely to see a doctor they identify with, increasing the number of physician visits by minorities who currently don’t see a doctor.
Diversity at the top of organizations has continued to lag, even as health reforms have expanded access to more diverse populations. In 2015 only 14% of board members and 9% of CEOs in hospitals were minorities, figures that hadn’t moved in the four previous years despite the The American Hospital Association’s #123forEquity pledge campaign (Livingston, 2018). One persistent issue is that board seats don’t turnover frequently and when they do people tend to pick a replacement from the same background, which often means white and male. Often these individuals seek diversity but ultimately cannot find someone because of the circle that has developed is exclusionary. Many managers know about the benefits of diversity from the bottom up to the board but few organizations have been able to implement practices to achieve diversity. The shining example of diversity within a healthcare organization is Kaiser Permanente. Minorities compose 43% of the board and 65% of the organization’s workforce, including a majority women composition of the workforce.
Workforce Planning
Workforce planning is the ability to match the number of workers with the right skills with the need for workers in the right place and time (Fraher, & Morrison, 2015). The healthcare workforce under the ACA combined with the aging population has grown. The demand for healthcare and health professionals continues to outstrip growth, leading to shortages and challenges in the industry. The ACA has had a profound effect on the workforce by facilitating an unprecedented expansion of the insured population. Furthermore, many preventative services are required by law to be covered without cost sharing, increasing utilization of physician and other professionals who administer those services (Healthcare.gov, 2018). Primary care doctors have shouldered an increased burden since the passage of the ACA. The ACA was projected to add 15.07–24.26 million primary care visits in 2019 (Parente et al., 2017). These visits would require 4,307 to 6,940 new physicians. Another estimate projected a need for 20,400 new primary care physicians by 2020. 81% of physicians report working at capacity or beyond (Huff, 2016).
The physician shortage has no immediate cures and is exacerbated by two systemic issues: first, the number of federally funded residencies hasn’t increased since the 1990s and second there are regional issues creating geographical divides (Huff, 2016). Increasing the number of residencies, particularly ones for students looking to go into primary care, would increase the number of physicians but they need to be located in the proper areas of the country. In a study of primary care residencies for each slot in a primary care internal medicine program, there were six applications (O’Rourke, Tseng, Levine, Shalaby, & Wright, 2016). Worse, it showed that nearly 61% of the 104 internal medicine primary care programs were located in the northeast, compared with 10.9% in the southeast and 9.4% in the midwest. The number of primary care residencies is inversely correlated with the geographic need for primary care physicians. Encouraging physicians to practice in different, underserved regions has spurred debate on how best to resolve the problem (Stapleton, Schroder-Back, Brand, & Townend, 2014). These range from increasing salaries for primary care physicians in certain regions to binding contracts that make practicing in underserved areas upon graduation contingent on acceptance into the program. Loan forgiveness programs for physicians that practice in rural hospitals are growing in popularity. Organizations must work to combat the general shortage of physicians in an era of increasing utilization, with some needing to fight structural disadvantages as well. Planning the workforce becomes a challenge when there are deep shortages in physicians.
There is a case study of how the ACA might affect organizational demand for other healthcare workers, specifically administrators. Before the ACA Massachusetts passed “Romneycare,” from which the ACA borrowed characteristics. The state reform allowed researchers to isolate the growth of the workforce compared to the rest of the United States. Employment of administrators in the healthcare sector increased 18.4% per capita in Massachusetts from 2005–2006 to 2008–2009, compared with 8.0% national growth during the same time (Parente et al., 2017). This growth in administrator employment reflects the need for more management when utilization increases and more individuals are entering the healthcare system.
These macro trends are important for organizations to consider when making decisions. Even changes to the number of residencies to increase the number of primary care physicians and nudges to better geographically allocate them will take years to affect the workforce. The ACA has and is projected to continue to bump wages for healthcare workers across the board, from doctors and nurses to administrators (Parente et al., 2017). These new administrators are being paid to make decisions in this macro environment where reform has changed the workforce.
Conclusion
Healthcare reform is occurring constantly at the state, federal and institutional level, even in the absence of major headline legislation. It is possible to draw connections between all of the different topics discussed. The demand for doctors, nurses, and administrators has driven up their wages (Parente et al., 2017; Huff, 2016). The nurse shortage driven by workforce trends has forced savvy organizations to hire from abroad or to meet the demands of a changing demographic by hiring displaced workers to serve an expanded population (Arnold, 2013; Rege, 2018). The poor allocation of primary care physician residencies makes recruiting more difficult for these underserved, often rural institutions (O’Rourke et. al, 2016; Rohatinsky et al., 2018). Organizations are turning to nurse practitioners and physician assistants to combat overworking doctors and encouraging them to practice to the top of their education and licensure (Huff, 2016; Institute of Medicine, 2011). Many of these same organizations are turning to medical home models, which come with challenges of their own as they try to increase their patient capacity. Future uncertainty in the regulatory and legislative environments make committing to any long term strategy difficult. Not enough organizations have a policy in place to maintain the credentials and privileges of aging physicians, a problem brought on by an aging workforce, population and increased access to healthcare through reform (Pelletier, 2018). Reform has increased access to healthcare to traditionally underrepresented racial minorities, who benefit from increased quality of care when the workforce resembles the patient population (LaVeist & Pierre, 2014). Future coverage expansions will insure the remaining population, who are disproportionately underrepresented. Increasing diversity throughout the workforce in an organization begins at the top in the boardroom and few organizations have had success (Livingston, 2018).
Healthcare reform touches all aspects of HR management and managers should remain informed of all developments in order to keep a competitive edge, increase quality of care and avoid legal issues.
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