While ‘solving’ the workforce problem by raising overall costs to unacceptable levels is not a viable solution, pushing hard on productivity also carries clear dangers.
Healthcare providers could simply slash their costs, as many businesses do in times of economic shortfall. But this is not advisable for two reasons. First, research shows that cost reductions made during financially difficult times are often not sustainable. On average 93 percent of costs cut are believed to return when businesses refocus on growth after a period of cost cutting (KPMG, 2011). Indeed, sustainable cost-efficiency programs tend to require businesses to engender a clear focus and vision, increase transparency and enhance employee engagement: capabilities that are lacking in many businesses and particularly difficult for healthcare organizations. Second, blunt cost-cutting measures are often shown to have a negative impact on both the quality of care and the engagement of professionals and other workers. Simply put, asking employees to work harder is not a proven recipe for success. Requiring professionals to see more patients per day could lead to diminished quality and a higher risk of medical errors. What is more, such measures generally decrease workforce satisfaction, leading to increased levels of absenteeism and decreased employee retention rates (see the red arrow in Figure 5). Clearly, if the healthcare sector were to lose focus on quality and attractiveness, then the significant potential of labor supply will be lost, leading to a downward spiral that we cannot afford. The challenge therefore, is to close the potential workforce gap in a new and radical way: by enhancing the productivity of healthcare personnel while at the same time improving the quality of care and improving the attractiveness of healthcare work. Our research clearly shows that this approach can result in cost savings, quality gains and a more satisfied workforce (as illustrated by the green arrow in Figure 5).