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7 Ways to Reduce Labor Costs - Without a Widespread Workforce Reduction

First few Article Sentences

COVID-19 has put an unprecedented financial strain on health care organizations. To exacerbate matters, these institutions already face razor-thin margins as many hospitals are relying on non-operating and investment income to survive.

To achieve financial stability, it may be necessary for organizations to cut operating costs quickly, which can be difficult and painful. Labor cost reductions in particular are hard to achieve and sustain, but important to manage; they still represent the single largest category of expense in a hospital—above 50% of total operating expenses, according to the Healthcare Management Financial Association.

However, before hospital leadership implements any labor cost reduction initiatives, it’s important to evaluate other opportunities in non-labor costs and revenue cycle enhancements so that you’re taking a balanced approach to financial health. This allows employees to be prioritized and labor reductions to be used as a last resort if non-labor cost reductions and revenue cycle improvements aren’t enough to meet a hospital’s financial goals.

Kim, David


Moss Adams


June 1, 2020

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