As labor costs rise, health care organizations implement cost-cutting measures.

The results of its Workforce Metrics Benchmark Survey have been released by SullivanCotter, the top independent consulting business in the country for workforce solutions, data products, and complete rewards program assessment and development for the healthcare and not-for-profit industries. Cost worries are being exacerbated by persistent personnel challenges, such as high turnover, employee fatigue, pay pressure, and other recruitment and retention issues, even though many health care organizations have started to see a moderate post-pandemic financial recovery. Hospitals and health systems are reassessing the composition and size of their workforces in order to reduce expenses and establish a more sustainable and cost-effective workforce architecture, even as labor expenditures remain high.

The total size of the workforce increased by less than 1% from 2022, but year-over-year comparisons reveal that the cost of labor is still increasing far more quickly. The bulk of an organization’s personnel costs, or the annual base payroll bill, increased by about 10% between 2022 and 2023. This has added around $200 million to the expense line for the average participating business, which has base payroll expenses exceeding $2 billion annually. A closer look at these results, which include information on various job families and demographic groups across career level phases, sheds light on how businesses might continue to assist workforce efficiency and expense control programs.