Where Hospices Are Seeing the Greatest ROI on Staffing Investments

Amid persistent workforce shortages, sign-on and employee referral bonuses, as well as enhanced benefits, are bearing the most fruit for hospice providers.

Though many providers are reporting upward trends when it comes to recruitment and retention, some clinical and administrative vacancies remain pain points. Filling gaps in the hospice workforce has come with hefty financial costs for some providers, but sustainable capacity is a large part of the return on investment.

These issues exist throughout the health care continuum, meaning that hospices have a broad range of competitors in the labor market.

Medical groups and health systems nationwide reported a median of 10% increase in staffing costs from 2022 to 2023 in a recent American Medical Group Association (AMGA) survey. Responses came from physician medical groups representing more than 6,100 clinics nationwide, including palliative and hospice clinicians. Roughly 30 different palliative care clinics provided insight for the survey.

The battle for registered nurses has been a particular sore spot for hospice and palliative care providers, according to Rose Wagner, chief operating officer of AMGA Consulting.

“We are seeing the nursing pendulum swing up in most specialties. It’s this moving into different fields,” Wagner told Hospice News. “But reimbursement is one of the biggest challenges for [hospice] organizations’ getting tighter and tighter margins. Salaries are usually the highest component of why profits and losses go up or down. At some point, it becomes unsustainable.”

Workforce strategy and ROI

Curbing turnover during the pandemic took chunks out of hospice margins across the country, according to Eddie Belluomini, COO of 1Care Hospice & 1Care Kids. But staffing investments to thwart turnover can pay off in more ways than one, he stated.

Nevada-based 1Care Hospice was established in 2020 by a group of hospice and palliative care leaders with nursing experience. The company began providing services one year later, but the staffing shortage constrained barriers to census growth.

“As far as margins are concerned, lower staff turnover leads to overall better continuity of care and less money spent on hiring, training and advertising,” Belluomini told Hospice News in an email.

Like many hospice providers during the pandemic, 1Care saw larger clinical turnover rates as it launched services, according to Belluomini. Clinical turnover rates averaged between 20% and 30% of its workforce during the first year of operations.

Since then, staffing levels have improved, partly due to the organization’s investments, which include sign-on bonuses. That strategy will be used “when needed” going forward if clinical capacity reaches similar strains, Belluomini said. Employees at the hospice also receive merit-based annual salary increases.

Having a good paid time off policy is also “vital to attract and keep employees,” he stated. A flexible schedule and having fewer patients on clinical caseloads is also important, Belloumini added.

Though those last two are not necessarily direct costs, offering improved employee benefits does come with financial strings attached.

“At 1Care Hospice we have found that potential and current employees truly value several things: Lower daily visit caseloads,” Belloumini said. “This is key to employees not feeling overloaded at work and having a better work-life balance. Employees having an autonomous work schedule, [which] gives them the flexibility to see the patients on a schedule that works for them along with the patient. A good PTO and sick leave policy is vital to attract and keep employees happy. We give employees three weeks of vacation per year upon hire and 40 hours of sick leave annually.”

Hospices seeking to boost their ranks need to know which of their staffing buckets they should try to fill first, according to Elizabeth Siemsen, director at AMGA Consulting.

This could mean investing not only in competitive compensation, but also in technologies that create more efficient workflows and patient admission processes, she added. This can pay off in terms of sustainability and growth, Siemsen said.

“[It’s] being in tune with what the staff needs, and I think that is an investment that pays off for any organization — especially in a time of staffing turmoil,” Siemsen said. “It’s easier to keep people than it is to hire new people. That’s an important piece when you look at hospice and palliative care [and] recognizing the large costs of care at the end of life. It’s getting back to the value equation of making sure that care happens in the right place, at the right time.”

The staffing ROI value equation

Aside from having a supportive workplace/organizational culture and offering flexible scheduling, compensation and benefits are among the key elements to attracting and keeping clinical and other interdisciplinary staff.

Employee referral bonuses were among the most common recruitment and retention incentives among 88.2% of medical groups in 2022, according to the AGMA survey results.

About 77.6% of respondents were looking at offering sign-on bonuses that year, while more than half (55.7%) indicated that they would be making changes to their employee benefits packages.

The ability to recruit and retain the right staff is even more challenging when competitors with deeper pockets offer larger incentives, Seimsen added. The precedent of offering bonuses during the pandemic is having a “snowball effect,” creating escalating competitive wage opportunities, particularly among nurses and clinicians.

“It kind of becomes a snowball and creates opportunities where medical groups are going to keep increasing wages and offering bonuses that creates turnover as people move on,” Siemsen said. “In aging populations, there’s an increased need for this particular nursing service, and that’s where you see turnover’s biggest return. While hospices may have fewer RNs, they put in different resources and support around them.”

Hospice providers have implemented new hiring and retention programs that have included these incentives, with some beginning to reap the benefits.

Case in point, Chemed Corp. (NYSE: CHE) subsidiary VITAS Healthcare launched a staffing bonus program in July last year, which has since relieved some of its clinical capacity constraints.

VITAS Chairman Kevin McNamara reported recent signs of returning to a “more normalized” and “expanded” capacity of its licensed health care professionals thus far in 2023.

The company added roughly 200 health care professionals to its ranks during Q1, with licensed nurses representing 60% of that growth, McNamara recently stated in an earnings call. To date, the program has led to a boon of 475 new staff members, he added.

The boost of nurses was crucial to the company’s ability to meet patient demand, according to VITAS President and CEO Nick Westfall.

“It is important to note the majority of this increase in staffing is for licensed nurses, including admission nurses in the first quarter of 2023,” Westfall said in the earnings call. “We have developed what I believe is a very sustainable path to building back our capacity and patient base to pre pandemic levels and beyond. The bottom line is if we can continue to win the war on talent, and we have the demand there for that talent to admit and care for patients – which we do – then it’s just a question of trajectory at this point.”

Home health and hospice provider Enhabit Inc. (NYSE: EHAB) also rolled out a workforce initiative in 2022 that is bearing fruit. The company took on additional costs to sustain competitive employee compensation and benefits packages across its business lines. Enhabit’s retention strategies have included updated mileage reimbursement, keeping paid contracting premiums low or at flat rates, and increased hiring salary incentives.

The company hired 101 full-time nurses during the first quarter, including 91 in home health and 10 in hospice. Improved staffing levels were part of what led to a 7.1% sequential increase in hospice admission during Q1 for Enhabit, according to the company’s recent earnings report.

Another workforce investment came earlier this year when Wisconsin-based Agrace Hospice & Supportive Care launched a three-pronged staffing initiative. This included a higher minimum hourly wage, year-end gratitude bonuses for all employees and lower health insurance premiums for lower-wage earners.

These investments were needed to support long-term retention amid rising demand for end-of-life care, according to Agrace CEO Lynne Sexten.
“There’s this constant balancing act of making sure we pay as close to the top of the market as we possibly can,” she previously told Hospice News. “We want to make sure we’re doing everything we can to reward and treat them well with a good work life and better financial balance.”