Managing Labor Costs in a Multi-Dimensional Environment
Labor costs often represent the largest expense in the budget for the Health & Human Services industry. For this reason, effectively managing labor distribution is imperative for maintaining budget compliance, evaluating programs and services, and meeting the complex reporting requirements of funders. However, managing and reporting on labor costs and allocations is often easier said than done.
As the industry landscape continues to evolve, many organizations are transitioning to complex and comprehensive business strategies, including robust care coordination and integrated service delivery models. These changes create a multi-dimensional environment where labor costs are especially difficult to track and even harder to analyze. While HR & Payroll systems are typically the origin for this critical data, most systems are not equipped to support the specialized tracking and unique analysis that this industry demands.
In order to succeed in managing labor costs in a multi-dimensional environment, organizations need to adopt modern solutions and strategies that follow these 3 guidelines:
Harness the Power of Position Control
Position Control is a unique feature that ensures your organization is budgeted by position, not employee. Through Position Control, labor dimensions can be tied to positions as inheritable attributes, without having to code individual employees. When an employee records time worked within their position, their labor will be allocated based on the labor dimensions defined by their position. This eliminates the need for manual coding and provides actionable data that can be used to create detailed labor allocation reports.
Adopt Innovative Costing Strategies
With hundreds of employees within an organization working across multiple labor dimensions and ranging from Full-Time, to Part-Time, to PRN status, the strategies for labor costing must be dynamic, while maintaining data integrity. Additionally, each organization has different needs and processes for aligning staffing needs with costs while simultaneously evaluating program performance. Therefore, multiple costing methods may be necessary for different groups of employees. Most HR & Payroll software will not be able to accommodate this. However, a software solution with Position Control can provide several methods for costing payroll data, including:
- Costing via Timesheets
- Costing via Time Clock Transfers
- Effort Report Costing
- Automated Costing via Standard Percentages
- Automated Costing Based on Revenue/Production
To learn more about various costing methods, and how to apply them, download our Labor Costing Strategies eBook.
Unify Your Data
The automation of multi-dimensional labor distribution is best achieved through the use of unified data. Unifying data from multiple systems provides greater organizational visibility and accuracy. Thus, creating a single source of truth for information and analytics that can act as a decision support tool for executive management. For example, costing strategies based on revenue and production are generated by pulling service level delivery data from the Electronic Health Record (EHR) into your HR & Payroll system. Additionally, detailed file feeds can be sent to the General Ledger (GL) to translate labor allocation and distribution data into accurate and relevant costs.
In order to manage these labor costs, maintain quality programming and services, and meet funders’ complex reporting requirements, it is imperative that providers have access to systems that streamline information-sharing, increase transparency, and eliminate compliance risk. Effectively managing labor costs in a multi-dimensional environment enables organizations to distribute labor across programs to analyze the summary of costs and revenues at a level of granularity that would be otherwise unachievable. This data helps to identify the financial efficiency of each program and, in turn, enable precise budgeting and costing strategies to maximize revenues.