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The biggest payroll challenges in healthcare

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There are few HR and payroll challenges as complex and daunting as those presented by the healthcare industry. The industry has a large and growing number of employees across expanding sectors like pharmaceuticals, aged care and not-for-profits.

Yet there is growing evidence to suggest existing legacy systems for managing HR and payroll across the industry are failing to keep up with the pace of change. This is posing a unique set of problems at a time when good health professionals are getting harder to find and retain while the general costs associated with healthcare continue to rise exponentially.

Professionals working across both the private and public healthcare sectors know only too well how hard it can be to get large-scale payroll and human capital systems to work properly. And the potential consequences of getting them wrong can be dire.

Chief among them are:

  • Low job satisfaction and high rates of churn: Healthcare workers typically work long, irregular hours. Their work involves high-stress situations, which are only exacerbated by errors or delays around their entitlements. This can make it hard to keep the best-performing and most experienced people.
  • Higher costs of delivering care: Poor systems for managing shifts in hospitals increase the need for locums and agency staff to fill last-minute gaps. These unplanned costs add up over time.
  • Reduced quality of patient care: System inefficiencies have a directly negative impact on the availability of healthcare services at a time when the demand for these services is quickly rising.

Payroll management in a varied workforce

The Australian healthcare sector is among the biggest employers in the country, supporting hundreds of thousands of people across multiple professions and disciplines. And with an ageing population, aged care is now among the biggest drivers of growth in the industry.

Healthcare has among the highest proportion of shift and contract workers, as well as locums and agency professionals, of all industries. All of these workers expect to be paid what they are owed accurately and on time – and rightfully so.

But the difficulties don’t stop with freelance and contract workers. Full-time, part-time and casual workers also want more flexibility and control over their work schedules. This poses a unique problem for the healthcare industry, as conditions are often stressful and difficult to predict.

Staff churn, agency and locum costs on the rise

In 2015, Australian technology specialists Allocate Software surveyed nearly 170 members of the Australian Healthcare and Hospitals Association on a range of human capital and finance-related issues.

More than a fifth of respondents expressed concern about high staff turnover, while a third of respondents expressed serious concerns about the costs of engaging agency and locum staff to fill vacant shifts. Other cost-drivers cited were unplanned overtime due to complex award interpretations and poorly planned holiday schedules.

The survey found that payroll bills represent over 65% of total operating costs in many instances. In a sector still heavily reliant on paper and manual processes, costs like these are only going to continue to climb.

Payroll and HR solutions enabling healthcare leaders

A growing number of healthcare organisations are beginning to explore the potential for cloud-based information systems to reduce costs and complexity, especially in hospitals and other environments with large numbers of staff and patients.

In particular, cloud-based digital payroll and HR solutions have a key role to play in improving efficiencies and reducing the spiralling costs faced by healthcare organisations. These systems allow HR directors to track and access payroll and HR data, and give employees the ability to manage their leave and entitlements quickly and easily online.

This helps address human capital problems such as low job satisfaction and high turnover. It also provides greater visibility and manageability of remuneration and shift management changes. Cloud-based systems are also cheaper and easier to deploy than more traditional alternatives.

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