Balancing penalties and rewards in benefits for health care providers
NBC News recently reported that it’s becoming common for hospitals to require nurses to pay back the cost of their training if they choose to leave or are fired within a certain amount of time. These costs can amount up to $15,000, so they represent the potential for significant debt. Brynne O’Neal, a regulatory policy specialist with National Nurses United, told NBC of her concern that, “Having that debt hanging over them means that nurses have a harder time advocating for safe conditions for themselves and their patients.” In September, the Consumer Financial Protection Bureau launched an investigation into the matter to see if oversight measures should be taken.
Understandable motivations behind a problematic policy
It’s unclear if hospitals’ repayment policies are well communicated to onboarding nurses. One thing that is clear is why a hospital might be motivated to enforce such a rule. Nurse retention is top of mind for health leaders across the country. According to the US Bureau of Labor Statistics, an additional 203,200 nurses will be needed in the workforce each year between now and 2031. This shortage is impacted by the fact one million RNs are expected to retire by 2030, and meanwhile, demand for these professionals is only expected to grow. To combat a staffing shortage that’s nothing short of a crisis, hospitals are understandably trying to improve nurse retention.
Additionally, hospitals are under pressure to control staffing costs. KaufmanHall recently found that 2022 was the worst financial year for hospitals and health systems since the start of the pandemic, and the cost of labor (which increased 2% from November to December 2022 alone) was a big part of the problem. Healthcare organizations are searching for ways to contain labor expenses, and a repayment policy aligns with this goal.
But it could also land a hospital in the news for the wrong reasons and place a strain on its relationships with members of its nursing staff, which begs the question: Can a retention program encourage longevity without risking such devastating consequences?
Risk and reward
There are times when it’s appropriate to place a certain amount of compensation at risk in order to encourage loyalty to an organization. The key, however, is to balance at-risk compensation with short-term rewards that help improve attraction. This is true of any rewards suite, but it will become especially important to healthcare organizations as they try to navigate the nursing shortage in ways that do not place these much-needed professionals at risk of incurring serious debt if they need to leave their positions.
Physician and executive recruitment and retention have become more competitive and costly than ever, so it’s also important to bring the same approach to designing benefit plans for these professionals.
How MaxWorth can help
MaxWorth would be happy to help you evaluate your benefit programs for nurses, physicians, and executives. A benefit plan review can bring to light any possible unintended consequences of your incentive programs. It can also help you make sure the risks and benefits of your programs are effectively communicated, so your employees understand the terms of their contracts before signing. Perhaps most importantly, we can help you strike a balance between at-risk and short-term rewards so you can improve attraction and retention in ways that don’t land you in the news.
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