key: cord-0750783-3wy9bzl1 authors: Trombold, Nicholas; Awad, Dima title: The economic opportunity of departmental training during pandemic scenarios: Concepts and analyses date: 2021-09-02 journal: Am J Health Syst Pharm DOI: 10.1093/ajhp/zxab321 sha: bcf4d9054c5c9cdcaa7f967cd53d6ee70427a2c4 doc_id: 750783 cord_uid: 3wy9bzl1 In an effort to expedite the publication of articles , AJHP is posting manuscripts online as soon as possible after acceptance. Accepted manuscripts have been peer-reviewed and copyedited, but are posted online before technical formatting and author proofing. These manuscripts are not the final version of record and will be replaced with the final article (formatted per AJHP style and proofed by the authors) at a later time. I n times of financial uncertainty and sudden decreases in staff utilization, it is common practice for institutions to implement cost reduction initiatives by making use of furloughs, cutting salaries, and mandating utilization of acquired paid time off (PTO). 1,2 It may be interesting, however, to analyze the microeconomic effects of such actions, and to entertain an alternative approach. An unconventional yet curious thought experiment would be to ask the following questions: Instead of implementing financial liability relief to achieve immediate adjustments on balance sheets, what if an organization allocated the same number of hours not coordinated to a production metric towards intradepartmental cross-training? Could this course of action capture a middle-to long-term financial benefit by increasing organizational productivity and stability? This idea is inspired by firms' reactions to restrictions placed during the COVID-19 pandemic in the spring of 2020. To free up healthcare resources, many health systems in the United States temporarily suspended elective surgeries and procedures, 3 reducing an avenue of staple income. Hospital admissions also decreased. 4 The decrease in patient volumes, uncertainty around financial recovery timeframes, and uncertainty in the availability of personal protective equipment (PPE) created a situation where concerns for financial viability in health systems drove tough decisions. Due to decreased demand for healthcare services, it was not uncommon for healthcare workers to be furloughed, receive a salary decrease, or be required to use PTO in order to meet traditional productivity measures. [5] [6] [7] This sort of analysis is predicated on investigating changes in the opportunity cost of training versus widget production when the demand for labor decreases due to decreased census. As defined by Merriam-Webster, one meaning of the term widget is "an unnamed article considered for purposes of hypothetical example, " 8 and the term is used frequently in economics to refer to a unit of production. 9 Under normal conditions, a strong department can staff itself in order to supply healthcare "widgets" as demanded. However, during times of high staff utilization, it is not optimal to shift people from production duties to training. In other markets disequilibrium of supply and demand may result in lost profit, but the consequences in healthcare can be far more dire. Labor supply uncertainty highlights an important point that traces back to foundational economic theory: specialization versus generalization. It is well thought that task specialization allows greater overall production. 10 In most cases we can see this holding in pharmacy. For example, a pharmacy technician who is jumping between multiple roles and tasks would function with higher stress and a greater risk of distraction-related errors, negatively affecting performance, quality, and safety outcomes. In contrast, unscheduled staff absences in a model of overspecialization can lead to limited agility in coverage due to gaps in knowledge and expertise, which in return create an environment that is less productive and more error prone. Unpredictability around specialist absence and its duration produces greater emphasis on the potential value of balancing specialization with generalization. In order to consider the benefits of alternatives to furloughs, salary decreases, and mandated PTO within the context of a hospital setting, we must make 3 assumptions. First, we assume that the roles of a pharmacist and a pharmacy technician are not readily replaceable by other departments due to specialized knowledge and a requirement of licensure (for all pharmacists and some technicians). Second, because this commentary addresses the interactions of labor supply and demand with consumer budgets, and because healthcare workers function both as producers of healthcare and consumers of goods, we assume that employees prefer to maximize their happiness, or, as defined in economics, utility. Third, we assume that a health system is making decisions in the short run and preferring short-term financial viability in a scenario of uncertainty. Consumer problem. To help us understand how an employee could react to changes in pay, hours, and usage of PTO, we used microeconomics tools to maximize the employee's utility given 2 goods they can allocate between: (1) consumption via wages earned and (2) unpaid time off (leisure). The details of solving the utility maximization problem, subject to a budget constraint of available hours per week, are discussed in the eSupplement. In summary, we found that decreasing an employee's salary Supplementary material is available with the full text of this article at AJHP online. AM J HEALTH-SYST PHARM | VOLUME XX | NUMBER XX | XXXX XX, 2021 and scheduled hours causes the relative price of consumption (of goods) to leisure to increase. Depending on how much the employee wants to buy goods or have free time, their substitution away from work may vary. An important point of this scenario is how pandemic workforce decisions may affect employees. An employee who is furloughed or required to take PTO in order to meet their personal budget may maintain their current utility so long as their ability to buy goods does not change. Moving forward, however, if an employee begins to feel their consumption habits changing due to reduced income, they will not be able to consume or take leisure as they had been and may search out other avenues of employment that will allow them to consume at their previous or a higher utility level. This incurs a cost to the health system, as staff attrition creates an immediate shortage and productivity decrease. Additionally, there is increased strain on other staff from hiring and training new employees. In the case of an employee who chooses to either work or take leisure in totality, as the price of consumption goes up their preference for taking time off must also decrease, or they will be more likely to substitute towards unpaid time (by quitting or finding a new job). Using PTO in the short run can allow an employee to maintain their current utility, but it will eventually run out. The employee may modify their consumption habits to prepare for future decreases in income, but decreasing consumption subject to their budget would also decrease their utility. An employee who would not be as negatively affected by working fewer hours is one whose ideal work week is shorter than their original (prefurlough) work week but still greater than their full work week minus the furlough. Mandating PTO to cover lost hours may also create downstream issues. The utility one gets from staying home in a pandemic might not be as great as the vacation they would have planned. An employee may suffer an opportunitycost loss in utility by "vacationing at home. " In summary, we found that furloughs, wage decreases, and mandating use of PTO to subsidize a reduction in hours may result in decreased employee utility and an increased chance of attrition, costing the health system both money and productivity. One possible solution to this dilemma we propose is conducting intradepartmental training during slack periods. This does assume that the department has the necessary resources for training. These resources may include PPE, appropriate space for social distancing, and technology support. Producer theory and financial impact. Through cross-training, an organization may make strides in reducing both the financial and logistical risks associated with a decrease in labor demand while also decreasing the risk of unpredictably being without key roles. Our approach to this piece of analysis draws from 2 assumptions: first, that PTO, although already an acquired cost for the health system, shares the same monetary value as productive time; and second, that the demand for pharmacy services in a hospital relative to the hospital census is depicted by an upward-sloping demand curve. As census increases, more productivity is required from pharmacy services. The Pharmacy Intensity Score, while factoring into pharmacy demand, is defined as a constant. We define pharmacy production of widgets to be dependent on the product of department efficiency and the input hours of labor plus a set amount of equipment capital. Pharmacy can use budgeted hours for 2 purposes: widget production and training staff. Using a method similar to the one used in the consumer problem, we maximize the productivity equation (subject to available hours). The result tells us that as the optimal amount of labor goes down due to a decrease in demand, the relative price of training also goes down. This presents the department with a unique opportunity to train, because under other circumstances it would be much more expensive to do so. In order to see how this training would affect an employee's performance and ultimately the department's overall performance, we derive an equation for each employee's widget production in a certain task whereby the quantity produced is directly related to their efficiency and time spent working. Detailed in the supplement, this equation can be generalized to define the average productivity of the entire department. As labor demanded decreases with reduced census, the opportunity cost of training decreases relative to the cost of producing widgets. Hence, instead of reducing budgeted employee hours, the hospital administration can allocate a reasonable portion of budgeted hours into training. Instead of producing healthcare widgets, employees can increase their efficiency at new tasks. As a result, we expect to see department efficiency climb and quality and safety outcomes improve. In the middle term, we would expect a department to return to baseline productivity should input labor decrease due to unexpected absences. As the pandemic subsides, the department now has an increased knowledge base amongst its employees. As labor demanded returns to normal, we expect to see the widget production curve shift outwards, opening the possibility for higher function. The University of Kansas Health System instituted a cross-training initiative similar to the one suggested. The hospital maintained that its employees were its most valuable resource, and the administration pledged to not decrease salaries, reduce standard hours, or eliminate positions in the wake of decreased census. One shift had to be cut, but pharmacists with decreased workload were trained in other areas such as intravenous compounding, critical care, and central operations. Clinical cross-training allowed pharmacists to staff other areas of the hospital and respond to rising demands in new ways. When the census normalized, shifts were evaluated for need. The previously cut shift was reallocated as a float shift to allow pharmacists, armed with new knowledge and experience, to support any area of the pharmacy team that was short-handed, decreasing the deficits normally incurred due to employee absence (K. Miller, PharmD, University of Kansas Medical Center, oral communication, March 12, 2021). Looking at the financial impact of investment into employee skills, it is reasonable to take an approach of examining widget production and opportunity cost. We define efficiency as widgets produced per dollar paid. Should an employee leave, there is an opportunity cost passed to the department in the immediate and interim terms while a new employee is hired and trained. A financial cost is also incurred by the hospital should shifts need to be covered by other employees. This loss in widget production can be compared against the savings from decreased wages and liabilities reduced. Conclusion. We are in a unique time of history, driven by the impacts of the COVID-19 virus. The healthcare system specifically faces new challenges in responding to the needs of the organization and, most importantly, the needs of patients. It is an interesting paradox that health systems initially faced financial challenges, because intuitively it would appear that they should have been both busy and profitable. Given the complicated interactions a pandemic creates, the year 2020 made us very aware of how thin a financial wire our healthcare organizations walk with regards to short-run revenue streams. While each healthcare worker commands a wage, the value they bring is the result of years of study, expertise, and clinical experience that are made manifest as positive outcomes for patients. The model described in the eSupplement invites us to understand the interaction of incentives between an organization and its employees. It shows that by investing in training during a period of low production demand, a department may prepare for uncertainty in labor availability and increase the department's overall competency. Low production demand presents a unique opportunity to train that otherwise might not arise. Most importantly, by keeping employees at work, the hospital administration allays uncertainty via affirming its staff's value. By maintaining engagement, administrators can more easily retain talent and build long-term department growth. It is not only a matter of dollars and cents, but rather the intersection of managerial incentives with employee engagement, that can turn a possible crisis into an opportunity for growth. Preparing your business and employees for furlough. The Horton Group Non-emergent, elective medical services, and treatment recommendations Americans are delaying medical care, and it's devastating health-care providers COVID-19 hits some health care workers with pay cuts and layoffs. National Public Radio Health care workers see hours slashed amid coronavirus spread. Mercury News Chicago healthcare workers see reduced pay, benefits in fallout from COVID-19. Becker's Hospital Review Specialization. Investopedia. Published The authors thank Huseyin Yildirim, PhD, from Duke University for his valuable feedback and advice regarding the microeconomics model. The authors also thank Katie The authors have declared no potential conflicts of interest.