Healthcare News & Insights

Shifting healthcare pay model to prioritize essential workers

The pandemic has put stress on the healthcare industry in many ways, including those not often thought of – timely payment and high turnover. In this guest post, Jeanniey Walden, CIMO of a provider of earned income software, will explain how hospitals can quickly evolve their pay model to better support their work culture and reduce stress.

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From the essential health workers tasked with treating patients while adhering to intense health and safety guidelines, to the back-office employees that must keep the system running remotely, the entire healthcare industry has reinvented itself in just a few short months.

This reinvention challenged every aspect of the health industry’s infrastructure, costing millions and placing cost-efficiency goals on hold. And through it all, health employers must keep their biggest asset top of mind: their employees. Some organizations were quick to adapt, changing the way they compensate employees, redirecting project dollars to avoid furloughs or pay cuts, and designing new benefits to help the entire household.

The coronavirus shows no signs of letting up, creating continued health risks, financial strain and stress for workers – all of which could yield higher turnover rates across the industry this year. The need to provide healthcare workers with flexible access to their earned income has created a new urgency for an employee-centric pay model that decreases turnover while increasing productivity.

The payment evolution

The National Automated Clearing House Association (NACHA) was founded in 1974 to manage electronic funds transfers in the U.S., which paved the way for the direct deposit system most of us are familiar with today. Since then, not much has changed in the ways employees receive their pay, which is surprising considering the modern, flexible electronic payment technologies – such as PayPal, Venmo and Zelle – consumers now use in their everyday lives.

While direct deposit is still the dominant employee payment system in North America, nearly half of all employees are willing to accept nontraditional payment methods, like mobile payments, digital platforms or pay cards. This shift in behavior has been driven by younger generations that grew up in an on-demand world, as well as the rise of the gig economy, which typically pays workers immediately after a job is completed, rather than on biweekly paydays.

Before the coronavirus appeared on the scene, access to flexible pay was a nice workplace perk. But the pandemic called attention to the limitations of outdated pay models, especially in health care.

The healthcare industry, which still relies heavily on paper-based transactions, is facing unprecedented challenges as administrative staff is forced to work from home without access to office supplies. And direct deposit is too slow during a time when many healthcare workers need flexible access to their earned income to cover unexpected expenses like PPE, which many workers have had to purchase on their own as hospitals face critical supply shortages. Pay flexibility, however, can help ease the stress on your workforce, and address critical staffing shortages and high turnover rates.

Benefits of on-demand access to pay

Healthcare organizations can quickly evolve their pay models to better support work culture, reduce stress and cost, and increase employee satisfaction – both now and down the road. On-demand pay technologies, which cost nothing for healthcare organizations to implement and seamlessly integrate into payroll systems, can help alleviate several key issues:

  1. Talent gap and turnover: Healthcare organizations have failed to meet their turnover reduction goals, driving up vacancy rates. In the home care sector, 98% of over 400 agencies polled considered recruitment a concern. By providing flexible access to earned income, these organizations can set themselves apart from competitors, closing the talent gap and improving retention rates.
  2. Billing challenges: In addition to reducing reliance on outdated paper-based transactions, on-demand pay solutions also improve time-clock compliance. Employees must accurately log their time to use these benefits, motivating them to report their hours on time. Payroll departments then have fewer timesheets to process, increasing overall productivity and efficiency.
  3. Employee experience: Employee stress results in lowered productivity on the job and more absences from the workplace – an estimated one million workers are absent every day due to stress. To say stress has risen in recent months among healthcare workers would be an understatement. While flexible pay can’t solve every issue workers face, it can greatly reduce some of the financial stress they’re experiencing, making them more motivated to report to work, resulting in more satisfied patients.

Flexible pay solutions are increasingly popular among tech-savvy younger generations driven by the desire for more seamless and immediate user experiences across all areas of their lives.

As younger workers continue to stream into the workforce, an on-demand pay option is the differentiator healthcare organizations need to attract and retain talent, especially during an economic downturn that coincides with increased demands on workers. What’s more, essential workers – who have put their lives on the line to help others – simply deserve access to flexible benefits that can alleviate at least some of the major stressors they’re facing.

Jeanniey Walden is the CIMO of DailyPay, a provider of earned income software.

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