July 18, 2018

Why Systems Integration Is Essential to Calculating Healthcare Compensation

2 min read

Written by: Jennifer Michelle  |  Share:

Healthcare organizations are responsible for managing the compensation for a wide and disparate workforce. Nurses and technologists, for example, are eligible for overtime pay, so their hours must be tracked. Providers who take call shifts also get differential pay, making calculating compensation a highly complicated proposition.

In most practices, different software systems are used to handle different aspects of this process. First of all, there is time & attendance software, which allows time tracked providers to clock in and out for each shift. Next, there are the staff schedules, which provide the details of where people are assigned on any given day. Lastly, there is the payroll system, which contains essential information regarding how many hours are in a pay period, how many hours each provider is contracted to work, and how differential pay is to be applied.

The problem arises in trying to pull pieces of this information together, as these systems are typically unable to communicate with one another. The time & attendance system knows who clocked out late, but it is the staff schedule that knows how much time that provider is scheduled to work for the duration of the pay period, and the payroll system that contains information on applying the differential pay rates.

When these data points are isolated in separate systems, managers are forced to make decisions without seeing all the facts. Budgets and forecasts are created without accurate data on key issues, such as overtime and incentive pay, leading to inefficiencies and excess costs.

Workforce Optimization Solutions Integrate Healthcare Systems

Healthcare organizations seeking to reduce operating costs by increasing staffing efficiencies are shooting themselves in the foot by housing this information in three different systems.

The solution is systems integration, provided by an automated workforce optimization tool. Typically built upon the staff schedules, workforce optimization tools make it possible for each of these key systems to interface with one another. This provides real-time data, complete with the most up-to-date changes in the staff schedules, and allows managers to make informed decisions.

Systems integration reduces the effort and costs associated with processing healthcare compensation in the following three ways:

  • FTEs needed for data re-entry are reduced.

    Staff schedules and payroll periods are not typically the same length. For instance, staff schedules may be monthly or quarterly, but pay periods tend to be two weeks long. This mismatch in time periods requires manual re-entry of data from the scheduling system into the payroll system. As the data need to be adapted to the correct time period as well as re-entered, this is a very time-consuming administrative task. With workforce optimization tools, the information is passed instantly between the different systems and FTEs are no longer needed for re-inputing data.

    This case study shows how one group practice was able to reduce compensation processing time from 20 hours per week to 8, simply by integrating their staff schedules with their payroll system.

  • Overtime can be forecasted accurately.

    The exact amount of overtime worked is usually only seen after the payroll period ends. Clearly, this is too late to be able to make changes that would have reduced the amount of overtime worked. The systems integration offered by workforce optimization solutions, however, allows this information to be seen while there is still a chance for the manager to redistribute shifts and call.

    The ability to present real-time data makes it possible to forecast the impact scheduling changes can have on overtime, but it also makes a significant impact on staff undertime. Undertime occurs when a provider is contracted for a minimum number of hours, but does not end up working that full amount. When systems are integrated, managers are able to ensure that staff are being utilized efficiently.

  • Differential pay is calculated automatically.

    Differential and incentive pay are a very complicated aspect of provider contracts. As providers often work slightly different hours than were originally on their schedule, calculating differential pay can be very time consuming. Without systems integration, hours scheduled need to be compared with hours actually worked, and pay needs to be calculated accordingly. For practices with multiple providers in multiple facilities, this can be an arduous process.

    Workforce optimization tools integrate the data points required to determine differential pay. These calculations can then be done automatically - and with far more accuracy.

Calculating healthcare compensation accurately requires data from numerous systems. By integrating staff scheduling, time tracking, and payroll systems using a workforce optimization tool, healthcare organizations gain efficiency and reduce their operating costs.

To learn more about systems integration, workforce optimization, and healthcare compensation contact us for a demo.