July 13, 2021

How to Effectively Manage Overtime in Your Healthcare Center

In some ways, overtime is an unavoidable reality of managing a healthcare workforce. Whether you need employees to fill in for absent coworkers or your center is experiencing an increased demand for services—such as what happened during the height of the pandemic—overtime keeps your facility fully staffed and ready to meet patient needs.

Though overtime is sometimes a necessity, it can quickly become problematic if you lack the necessary policies and systems to manage it. High overtime rates can result in increased labor costs and burned-out employees, both of which can negatively impact your ability to meet patient care goals.

Reasons to Manage and Reduce Overtime

There are compelling reasons to control overtime without hurting your healthcare center or workforce and reduce it to acceptable levels:

To manage labor costs.
Straight overtime (i.e., time and a half), double-time, and overtime resulting from shift differentials can quickly add up. Some healthcare professionals believe a healthy overtime average for healthcare centers is about three percent, but it could quickly escalate without proper oversight. For example, a review of overtime practices in a New York City public health system found that overtime pay totaled at least 50 percent and as much as 183 percent of some employee base salaries.

To reduce the occurrence of employee burnout.
Employees who work excessive overtime can find it harder to achieve a healthy work-life balance, elevating levels of stress and burnout. In fact, one study of overtime among nurses in the U.S. found that working long shifts resulted in a higher incidence of burnout and job dissatisfaction.

To reduce the risk of error and risk to patient care.
An early study conducted by Health Affairs found that the risks of making an error were significantly increased when hospital nurses worked shifts longer than twelve hours or worked more than forty hours per week. And nurses aren’t the only employees whose work quality can be impacted by too much overtime. Custodial staff, patient transport workers and facility food service employees may become more prone to mistakes, and those mistakes can directly impact the health and safety of patients and visitors.

To attract and retain talent.
Developing a reputation for excessive overtime can make it hard to attract and retain talent, which is especially concerning when you consider the existing healthcare talent shortage. Research from Mercer estimates that by 2025, there will be a nationwide shortage of nurse practitioners, home health aides, nursing assistants, and medical and clinical laboratory technicians. Without an effective way to manage overtime, your healthcare center may find it even more challenging to attract already scarce talent.

5 Ways to Tackle Overtime Effectively in Your Healthcare Center

Overtime eligibility is likely to be prevalent throughout your organization, covering nursing staff, technicians, administrative employees, custodial staff, and others. Therefore, you need an effective way to manage overtime hours to prevent employee burnout and better serve patients. Here are five key ways to regulate overtime for the benefit of your healthcare operations, workforce, and patients:

1. Establish a clear policy and procedures.
Because overtime has more than a few nuances, it is not enough to follow the legal requirements and pay employees time and a half for any hours worked over 40 in a workweek. In fact, healthcare centers need to fully understand the “eight and eighty” overtime calculation option afforded by the Fair Labor Standards Act (FLSA). Under the eight and eighty system, your healthcare center can use a fixed work period of 14 consecutive days to calculate overtime, instead of the 40-hour workweek. You may even opt to use one calculation method for specific groups of employees, and the other method for other groups.

Whether your healthcare center opts to follow the traditional 40-hour system, the eight and eighty system, or both, you need a policy that clearly spells out how you calculate employee overtime, how you assign overtime, and any applicable limits. Other details you should cover in your overtime policy include:

  • Any overtime limits, if applicable.
  • How you manage overtime in the case of a policy exception.
  • Whether employees can swap overtime hours with coworkers.

2. Set predictable schedules for regular and overtime hours.
Overtime shouldn’t just happen on its own, but rather it should follow a coordinated plan that makes the best use of available talent. By setting predictable schedules, you can ensure adequate staff coverage during all working hours and avoid needlessly overworking your employees.

A workforce management system with robust scheduling tools can help you set employee schedules and see how much overtime you require, if any, to meet your needs. It can also offer reporting to measure and manage labor costs. With these helpful insights, you can determine where you need additional overtime and where you may want to apply additional solutions, such as on-call or per-diem staff.

3. Monitor overtime limits and overscheduling.
A critical component of successfully managing overtime is staying on top of it in real time. By having a clear understanding of when employees are approaching or working overtime hours and when overtime hours may be approaching excessive levels, you can take action before it becomes a serious problem. For example, with overtime monitoring software, you can set up notifications to alert you when employees approach overtime limits or work too many consecutive days of overtime.

4. Identify and eliminate potential areas of waste.
When managing employee overtime, you not only need to track scheduled overtime hours, but also unscheduled overtime that creeps into employee schedules. For example, end-of-shift emergencies and employees who punch in early or punch out late can ramp up overtime in small five- or ten-minute increments. When those short overtime periods are multiplied across dozens or even hundreds of employees, you can end up with more overtime than you anticipated.

One common way to address unscheduled overtime is to apply the “seven-minute rule” for rounding work time up or down in compliance with the FLSA. However, this rule is frowned upon because it can be taken advantage of and it was even recently ruled illegal in California as it was causing employees to miss out of premium pay when taking shorter than required meal breaks. A better practice is to use exceptions within your workforce management system to flag or restrict clock operations that deviate too far from the schedule. Another option is to set up occurrence rules that monitor the number of times employees deviate from standard practices and can flag them for disciplinary review.

5. Monitor historical overtime trends.
Although employee overtime management requires a forward-thinking, proactive approach, there are times when it is appropriate to take a look back. To make sure you don’t miss out on any noteworthy overtime patterns, it is a good idea to examine historical trends and compare overtime hours from one period to the next. You can also compare your historical overtime data with productivity metrics to understand if overtime delivers the value you expect. For example, if hospital food service employees are working overtime but preparing the same number of meals each week, you can take a deeper look to determine the appropriate level of overtime for those employees.

Manage Scheduling and Overtime for Maximum Efficiency

Managing a healthcare workforce requires doing everything possible to keep employees productive and engaged. To achieve those goals, it’s essential to establish work schedules that prioritize patient care and employee needs for balance and predictability. Although overtime may be a necessity at times in your healthcare center, it doesn’t have to stand in the way of effective cost management and efficient work operations.

If you think your organization can benefit from improving overtime management and other labor costs, read our free resource, “5 Ways Scheduling Affects Healthcare Labor Cost.”