June 6, 2024 Under stress: 33% annual rise in healthcare managers with 2+ cost centers

What the data says
Two years ago, 12% of frontline managers at health systems managed two or more departments; today, 21% do. This compound annual growth rate (CAGR) of 33% has been steady over the past two years. (Note that for the purposes of this analysis, only departments with five or more employees were included. For example, sometimes new departments are created for tracking expenses rather than managing employees, but that type of change was not included here.) 

Clinical inpatient managers have seen the greatest increase in the number of departments they lead (as shown below). In particular, Operating Rooms (ORs), Intensive Care Units (ICUs), and Med Surg managers were most likely to transition into managing multiple units over the last two years with a growth rate of 1.8x to 2.5x. The number of support services managers who manage multiple departments has also grown over the last two years, though at a slightly lower rate of 1.2x to 1.3x.

This change has happened unusually fast, and can only persist at this rate for a few years. If it continues at this pace, in three years, 50% of managers will have more than two departments and in another three years, almost all managers will.

In terms of the second department a manager picks up, the data shows that:

• The vast majority (80%) of the time, the second department a manager picks up is smaller than their initial one.
• Almost half (47%) of the time, the second department type is the same as the initial type (e.g., an ambulatory manager picking up another ambulatory location). Less often, managers pick up a related department in a different site of care (e.g., an inpatient Women’s Health manager picking up the Women’s outpatient center), an administrative or support services department, or a department of a different type, as shown in the pie chart below. Even when the department is the same type, they are often in different facilities, creating complex communication challenges with the second team.

What it means

1. The trend likely represents an inability (either financial or otherwise) of health systems to replace managers.
   • Growth in the percentage of managers who manage multiple departments is caused by either (a) an intentional merging of disparate departments under one manager, or (b) an unwillingness (or an inability) to replace managers after they leave, which requires organizations to double up other managers’ leadership responsibilities.
   • Given that this trend can only exist at this rate for a limited time period, it represents an atypical and unsustainable underlying structural change. There’s no reason for health systems nationally to be accelerating the intentional merging of departments outside of financial or staffing constraints. The inability to replace managers, either due to a lack of funds or available candidates, is most likely driving this trend, reflecting the serious financial and leadership pressure health systems face at present.
   • If the inability to replace managers is due to cost-cutting, it may reflect a lack of consideration to the downstream impact of potential increased turnover, decreased team engagement, and accelerated manager burnout.
   • As one former nurse manager shared recently:
     • “I had one department and over 60 FTEs there, then was given the opportunity to open a new unit. That added an additional 25 FTEs to my workload and I was offered a small stipend to compensate for the additional workload. The organization didn't have to hire another manager…This saved the organization money in the short-term but I was spread so thin...”
2. The managing multiple departments trend is heightened in high-acuity and revenue-creating areas, which are facing elevated turnover and retirement rates – implying that an inability to replace managers is driving it
   • ORs, Post-Acute Care Units (PACUs), and Emergency Departments are considered revenue-creating; in contrast, Med Surg and ICUs are seen more as departments since they provide care to patients who are already admitted to the facility.25% of RNs in the OR are over the age of 55, the highest percentage of all major inpatient specialties, leading to higher retirement rates in recent years.
   • Two of the three department types most affected over the past two years, ORs and ICUs, are high-acuity departments. The exceptional pressure felt by managers of high-acuity areas, along with the potential for the higher pay levels of specialized frontline nurses in these areas, reinforces the evidence that leadership scarcity, particularly in high-acuity areas, is the primary underlying cause.

What the implications are for healthcare leaders 
Frontline managers need more rewards, recognition, and a path to sustainable careers; frontline team members need to see these visibly to encourage them to follow their managers on this career path.

1. Frontline managers need to have workloads, roles, and boundaries that are sustainable so they choose to stay.
   • As one ICU manager shared with us recently, “At eight months into my tenure as a manager, life is 75% sustainable. 24-hour accountability is difficult especially as 80% of the shifts are not staffed appropriately…At the end of the day, it's tough trying to stay awake and be safe and be mentally sharp when I have to make decisions after being awake all day…It’s been tough for me. I’ve tried really hard to not take things personally but there is a lot of stress due to staffing, including team member absences. I balance it by sending a weekly update on the positives, which is a good practice that I’ve learned.”
   • Laudio’s research shows the incredible and statistically significant impact that managers’ recognition and purposeful check-ins with their team members have on team member retention and engagement. The same could be used as evidence for the importance of recognition of the managers by their leaders. (This is explored in greater detail in Laudio and AONL’s Spring 2024 report, Quantifying Nurse Manager Impact.)
   • Recognition is not enough. Managers need administrative processes removed from their workloads. They need clear priorities from their executive leaders with mutual clarity on work that is not a priority. They need purpose-built platforms to support them in organizing and completing their work. They need teams with reasonable spans of control.
2. The role of the manager needs to be made more attractive and frontline team members need to see it, so health systems can deepen their leadership pipelines.
   • Frontline team members look at their managers today and see someone they don’t want to be: worn out, tied to their desk, working excessively long hours, dealing with intense families and team members, and experiencing little reward for their efforts. While some health systems have systems in place to support and recognize their managers (e.g., HR business partners and executive thank you notes), these are often underutilized and unavailable for frontline team members to see.
   • A prior article (LINK) showed how frontline clinical managers’ salaries are only slightly higher than their team members’ salaries, exacerbating the relative unattractiveness of this exponentially more difficult role.
   • Leadership Ladders (LINK as discussed in two recent articles) are development tools that allow frontline managers to both delegate and to create a pipeline for the next generation of leaders, such as formal manager succession. Executives and service line leaders can build and support managers in implementing these ladders which are relatively simple to design. They have additional benefits of building culture and staff morale.