In the Numbers: The ROI on a Healthcare Background Check for Your Organization
Doctors, nurses, and other caregivers are in the trusted position of looking after the sick and vulnerable, and as a result healthcare is one of the most highly regulated industries in the US. According to an American Hospital Association (AHA) report, health systems and hospitals must comply with over 600 distinct regulatory requirements across nine domains, resulting in a combined total spend of $39 billion annually. While those regulations are designed to protect patients, they require healthcare employers to pay extra attention to compliance, including in the area of talent management.
Even as many healthcare workers on the front lines are fighting the COVID-19 pandemic, hospitals and health systems continue to make regulatory compliance a priority—for the protection of patients and the healthcare professionals who care for them. With healthcare organizations working around the clock to save lives, there remains the need to carefully follow new and changing regulatory guidelines. As an example, since February 2020, CMS (Centers for Medicaid and Medicare Services) has issued several new or expanded regulations for healthcare organizations to combat coronavirus.
When it comes to hiring talent, healthcare employees must not only abide by background screening regulations that apply to all employers—for example, the Fair Credit Reporting Act (FCRA)—but also industry-specific requirements set by CMS, The Joint Commission, and state laws. Therefore, to achieve regulatory compliance and remain in good accreditation standing, healthcare organizations must take the necessary steps to properly screen prospective employees and avoid making poor hiring decisions.
A thorough background check is a key tool for gathering information about candidate qualifications, licensing, and criminal history, and it ultimately delivers a range of benefits to the organization, employees, and patients. Here are six ways the healthcare background check can deliver a positive ROI for your healthcare organization.
Reduction in Financial Liability
Healthcare employers must comply with restrictions that limit who is permitted to work in a healthcare environment. Organizations employing individuals with revoked or suspended medical licenses, including those who have been barred from healthcare employment, can face fines and costly lawsuits. According to a compilation of court records from the last decade, employers have paid out $174 million to resolve class-action lawsuits over alleged background check violations. Among the largest was a $1.2 million settlement against a healthcare organization accused of violating FCRA background check disclosure requirements.
Avoiding a lawsuit positively impacts the bottom line and illustrates the ROI of thorough healthcare background checks. Background checks reduce hiring risks and the financial penalties they can bring. A thorough background check delivers useful employment, license, and criminal information about candidates, weeding out individuals who have been barred from healthcare employment or who do not possess the necessary qualifications to perform a specific role. In addition, conducting post-employment background screening will help to identify individuals with new healthcare employment sanctions as well as those whose licenses are up for renewal or review.
Reduced Expense Associated with Making a Bad Hire
The cost of a bad hire can be astronomical when you consider the cost of recruiting, onboarding, and training new hires who subsequently leave the organization. When you have to recruit, onboard, and train their replacement, the cost skyrockets further. An effective healthcare background check mitigates the risk of making a bad hire by putting more information in your hands before a conditional offer becomes a new hire.
In addition to criminal history checks, employment and education verifications, and licensure verifications, a thorough healthcare background check also includes various healthcare exclusion and debarment lists such as:
- U.S. Department of Health and Human Services Office of Inspector General (HHS OIG) List of Excluded Individuals and Entities (LEIE): Lists individuals excluded from working for healthcare organizations that receive federal funding
- U.S. General Services Administration (GSA) System for Award Management (SAM): Lists individuals and firms barred from receiving federal contracts or subcontracts
- Healthcare Fraud and Abuse Lists: Provide individual sanction histories using data from federal agencies and over 800 licensing and certification agencies across 50 states
- National Practitioner Data Bank (NPDB): Contains reports on medical malpractice payments and other adverse actions taken against health care practitioners and suppliers
- Global Sanctions and Watch List: Includes individuals named as national security threats by the Patriot Act
- State-Specific Exclusion Lists: Provide information about individuals barred from healthcare employment in specific states
A recent report pegged turnover in healthcare at 19.1 percent, higher than the average rate among all other industries (15 percent). While there are many causes for turnover, there are also many ways to tackle it, including a quality background check.
A thorough healthcare background check supports healthy turnover by helping you avoid bad hires in the first place. With the information gleaned from thorough background screening (for example, education and licensure history) you can reduce the likelihood of hiring a candidate who might leave the organization later due to insufficient education or a missing license.
Avoiding hires who are a poor fit or lack the necessary credentials to perform their role can help to avoid unnecessary turnover. Research reveals that reducing turnover saves money, further demonstrating the ROI of a quality background check. According to research from Nursing Solutions, the average cost of turnover for a registered nurse ranges from $37,700 to $58,400, but each percent reduction in nursing turnover can save the average hospital an additional $373,200.
Safer Work Environment
A safe working environment is critical in any industry, but it’s especially important for healthcare where the work environment overlaps with the patient care environment.
Background screening is a highly valuable tool in helping to facilitate a safer environment for employees and for patients. Whether via services such as drug screening that detects illegal drugs, or reference interviews that uncover more information about candidate employment history, background checks reduce the likelihood of accidents, errors, or unsafe activity, and make the workplace safer for employees and patients.
Including non-employees in your overall background screening program is another way to build a safer work environment. Instead of screening those individuals through third-party agencies that may apply insufficient or inconsistent screening standards, you can increase patient and employee safety by incorporating them into your existing screening program. That way, you have peace of mind that background checks for visiting and per diem nurses, contractors, volunteers, and interns are being conducted to the same screening standard as employees.
If you’re one of the over 22,000 healthcare employers accredited by The Joint Commission, you already know the importance of adhering to its guidelines, including those for background checks. The Joint Commission requires that organizations conduct background checks in accordance with the law and organizational policy. Doing so reduces the risk of running afoul of state and federal laws, which carry their own set of penalties.
Compliance with Joint Commission guidelines for background screening keeps the organization in good standing for accreditation reviews. Moreover, going beyond pre-hire background screening, and conducting periodic or continuous screening of existing employees, reduces the likelihood of surprises during an accreditation review, and also allows the organization to address issues in a timely manner. By staying on top of any sanction or licensing issues and following accreditation guidelines, the organization can also avoid costly repercussions of lost accreditation such as:
- Lost Medicare payments
- Denied medical claims from private insurers
- Ongoing investigation from state agencies
Lower Training Costs
Investing in employee training is a great way to support employee engagement and develop a highly-skilled workforce. Given the financial resources and time associated with training, it’s important to make every dollar count.
Quality background checks enable organizations to make better-informed hiring decisions, which in turn lowers training costs in two ways. First, healthcare background checks typically include employment, education, and license verifications, which provide organizations with a more complete picture of an individual’s qualifications. Hires that already possess the required qualifications may have less need for training than those with fewer qualifications. Second, background checks support better hiring decisions, which can limit turnover and reduce the number of replacement hires. Fewer replacement hires results in lower new-hire training costs.
Increase the ROI of Healthcare Background Checks
Conducting background checks is a necessary part of hiring in healthcare, but it also offers a healthy ROI that benefits employers, employees, and patients. A quality background check allows for a better-informed hiring decision, positively impacting hiring risk, training expense, workplace safety, and turnover.
To make sure you’re getting the full benefit and ROI of background checks in your organization, it’s important to work with a reputable background screening provider. In partnership with your screening provider, you can design and implement a background check program that offers maximum value while also delivering thorough and high-quality background checks for candidates and employees.