Impact of Workforce Flexibility on Operating Costs: Empirical Evidence from Healthcare

ABSTRACT With increasing nursing shortages, workforce flexibility is frequently used in hospitals. Commonly referred to as “mobility flexibility” or “floating,” this type of workforce flexibility cross-trains and re-deploys nurses to the short-staffed hospital units. Using panel data across three years, we empirically show that mobility flexibility has a U-shaped effect on operating costs. It is very helpful in reducing costs at first. However, beyond an infliction point, the benefit of mobility flexibility diminishes. Managers should encourage limited employee movement outside their units and provide a mechanism to capture the knowledge gained during their re-deployments.