Hospital Clients Nurture Firm’s Scheduling Software
Confronted with spending millions of dollars persuading nurses to work overtime, an Indianapolis hospital administrator had a novel thought: Could a computer program let nurses “bid” on which shifts they wanted and how much they should get paid? It would be like EBay in reverse -- the nurse who bid the lowest salary would get the shift, and those who wanted to earn more could try for unpopular hours.
The Clarian Health Partners executive asked tech entrepreneur Ian Chaplin whether it could be done. Chaplin turned the idea into a company.
Since Chaplin founded San Diego-based BidShift Inc. four years ago, the software company has signed contracts with more than 90 hospitals and expanded to 35 employees.
But along the way, Chaplin discovered that BidShift required more than one innovative concept to succeed. The company’s growth -- and future -- has required BidShift’s executives to enlist their clients as idea laboratories that nurture the company’s creativity cycles by suggesting new products and solutions for navigating healthcare’s bewildering bureaucracies.
“Every new step we take is really driven by the requests and ideas of our customers,” said Scott Bechtler-Levin, BidShift’s vice president of marketing and client services. “When in doubt, we just give new products to the customer and let them tell us what we should do next.”
Such symbiotic relationships between companies and clients aren’t new. But they are becoming more common as firms look for new ways to compete. Corporations such as consumer goods giant Procter & Gamble Co. and Palo Alto-based design firm Ideo have tried to spur creativity by asking employees to approach clients with questions rather than solutions.
“A lot of companies worry that by giving customers incomplete products or admitting there is something they don’t know, they are damaging that relationship,” said Lisa Gundry, a professor at DePaul University’s business school. “But if clients understand that they are participating in developing something new and feel like their frustrations are guiding new prototypes, they tend to become even more loyal to the finished product.”
In the case of nursing, hospital frustration is intense.
Nationwide, nursing shortages are reaching alarming proportions. California alone needs 7,000 to 21,000 additional registered nurses to properly serve the state’s population, according to a 2005 analysis by the Center for California Health Workforce Studies and UC San Francisco. The governor’s office estimates that California will need 11,000 additional nurses each year until 2010.
For hospitals, those numbers have translated into spiraling costs. According to the U.S. Department of Health and Human Services, the average nurse earned a base salary of $57,784 in 2004, the last year for which statistics were available. But nursing shortages have forced some facilities to spend as much as $30,000 more a year per nurse in overtime and administrative costs.
For instance, an administrator at Tucson Medical Center, a hospital that adopted BidShift’s technology in 2004, estimated that before working with the company, nursing managers spent about 60% of their time telephoning staff to fill vacant shifts. When that didn’t work, the hospital was paying temporary workers 20% more to work alongside more experienced permanent staff.
Problems like those spurred BidShift’s creation. The company’s Internet-based application is modeled on software used in the airline industry. Hospital staff members log on via the Internet from any computer to bid on shifts, and administrators can personalize preferences for specific employees. Certain shifts can be limited to nurses with particular skills or seniority, and financial incentives can be customized to make some shifts more attractive to certain workers.
“In the past, nursing administrators posted a sheet on a wall, and whoever signed up first got the shift,” Bechtler-Levin said. “But nurses working in other departments weren’t learning about openings.”
But simply creating the BidShift software was not enough for the company to succeed. After working with Clarian Health Partners, BidShift executives approached other hospitals and discovered that, regardless of how useful the system, bureaucratic obstacles to purchase existed. So they asked their first clients to suggest solutions.
The result was a subscription model that lets hospitals buy the BidShift service on a monthly basis, avoiding the large financial contracts that require board approval and can take months to complete. What’s more, BidShift executives learned that nursing staffs hated competing for attention from hospitals’ technology departments whenever something broke down. So BidShift keeps the data on its own servers, where it can perform immediate upgrades and maintenance.
“We wanted to be easy to work with, so we asked nurse managers how we should structure our business,” Bechtler-Levin said. “They told us if they purchased software, it had to go through a capital review process, but that they could use their labor budgets any way they wanted. So we made the software a less expensive subscription [that] a labor budget can accommodate. They told us they hate waiting weeks for IT to call back. So we host the system.”
Those and other creative ideas -- such as letting managers break shifts into smaller chunks so that nurses can divvy them up -- originated with clients but were quickly embraced by BidShift.
“Our customers are the ones who have honed this software,” said Chaplin, the company’s vice president of product development. “The people who started BidShift come out of e-commerce, not healthcare. The nurses we work with know more about healthcare than we ever will. So we look to them for ideas about how we can be more helpful.”
The company solicits from every client a wish list of ideas for new applications. Those lists are instrumental to BidShift’s development process.
For instance, nurses at one hospital noticed that when an extra $10 an hour was offered for overtime, younger nurses signed up because it was a 33% pay increase over the $30 they normally received. But more experienced nurses who earned more stayed away, because a $10 increase represented only a 20% raise over their normal $50 an hour.
So BidShift designed a system that could automatically offer higher-paid nurses a larger overtime bonus in an effort to attract the best employees.
“Nurses are very vocal people,” Bechtler-Levin said. “If you tell them your company needs new ideas, they are eager to help.”
Indeed, the nursing administrator at the Tucson Medical Center who hired BidShift said that interactivity was the most valuable part of hiring the firm.
“They were always asking us for new ideas, and then -- pop! -- something I suggested would become part of the software,” said Rosemary Notarantonio, who contracted with BidShift as chief nursing officer at TMC HealthCare. “You wouldn’t get that with most big software companies. And it made me more loyal to BidShift.”
At the end of the day, that sense of consumer participation may be the most valuable part of transforming customers into idea originators.
“The most innovative companies manage to break down barriers to new ideas and give broad ownership of those ideas,” said Gundry, the business school professor. “Every CEO says they want to be creative. But to achieve it you have to make everyone feel like they played a role in creating something new.”
