Childcare center at CCM Health helps in recruiting and retaining staff

As a business, a hospital-owned and operated childcare center might seem to be a money-loser. But as an employee recruitment and retention tool, it’s a winner with a clearly positive downstream financial impact.

CCM Health, a 25-bed critical access hospital (CAH) in Montevideo, Minn., opened its center in January 2020. A week later, a nurse who was seeking employment and had heard about the center called to learn the details.

“She said, ‘I just lost my childcare for my twins. Do you have any openings for RNs?’” said Brian Lovdahl, CEO of CCM Health, which is owned by the city of Montevideo and Chippewa County. “Within two weeks she was working for our organization, and she’s still working here to this day.”

CCM Health leaders had conceived of opening the childcare center in 2018, having recognized that the lack of childcare in Montevideo, a community of about 6,000 people, was a barrier to recruiting and retaining staff.

“We had people who wanted to work, but they couldn’t work because they didn’t have childcare,” Lovdahl said.

After exploring various options, CCM Health leaders made a strategic decision to open a center that would be exclusively available to its staff.

Originally licensed for 24 children, the childcare center was expanded in 2021 to accommodate up to 31, as the demand from staff for childcare grew. the center currently has a waiting list, but a plan to build a new building with capacity for up to 70 children is in the works.

“We still have a lot of people in our organization who are pregnant, and we are a growing organization, so we are always going to have to retain and recruit people,” Lovdahl said. “We don’t want to worry about losing a prospective employee because they don’t have access to childcare.”

He also intends to increase the center’s hours — currently 6 a.m. to 6 p.m. — when the new building opens.

“We’re looking at maybe 6 in the morning until 8 at night so we can serve people with those 12-hour shifts,” he said.

A cost-benefit conundrum

America’s crisis of inadequate access to affordable childcare in many communities is driven by a fundamental problem: the cost of running a childcare facility outstrips many parents’ ability to pay for its services. The problem hits rural communities, and their hospitals, particularly hard.

Consider that the fundamental expense of operating a daycare center include the costs for staff, insurance, food, facility space and maintenance, utilities and classroom supplies, to name a few.

Yet the benefits for a hospital like CCM Health from providing affordable childcare services for staff in many ways justify the costs. consider the following, for example.

The ability to attract younger workers. The average age of CCM Health’s nurses is 38, compared with the national average of 44.

“If there’s somebody out there looking for a job, they may think ‘Hey, I want to have children here in a couple of years, and I’m already concerned about childcare. CCM Health has a childcare center so I’m going to entertain that as a place to work,’” Lovdahl said.

Expansion of childcare capacity for the overall community. “[It] gives the community a provider it wouldn’t otherwise have,” he said. “And, as we look to the future, ours is one of the few communities in the area that actually grew a little bit over the last census.”

The convenience for employees when their children are at an on-site facility. “Having their children right across the street so they can go see them on their lunch break is a pretty cool thing,” Lovdahl said.

That benefit is a major contributor to retention, which is a major concern in a rural community like Montevideo.

CAH designation important

As a CAH, CCM Health is entitled under Medicare to receive cost-based reimbursement for all business-related expenses.

“If we just allow our staff to utilize [the daycare center], the entire center becomes eligible for cost-based reimbursement,” Lovdahl said. “[But] if we were to open it up to other community members, that would not be possible, and we would have to carve out a lot of those expenses.”

With the Medicare payment benefit, CCM Health calculated that the center would pay for itself easily, even beyond the benefits ccm would enjoy, as described above.

“If we were able to recruit two RNs and avoid the expense of having travelers here, we would be money ahead,” he said.

Not an easy endeavor

That said, starting and running a childcare center comes with challenges.

Because of the number of children it serves, CCM Health’s childcare center is regulated by Minnesota’s Department of Human Services. Lovdahl and his staff had to get up to speed on many rules — such as the proper placement of hand-washing stations near diaper-changing stations — for an industry in which they had no experience.

Because the hospital had available space, including an attached kitchen, the initial capital outlay was minimal.

But creating the optimum facility came with challenges that may seem obvious but were not immediately apparent, including the cost of purchasing and installing playground equipment and dealing with the high turnover of childcare workers.

“Playground equipment is incredibly expensive, and you could spend $75,000 on a playground at the drop of a hat,” Lovdahl said. “The childcare center staff actually installed the playground because we just couldn’t afford to outsource that.”

The regular need to recruit and retain childcare workers is challenging not only because the work is difficult but also because the pay tends not to be commensurate with the difficulties, which contributes to high staff turnover.

CCM Health has a minimum-wage policy of $17 per hour for all workers, so the childcare center’s employees are paid more than some other centers in the community pay their workers. Also, the childcare workers are eligible for CCM Health’s benefit package, said Kelly Johnson, the health system’s director of human resources.

Beyond that, the health system tries to exceed the state’s staffing requirements of one staff member for every four infants, one for every seven toddlers and one for every 10 preschoolers to reduce the workers’ burden.

Still, the childcare center has a higher turnover rate than the health system overall. but working through the challenges is worth it, Johnson said.

“And in the summertime, we have some college students that help with covering for vacations, which [allows other staff to] catch up on required trainings,” she said. “It’s been an incredibly rewarding thing to have employees trust us with their children on a daily basis. I’m proud to work for an organization that is willing to invest in [its] employees.”

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4 tips to ease a childcare center implementation

The experience of CCM Health, a critical access hospital in Montevideo, Minn., in opening a childcare facility for its staff offers lessons for other hospitals that are considering such a strategy. CCM Health’s Kelly Johnson, director of human resources, and Brian Lovdahl, CEO, offered the following tips from their organization’s endeavor.

1 Consider your pricing strategy. Although its business model could theoretically allow CCM Health to charge less than the in-home childcare centers in the community, it opted not to do so to avoid jeopardizing the other centers’ ability to stay in business, Johnson said. Thus, CCM Health analyzes the market each year and sets prices to be about the same as other childcare providers.

2 Reach out to community and state leaders. Many states offer resources to expand childcare capacity, and local leaders will appreciate such efforts, Lovdahl said. “Everyone wanted us to get this up and running, and they were incredibly helpful,” he said.

3 Hire a leader with childcare management experience. The rules for childcare are different from those governing healthcare, Lovdahl said. Therefore, the ability to develop policies and procedures and manage the childcare workforce requires a different type of experience than a typical healthcare leader would have.

4 Calculate the ROI from an organizational perspective. Lovdahl puts the childcare center in the same bucket as emergency departments and medical clinics — essential even if they don’t generate a profit. “Whether we make a financial return on it is less important than what it does for the culture in our organization and the buy-in that we get from our staff,” he said. “The ability to make sure our employees can live in our community is just really hard to quantify.”