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HR Solutions: Don’t Underestimate Labor Costs in Your Budgets

At some point, we have all used this calculation:

Labor Role (e.g., coordinator) = (Hourly rate + benefits) X Number of hours to do the assessment or visit the clinical trial.

Pretty straight forward, right? Wrong. This simple under calculation is the reason sites struggle to afford quality or additional employees, and also retain them. Sites and sponsors typically underestimate labor costs due to lack of awareness of their real costs and to avoid any suspicion of coercion or influence on the outcome of the trial. (1) Legislation, specifically the Sunshine Act, along with vague yet threatening terms like “fair market value” have scared sites away from negotiating the labor section of the clinical trial budgets to reflect the true cost sites incur.

The most common site burdens that go unaccounted-for are turnover (it’s inevitable), training, and employee retention. As prevention is cheaper than treatment, retention is cheaper than attrition. To retain top talent, sites need to offer continuing education, opportunities for career growth, and avoid overworking staff. Staff burnout and lack of career growth are often listed as the top two reasons for leaving clinical research site jobs. (2) Offering reimbursement for clinical research certification achievement and maintenance is just one example of a measurable cost to retain your talent.

Despite site management efforts, turnover at sites is common due to sponsors, CROs, and competing sites recruiting away top talent for opportunities in career growth and higher salaries. This can leave the site with vacancies for up to nine months, potentially decreasing the productivity of the remaining staff, while also limiting enrollment and the opening of new clinical trials (all sources of revenue). The site has concrete expenses to recruit talent, interview, hire, and onboard new team members. These expenses can, on average, cost the site six to nine months of the employee’s salary. (3) Site administrators need to calculate the average rate of turnover and include these hard costs across labor budgets.

EXAMPLE:

Average turnover of 1 coordinator/year = $52,000

Onboarding a new coordinator = $26,000-$39,000

Sponsors and CROs expect to work with competent sites that provide ongoing training and education. This is further supported by the Addendum to ICH Guidance for Industry E6 Good Clinical Practice: Consolidated Guidance, Section 4.2.6, which requires the investigator/institution to demonstrate that all staff delegated to perform tasks on the clinical trial can show their competency and training in that role. (4) To be considered a premiere site, the sites must invest in their staff with ongoing training opportunities and, potentially, internal trainers. All of this must be documented. Training opportunities come with memberships to organizations such as SCRS, ACRP, SoCRA, conferences, webinars, and classes. These all take employee time and money and can be incorporated into your sponsor budgets.

The next logical question is, “How can sites incorporate all of these costs into budgets when the other sites are using the initial (under) calculation?” The answer is justification documents that explain your very real costs. No one is suggesting that sponsors take the entire burden of paying for turnover, training, or retention; however, it should not be completely the burden of the site. No one will argue that these are the requirements to be a quality site, and ineffective sites delay trials and increase sponsor costs.(1)

Here are some steps to take to start developing these justification documents. Calculate your annual voluntary turnover rate per role, along with employee time and cost spent training. Then, factor in hard costs, such as certification pay, and a reasonable workload per employee. Consider all of these factors when allocating costs to each clinical trial. Provide justification on where you got your numbers to help the sponsors understand the real cost of labor at sites (and to protect all parties).

Note: This article originally appeared in the June, 2017 edition of SCRS Insite: The Global Journal for Clinical Research Sites.

References

  1. Arenz D, Hero B, Eichhorst B, et al. Estimating Site Costs Prior to Conducting Clinical Trials. Future Science. 2014; 4(3): 227–234.
  1. Speicher LA, Fromell G, Avery S, et al. The critical need for academic health centers to assess the training, support, and career development requirements of clinical research coordinators: recommendations from the clinical and translational science award research coordinator taskforce. Clinical and Translational Science. 2012; 5(6): 470–475.
  1. Kantor J. High Turnover Costs Way More Than You Think. Huffington Post. February 11, 2017. Accessed from: http://www.huffingtonpost.com/julie-kantor/high-turnovercosts-way-more-than-you-think_b_9197238.html
  1. International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH). Integrated Addendum to ICH E6(R1): Guideline for Good Clinical Practice E6(R2). November 9, 2015. Accessed from: http://www.ich.org/fileadminPublic_Web_Site/ICH_Products/Guidelines/Efficacy/E6/E6_R2__Step_4.pdf

About the Author

Molly has over 18 years of health care experience with specialization in oncology, research and health care administration. Now Molly shares her experience and expertise with sites as a Medix Clinical Research Consultant.

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