Our team of Healthcare Industrial Engineers created this newsletter to share the industry’s best practices with leaders who can apply operational efficiencies in their daily work.
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Top performing hospital leaders are always searching for innovative ways to reduce the cost of healthcare without adversely impacting care and services provided. Labor spend constitutes over half of total hospital expenses and is widely considered the most controllable expense. Daily productivity management can help hospitals reduce expenses without having to furlough or lay off staff members.
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Introduction to Daily Productivity
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A successful strategy includes two primary components: increased performance visibility through daily reporting and managing improvement through department action plans to remedy missed targets.
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Require action plans from all variable departments performing below 95% productivity. Ensure ineffective action plans are not recycled, as departments should take action that will impact productivity performance.
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Psst... don't forget to check on departments running above 105%! Running too lean can sacrifice quality of patient care and staff experience.
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IMPLEMENTING DAILY PRODUCTIVITY
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1) IDENTIFY EXECUTIVE CHAMPION
Select a leadership team member to manage productivity action plans and associated performance coaching conversations. This should be the leader responsible for labor spend, typically the Chief Financial Officer or a delegate, facilitating both support and accountability for department leaders.
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2) QUANTIFY FINANCIAL OPPORTUNITY AND SET GOALS
Quantify labor management improvement opportunity at your hospital by understanding what percentage of operating expenses are represented by labor. In general, this number should be at or below 50%. For department-specific goals, benchmark data may be used or zero-base exercises may be performed. Variable departments should regularly perform between 95%-105% of their productivity target.
Ensure that department hours and volume data are validated and representative of current state. It is imperative that reporting accurately reflects operations when introducing staff to the concept of productivity management in order to maintain the initiative’s credibility.
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3) EDUCATE DEPARTMENT LEADERS
Host mandatory productivity sessions for leaders. These education sessions should explain all calculations behind productivity metrics and provide examples of decisions leaders can make to impact performance, such as flexing off staff and closely monitoring overtime utilization. Be sure to also discuss the expectation that leaders failing to meet their target are required to develop a plan to get back on track to meet their target.
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4) ENSURE RESULTS ARE REGULARLY DISTRIBUTED
The executive leadership team should regularly receive a report summarizing department level performance. This biweekly report should support quick identification of departments with opportunity by highlighting:
– Performance Variance – Hours and FTEs
– Productivity % (Target Hours / Actual Hours)
– Overtime and Contract Labor Utilization
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Department leaders should receive daily performance for their department. Best results are seen when this trended performance report is distributed via email and includes:
– Actual Volume
– Regular, Overtime, and Agency hours
– Performance Variance - Hours and FTEs
– Productivity %
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5) CREATE ENVIRONMENT OF SUPPORT & ACCOUNTABILITY
After all leaders have attended education sessions, hold regular meetings with department leaders with poor productivity performance. The goal of these meetings is to support improvement through education and problem solving, with executive intervention if necessary.
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Next, ensure an action planning template is implemented. The purpose of the daily action plan is to ensure that department leaders are thinking ahead and developing realistic strategies to align with their department’s productivity goal. When reviewing daily performance data, a department may make adjustments that impact performance, driving long term improved productivity.
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A successful action plan displays consecutive performance for each department and requires a detailed action-oriented plan to resolve the variance, as opposed to an explanation for variance.
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