The Truth about Productivity
Posted on: August 10th, 2009
Charlie K Dawson, MBA, CPC
President, Workforce Prescriptions
Noun1: the measure of “effort per output” of a process
Noun2: the cause of sending home needed employees in order to meet a 3rd party’s random expectation
We have arrived! Healthcare has finally begun joining the ranks of other industries in the pursuit of greater productivity. We are now playing big boy business games with our grown up workforces and my-oh-my how un-welcomed it is!
But why is that? If the goal of measuring productivity is to find a way to accomplish more with less, then why isn’t our new focus on productivity being met with cheers and adulation? Everyone wants to be as efficient as possible don’t they? We as an industry want to be able to provide more for less in our pursuit of our ultimate goal: great healthcare for all . . . don’t we?
The core answers to those questions are a resounding, “yes”! Yet we are struggling as an industry with our first forays into improving productivity and it is time we understood, “why”.
Productivity is NOT a 4 letter word!
In spite of what 100’s of managers, directors and VP’s we have spoken with think, improving productivity is not a bad thing! As a matter of fact, it is a long overdue necessity for healthcare. As reimbursements shrink (we have less money to spend per volume of service) and workforces age (we have to spend more per hour of labor) and boomers are beginning to retire (we have fewer people to do the work) and volumes are rising (we have more work to do) it seems to us as if productivity should be the most open water cooler conversation in healthcare.
And it is . . . but not for the right reasons!
See if any of these sound familiar to you (‘cause we are hearing them A LOT around the water coolers we are near):
“I have a 100% exempt department. All my staff are salaried. But the system has given me productivity targets based on worked hours and tied to census. Now I am frequently having to chose between sending home people who will then be PAID NOT TO WORK or missing my productivity goals.”
“In order to hit my productivity targets, I end up flexing people down, but when they go home they just take PTO so now we are PAYING PEOPLE NOT TO WORK when before at least I could have had them doing something for that money.”
“I send home so many people and schedule so many days off in order to hit my productivity targets that sooner or later my staff will run out of PTO and the day that happens and they are sent home with no pay, they will all quit.”
“I run a support department and 90% of our work is necessary whether our census is 50 or 500. Our work volumes have almost nothing to do with census so why am I having to send home needed staff just because house volumes dropped?”
“All but 3 people in my department are exempt. In order to meet my productivity targets I am sending them home and giving them days off, but since the work still needs to get done and our time is not tracked, those of us who are still working just work later or come in on the weekends to get the work done. So even though our reported worked hours are less, we are working the same hours except now we are approaching burnout.”
If you have either said or heard any of these or many other similar statements, then something has gone woefully awry in your organization’s understanding of the goals of productivity!
The goals of productivity
The reason organizations measure and attempt to improve productivity are two-fold:
- To produce more with the same resources
- To produce the same with less resources
Basically, the goal of productivity in healthcare is to deliver our services at lower costs and with greater efficiency.
If the goal of productivity is to provide our services at lower cost and with greater efficiency, then we have problems with every area of productivity:
- What we measure – Our first challenge with productivity is determining what the right things are to measure. Should we be measuring worked hours per unit of service (which initially seems to make sense) or should we measure paid hours per unit of service (there are some good arguments for that as well)? Should we use instead of worked or paid hours, “labor cost per unit of service” or better yet, “cost per output of unit of service”? Which of these measures will work? Should it be the same for all departments?
The short answer is that they each have their place but what’s more valuable to understand is that, “the measure isn’t nearly as important as IMPROVING productivity”! Many organizations (and departments within organizations) have become totally lost in their frustration with the measures being applied and have lost sight of the reality that the entire purpose of measuring productivity is to incentivizes and encourage the improvement of productivity! There is always time later to negotiate a different or more appropriate measure. What needs to occur today is for productivity to actually improve.
- What we understand – Most organizations we have encountered actually believe that productivity is about lowering the numbers of hours that people work. If they are measuring “worked hours per adjusted patient day” they believe that sending people home, giving them days off or canceling their shifts is improving productivity. In reality, all they are accomplishing is more PAYING PEOPLE TO NOT WORK when their help could actually have been used! You haven’t actually become more productive until YOU ARE NO LONGER PAYING PEOPLE NOT TO WORK.
The belief that you have improved productivity by having fewer people in the building is erroneous if you are still paying all of them at home! When this becomes the foundational understanding of productivity, eventually PTO runs out and canceled staff do resign. Ponder on this question, “Which is more productive: paying people to work or paying them to sit at home?”.
- How we are applying it – When the understanding of productivity is awry and the measurement of productivity is adrift is it any wonder that the application of productivity doesn’t actually reduce costs? When productivity is being applied through the reduction of available worked hours then the accomplishments of productivity are five-fold:
- You heightened burnout for exempt employees
- You heightened turnover of non-exempt employees
- You incentivizes the miss-use of PTO
- You decrease in the satisfaction of staff and management
- You decrease the productive work per FTE of your workforce (so you need MORE people for the same work ‘cause each are working less)
- You increase your cost per hour per unit of service (until PTO is all used up). Think about this one: if your nursing unit has been working 100 RN hours per day to meet your volumes and your new productivity grid tells you to reduce that to 90 hours, the people that are asked to take time off will do it through the use of their PTO (they do all still need and want their full paychecks). Here is what THAT math looks like:
BEFORE PRODUCTIVITY AFTER PRODUCTIVITY
100 hours @ $35/hr 90 hours @ $35/hr
0 PTO hours 10 PTO hours @ $35/hr
Cost per worked hour = $35 Cost per worked hour = $35.89
But there is more . . .
Currently, 100’s of healthcare organizations are measuring productivity and setting targets for improved productivity. What is mostly missing from the equation is the “HOW” of improving productivity. Without that “HOW”, the best healthcare can do is continue to pay people to NOT work! However, if the real goal of measuring productivity is to do more with less, then real productivity can only be achieved when we first re-design our processes and practices SO THAT WE CAN do more with less! Doing less of the same thing only produces fewer results. Doing things differently is the only true way to improve productivity.
A manufacturing example to contemplate:
It takes 6 people to assemble, package, label and ship 1,000 widgets per day. You decide you need to improve productivity by 13% so you send one person home but don’t change any process or procedures. The remaining people now can only assemble, package, label and ship 870 widgets per day (a 13% reduction). If the person sent home takes a PTO day (so that their paycheck doesn’t go down) you also increased your cost per product by 13% (because you are now paying someone a full day’s pay to NOT help produce widgets). Would you call it “improved productivity” if you produced 13% less product at a 13% greater cost . . .?
Things to try to improve productivity
- Review all your work processes and practices and try to eliminate: waste, redundancy, re-work and unnecessary work (oddly enough as much as 30% of ALL work in some areas is no longer needed and is just done out of habit). The death of improving productivity is the concept that, “We do what we do because it is what we have always done”!
- Look for ways to specialize your staff. If someone is really, really good at something, have them do more of it and swap some of their duties to people who aren’t so good at it. Each of your staff have unique strengths and talents – capitalizing on them can improve productivity up to 50%!
- Give back what wasn’t yours in the first place. Over time in healthcare many departments take on duties that actually belong somewhere else. Give them back and productivity can improve as much as 20%!
- Get rid of the paper. In a national survey, nurses alone reported spending nearly 2 hours per shift in paperwork (much of which included redundant information). Even with systems that don’t speak to each other it is possible with inexpensive scripting programs to eliminate as much as 90% of your paperwork which can improve productivity by as much as 18%!
- Quit replacing your low cost staff with your high cost staff. We all want to keep our most valuable staff working, but replacing a $12/hr unit secretary’s duties by having an RN do them is the opposite of improving productivity. Look to your skill mix instead and go play, “lets make a deal” – you get the bodies you want – th ey get the cost reductions they need instead! This can improve your financial productivity by as much as 25%!
You get the idea. If you first focus your time and energy around improving productivity, you will actually improve productivity regardless of what the measure says! Documenting your successes will allow you to validate what measures actually matter and help you make your case.
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