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Balancing Labor Costs With Quality Patient Care
Michael Bernstein
Health Care DirectorMoss Adams LLP
April 23, 2009
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Agenda
Issues Impacting the Health Care Industry
Organizational Change Workforce Management Solution Benefits & Results
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Agenda
Issues Impacting the Health Care Industry
Organizational Change Workforce Management Solution Benefits & Results
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Issues Impacting the Health Care Industry
Reductions in Federal & State Payments
Reductions in Insurance Payments
HIPAA
Consumer Expectations
Quality Initiatives
Information Technology
Liability Insurance
Community Needs
Sales & Use Tax Increases
Increasing Wages and Benefits
Pharmaceuticals
Physician Shortages
Labor Shortages
Corporate Compliance
Aging Plant & Equipment
Medical Technology
Providers
Organized Labor
Patient Safety
Uninsured
State Mandated Staffing
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Daily Balancing ActQuality Patient Care
(Proper Staffing Levels, With Skills, State Mandates, and JCAHO)
LaborCost
(Control in-house labor costs; use Agency workers effectively)
EmployeeSatisfaction
(Keep physicians & nurses happy (and retain them)
by not overburdening them)
QualityHealthcare
QualityHealthcare
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Agenda
Issues Impacting the Health Care Industry
Organizational Change Workforce Management Solution Benefits & Results
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Strategic Objectives
Ensure quality patient care Be “Top Employer” in region Control labor costs to improve bottom line
results Increase labor productivity
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Change Management Buy-in: all levels equally important Benchmark for success: establish baseline &
stretch performance metrics• “Don’t expect what you are not willing to inspect!”• Timing & timeliness of data
Carefully consider (and plan for) your change agents• Cross-functional subcommittee to identify program
success & challenges Involve internal constituencies and leverage
their expertise and relationships• Nursing & Finance to inform peer-to-peer
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Change Management (Continued)
Create sense of ownership: timely data input critical to its success, involvement in establishing productivity targets
Aggressively train: quicker adoption results in higher acceptance and accelerated ROI
Test & Test again: building trust in the data reliability translated into its acceptance
Communicate: initiatives and targets constantly evolve
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Agenda
Issues Impacting the Health Care Industry
Organizational Change Workforce Management Solution Benefits & Results
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Workforce Management Solution
• Labor Productivity methodology and tool
• System combines right-time time and labor, billing, budget, payroll, and work volume information
• Tracks efficiency (hours) variances and rate (dollar) variances
• Creates actionable, single-view, volume-adjusted daily and shift productivity reports
• Provides cost-effective recommendations to resolve labor shortages/excesses
• Identifies variances in performance and alerts managers
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Agenda
Issues Impacting the Health Care Industry
Organizational Change Workforce Management Solution Benefits & Results
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Actual Results at a 300-bed urban hospital
Reduced premium labor pay by $400,000 within 1st year of implementation
Improved labor productivity by $1.8 million ROI within 5 months through premium reduction
alone Within 2 Years:
• 7.5% reduction in premium labor costs
• 2.75% reduction in FTEs per AOB
• 1.5% reduction in labor expense as percent of net revenue
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Medical Center
Total Or ganization Pr oductive Ftes
1,300
1,350
1,400
1,450
1,500
1,550
1,600
Y r 0 Y r 1 Y r 2 Y r 3
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Medical Center
Ftes per Adjusted Occupied Bed
5.25
5.11
5.02
4.86
4.6
4.7
4.8
4.9
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5.1
5.2
5.3
Y r 0 Y r 1 Y r 2 Y r 3
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Results Year 0 – Year 3
Overall patient volume increased 12.8% Discharges increased 15.9% FTEs increased 6.9% Increased RN regular staff by 30% Labor costs only increased 2.6% Improved employee and patient satisfaction
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Results
Improved accuracy of data flows and calculations providing “credibility” and “reliability”
Helped revenue cycle be more timely and accurate
Developed infrastructure that supports consistent and timely report distribution
Created accountability process and culture
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