Benchmarking performance against regional and volume-based peers is another often overlooked but vital assessment. Publicly available data, as well as proprietary databases from various organizations, can help provide insights into how your organization performs and what may be reasonably attainable through improvement initiatives.
Perform High-Level Benchmarking
In the scenario below, a hospital performs in the lowest quartile compared to its peers.
Usually, failing to correct this situation comes with negative consequences, and thus the status quo likely isn’t sustainable.
Identify Department-Level Opportunities
First, identify areas that warrant further attention by engaging with department directors and managers as part of an initial performance assessment.
Establishing trust with department leaders requires asking the right questions to understand all the variables that may impact the poor performance results.
Important questions to ask include:
- How did COVID-19 impact your department?
- What normal seasonality patterns affect your volumes?
- Is there anything unusual about your department that makes it different from similar departments at other hospitals?
- Are there any physical limitations to your department that affect your ability to deliver quality care efficiently?
- How accurate are your productivity reports? Are there patients or procedures for which you don’t get so-called productivity clicks?
- Do any staff show up in your cost center who don’t belong there? Do those reports accurately reflect employees who work for multiple cost centers?
- What are your staffing challenges? Do you need to routinely use premium pay, travelers, or agency personnel to fulfill your staffing needs? Does your facility have an effective float pool to help fill gaps in your daily staffing?
- What is your staff turnover rate? Do you have trouble recruiting and filling vacancies?
Phase Two: Identify Solutions
Communicate the Vision
As you evaluate opportunities and your labor efficiencies, engage in robust dialogue with key stakeholders to garner support for the performance improvement vision.
Commit to labor targets with a clear understanding of the benefits. Targets should then be assigned to individual executives, directors, and managers based on the results of the phase-one assessment.
Support and Empower Department Managers
Follow these steps to support your managers:
- Support and empower managers. Empower the department managers to develop appropriate solutions to the challenge they’ve been presented. Provide support to managers with large targets or those with less apparent strengths to creatively close the gaps throughout the process.
- Connect with an outside consultant. Consider leveraging consultants with expertise in labor cost management to help managers examine all the key levers, including ascertaining managers’ own ideas and vetting and quantifying the impacts.
- Provide industry insight. Share relevant industry best practices that might help your organization.
- Base decisions on data. Perform detailed modeling and other analytics to help identify opportunities.
In addition to supporting managers as they develop needed solutions and turn them into action plans for meeting their targets, a good leader will:
- Provide education and mentoring
- Share tools to allow managers to more effectively control their labor costs going forward
Phase Three: Implement Your Plan
Implementation is typically the most challenging phase. Successful leaders will provide support, monitor progress, remove barriers, verify communication continues, and hold people accountable for achieving their results.
The initiative and the business imperative need to remain highly visible to keep people engaged and moving in the same direction.
As this phase concludes, it’s important to develop plans to continue monitoring all impacts and address any slippage to hold the gains.
Success Story Examples
Hospitals that have successfully utilized these strategies include:
- A 350-bed teaching hospital in Ohio that identified over $9 million in labor cost reductions versus a target of $7.9 million
- A 300-bed community hospital in Central California exceeded its targeted labor cost reduction of $6.6 million with over $9.2 million in improvements identified and approved for implementation
- A 150-bed community hospital in Northern California that identified over $11.2 million in performance improvements versus a target of $9.5 million
What Next Steps Can a Hospital Take?
Assessing results and identifying performance gaps or opportunities for improvement may not only be warranted, but also critical for the hospital’s overall performance.