With the meteoric rise in US healthcare spending, hospital administrators find themselves increasingly strained to balance the budget. The cost of providing healthcare has skyrocketed, while revenues continue to plateau.
What’s a hospital administrator to do?
This challenge has no simple answer.
While some hospitals (rightfully) choose to invest in technology, automation, and better equipment to improve physician productivity — they walk a very thin line between the red and black. Improving physician productivity is a hefty, long-term goal, while the upfront cost of the requisite technologies can be astronomical.
And even then, improving physician productivity isn’t as simple as budgeting a few million dollars on the latest in med-tech.
A comprehensive plan must be put in place in to make the most out of your existing budget — from proper tracking of metrics to having the analytical tools to leverage them, to investing in the right equipment for the right departments at the right time. This is no simple task.
And that doesn’t even cover the human resources element of managing a hospital.
Consider this point for a moment: salaries and benefits can make up almost 50% of a hospital’s expenses.
While non-personnel costs can be minimized, this doesn’t leave a lot of wiggle room for administrators. A reduction in staffing negatively impacts patient capacity, and that invariably impacts revenue. And the converse is just as bad — increasing staffing can create redundancy and lead to mismanagement of resources. Why pay for nurses and physicians to stand around, twiddling their thumbs?
But how should hospital administrators find this balance, and what sort of things should they be looking for?
While by no means comprehensive, we’ve compiled a list of five effective methods for improving your facility’s productivity.
And the first thing you should be doing is tracking the right metrics.
1. Start by Choosing How You Measure Productivity in Your Healthcare Facility
Measuring your facility’s productivity correctly is the first step to improving it — and one that challenges many hospitals..After all, what gets tracked, gets managed.
Further: what gets tracked poorly, gets managed poorly.
Tracking productivity is difficult enough for regular businesses. Add in the complexity of regulatory requirements for staffing, convoluted medicare and medicaid reimbursement processes, malpractice liabilities, and dozens of different services with thousands of distinct procedures (with varying costs and revenues) — it’s enough to make a CFO’s head spin.
But assigning a metric to productivity can be an enormous challenge. How do you quantify “good” productivity?
After all, is “good” productivity…
- Seeing many patients, which makes the physician look more productive?
- Or, is it seeing patients for longer, more complicated procedures, which in turn is more financially productive?
- Or, rather, is it recommending more profitable procedures, more often, which in turn increases physician output and revenue — but opens the hospital up to malpractice liabilities?
One solution, the RVU system, seeks to address this complexity — by introducing some complexities of its own.
Tracking Work Relative Value Unit – wRVU
What is RVU?
wRVUs, or Work Relative Value Units, are a standardized measurement of physician services in the United States that are used to determine Medicare reimbursement. wRVUs attempt to combine the work effort, practice expense, and malpractice expense of every type of hospital service into a single metric. There are currently about 7,000 physician services that have an RVU value assigned to them.
When it comes to assessing productivity in healthcare, administrators, doctors, nurses, etc., are intimately familiar with work relative value units. Afterall, nearly two-thirds of physicians in the United States find their compensation impacted by wRVUs in one way or another.
Despite the fact that wRVUs do not truly represent monetary value, and alone do not directly measure productivity, they are one of the main metrics hospital administrators use to measure the efficiency of their hospitals. They’re just too convenient — combining work effort, practice expense, and malpractice expense into a single, standardized metric can simplify data-collection and analysis.
As to be expected, however, combining several complicated variables into a single metric leaves hospitals with some serious blind spots.
- Because some level of pre and post surgical care is expected for surgical procedures, Global Visits have an RVU rating of 0 — which would imply that physician assistants and nurse practitioners who spend most of their time in pre or post-surgical care are unproductive. This is clearly untrue.
- Using “Shared Visits” and “Incident To” services can also hide the productivity of physician assistants and nurse practitioners by tying all services to the accountable specialist.
- If your healthcare facility is directed by scheduling or predetermined assignments, then measuring RVU as a stand-in for productivity becomes a moot point — your staff will only ever be as productive as their predetermined assignments.
So while RVUs can give you a quick (albeit incomplete) bird’s eye view of your facility’s productivity, they are not enough to make informed decisions about the productivity of your physicians. Focusing on other factors, such as patient panel sizes or physician hours can aid in building a more accurate picture of productivity.
Tracking Hospital Hours as a Way to Measure Productivity
With nearly half of expenses going towards salaries and benefits, administrators will want to ensure that best practices are being implemented during labor hours.
This is a simple, tried and true method of measuring productivity that applies to virtually any industry — and it’s one of the easiest to implement. Determine how many nursing hours are required per patient day, and then track and update consistently.
If, in the past, your facility determined that six nursing hours were required per patient day for example, that doesn’t mean that this will always be the case. Perhaps some of your staff members are burning out and losing motivation — accomplishing fewer check ups per shift. Maybe changing demographics in your zip code are bringing in fewer patients with serious conditions. Or maybe outdated equipment is beginning to take a toll on productivity.
By tracking these hours and consistently updating benchmarks, you can get an accurate and live overview of your staff productivity.
Diligent hour tracking and analysis can also provide insight into the mental health of your staff. If there is a large gap between hours, your staff could suffer from high levels of stress, which can lead to burnout, malpractice, or high turnover (which in turn, increases largely unproductive training time of new staff).
But the best reason to track hours diligently is that they can be used as a diagnostics tool — especially when combined with other metrics.
You can compare hours worked to the facility’s RVU output, for example, to determine if you’re over-servicing patients. Or cross-reference staff hours to patient outcomes to determine the optimal staffing model to minimize malpractice liability.
Ultimately, you should be tracking multiple metrics, including clinical scheduling, patient hours, panel sizes, billing data, and RVU output. Alone, none of these metrics give you the full picture. Spliced and diced and cross-referenced, however, these metrics are an excellent tool to diagnose and treat your physician productivity issues.
2. Implement Big Data Analytics in Healthcare
Collecting tens of thousands of data points across a dozen metrics may seem like an enormous undertaking — and it is. But it’s only the first (and arguably, simplest) step in improving long term productivity.
Most hospitals have more data than they know what to do with. Due to reporting requirements, strict staffing oversight, and expansive patient health record regulations, this data is already being collected and stored across a variety of databases in your hospital. Whether administrators like it or not.
But actually leveraging this data to identify trends and improve hospital operations?
That would require compiling and organizing thousands of paper documents, pulling databases from dozens of electronic systems (which often do not work together), and being able to cross-reference every data-point for analysis. Add decades of historical data, and it would take a thousand analysts just to make heads or tails of it.
Enter Big Data.
Though slower to adopt Big Data analytics than most industries, healthcare can benefit the most. The industry stands to save nearly $400 billion dollars by leveraging big data. And productivity is central to this opportunity.
Here are a few examples of data that can be collected and analyzed:
- Clinic scheduling data;
- Time-tracking data;
- Billing data;
- EMR data;
- Benchmark data from third-party vendors
Administrators can also leverage new technology like medical device integration (MDI) to help automate this type of data collection.
And while the initial investment may include rough patches during training, the long-term benefits of introducing big data analytics practices in healthcare facilities are ten-fold.
Point is: if you want to accurately track all of the vital metrics, and have the capacity to analyze and act on your data sets — there’s no escaping Big Data services.
3. Focus On Improving Operating Room Efficiency
When it comes to improving hospital productivity, operating rooms are top of the list. Because surgeries account for 48% of all hospital revenue, improvements in surgeon productivity could yield the biggest impact on your hospital’s bottom line. Aside from the fact that surgeons are some of the best paid specialists in your facility, a single surgical procedure can also pull dozens of hours from physicians, assistants, and nurses.
As always, your first concern should be tracking the proper metrics. And because of the specialized nature of the operating room, analysis can become even more complex, with additional considerations to make.
Operating Room Efficiency Metrics
Beyond the standard metrics we outlined above (RVU, hours, patient panel sizes, etc.), operating rooms should also be tracking and managing:
- First case start times
- Case cancellation rates
- Staffing costs
- Turnover times
- Patient outcomes
Another novel method of measuring productivity of an OR (and benchmarking your surgery times) is to measure anesthesia claims, which are almost perfectly correlated to surgery time.
Once again, the real improvements to productivity will come from a thorough, structured process of comparing varying sets of metrics to diagnose problem areas in your facility’s care delivery.
For example, if you find that your first cases of the day often experience a delay which leads to slower turnover times, consider examining your staff hours to determine whether you are understaffed, or whether your NPs and PAs are overworked (and thus, slower, and less productive).
And if you’re experiencing productivity problems in the OR but can’t seem to pin it down to any particular staffing issue — consider your equipment.
4. Upgrade Your Hospital’s Equipment
Replacing old, inefficient hospital equipment as a means of improving productivity may be an obvious solution — specifically in operating rooms.
That’s why the global hospital sector is investing aggressively in:
- Medical Device Integration (MDI) systems (as previously mentioned);
- IBM Watson / AI / Automation
- Physical equipment upgrades (i.e. surgical instruments, ventilators, blood gas machines, headlights, etc.).
And although investment into technology and equipment is expected to drive a great deal of improvements in efficiency, it’s a risky endeavor. Especially if the decision to purchase new equipment is initiated and finalized by a siloed procurement department.
Healthcare administrators are often too focused on the numbers (perhaps, rightfully so) to consider the day-to-day reality of individual practitioners. In most cases, numbers are king. But when it comes to equipment purchases that impact the workflow of your staff, numbers can only tell part of the story. There are simply too many variables.
A research study on the effect of medical procurement on practitioners across 4 countries, found that procurement decisions made by committee — without the input of the medical specialist who would be using this equipment — may have negative impacts on patient care and outcome.
“…[t]he expertise of the surgeon is very crucial. He is responsible for what the patient gets implanted and therefore he needs to be convinced of what he is using during surgery.”
Surgeon from Switzerland
In fact, based on responses from 59 medical professionals, the study concluded that the ideal solution was to involve medical practitioners more actively in the procurement process.
And this makes perfect sense. Without basing your procurement practices on heavy input from your practitioners, you risk:
- Underestimating the training costs associated with rolling out new equipment
- Not sufficiently accounting for equipment maintenance costs
- Purchasing expensive equipment that your staff won’t use
- Unintended consequences to long-established clinical workflows, creating bottlenecks that impact the rest of your operations
- The opportunity cost of using up the budget on equipment that your staff don’t want, foregoing equipment that they need
All this is to say — upgrading medical equipment is crucial to improving physician productivity, and will become the single biggest driver of hospital efficiency in coming years. But unless you are basing your fundamental procurement strategy on the needs of your physicians, you risk making poor investments.
The ideal procurement process is one with practitioners right at the heart of it. The needs of your staff should be the first and last consideration — with hospital administrators acting as gatekeepers in the middle, ensuring budgets are adhered to and the economics make sense.
5. Upgrade Your Hospital Lighting
The least obvious (but, perhaps easiest) method for improving physician productivity in your facility is changing your light bulbs.
According to the U.S. Department of Energy, poor lighting in healthcare facilities can cause:
- Negative effect on staff work performance
- Eye fatigue in night shift workers
- More medication dispensing errors
- Increased difficulty in patient care and staff decision-making
There’s also a cost-savings benefit associated with switching to brighter, more efficient LED bulbs for every room in your facility. If your facility is not currently using LED bulbs, you stand to save up to $132 over the life of the bulb. For every light bulb in the building.
But it doesn’t stop there.
In a 2010 study of operating room lighting, researchers found that, on average, surgeons and residents had to reposition their overhead lights every 7.5 minutes. Worse yet, 64% of these adjustments interrupted their procedures.
In the interview portion of this study, surgeons claimed that “[t]he amount of LAs [Luminaire Actions] to obtain a well-lit wound, the illumination level, shadows, and the illumination of deep wounds” were aspects of their OR lighting that needed the most improvement.
Chances are, your OR staff are facing the same difficulties.
And because operating rooms account for most of your hospital’s revenue, upgrading your OR lighting should be a top priority. Consider investing in surgical headlights to eliminate Luminaire Action (light readjustment) interruptions in surgical procedures, improve deep-wound visibility for your surgeons, and decrease eye fatigue and error rates.
The global hospital sector is in the midst of several momentous changes — from flatlining revenues and increasing costs, to rapid (and unpredictable) technological transformation. While these changes present major challenges to hospital administrators across the world, they also present new opportunities for those who stay ahead of the trends.
The methods outlined above aren’t simple fixes, and they won’t address every productivity issue in your healthcare facility. But they can act as a defibrillator for complacent practices. And if you’ve got a pulse on your productivity, the real work can begin.