Ten Steps to Labor Productivity


By Tom O’Bannon, Senior Director, Executive Resources Specialist and Stephanie Dorwart, CEO, Altius Healthcare Consulting Group (Adapted based on information from Altius Healthcare Consulting Group)

Improving labor productivity within hospitals and healthcare systems has become a core element that compels organizations to seek new approaches to working more efficiently. In order to gain control of increasing labor costs, it is essential that an organization understands the prevailing climate of achieving more with less to increase its bottom line while also delivering the best quality of care.

Let’s take a look at ten steps you can take now to enhance labor productivity:

  1. Review or develop global and departmental targets by gauging your performance against national and customized peer groups.
  2. Establish a transparent accountability model by requiring all levels of management to respond to staffing overages in a timely manner.
  3. Implement a vacancy control committee that reviews and approves all positions, replacement or new.
  4. Link the budget process with productivity target and job requisitions by utilizing your comparative benchmarks and current productivity performance to develop initial budgeted FTEs based on projected volume.
  5. Complete a physician productivity study and implement targets that include visits and revenue in addition to relative value units (RVUs).
  6. Complete a span of control and scope of management review in order to right size your administrative team. Assess the entire size of the management structure by utilizing best practice levels and drill down into the organization by functional levels.
  7. Implement analysis of prospective staffing needs by calculating total current FTEs and total open positions. Adjust for expected turnover in the next six months, identify staffing needs in six months and adjust open positions accordingly.
  8. Build a flexible workforce by attracting higher quality part-time workers through competitive offerings.
  9. Evaluate and reduce overtime and agency utilization by reviewing all pre-scheduled overtime to ensure shifts are justified.
  10. Reduce non-productive time and pay practices by evaluating your orientation and education hours to ensure you are meeting minimum requirements and eliminating unnecessary requirements. Also review all paid time off policies and practice for opportunities.

A productivity initiative can be an arduous journey which will never be successful without focused efforts, realistic targets, strong accountability and reliable statistics. Organizations across the industry need to make the conscious decision to commit to efficiency improvements and operational excellence on every shift, in every department.

Get all the details in our new white paper, Ten Steps to Labor Productivity.

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