Executive Management buy in is a critical component of any Labor Cost Management solution to achieve continued success. We’ve seen labor cost management efforts fail to produce expected improvement results and cost savings when Executive Management buy in is not an integral part of the equation. In addition to providing actionable information to examine labor cost management performance and appropriate labor needs, successful organizations rely on Executive Management support to incorporate their Labor Cost Management solution into management processes and their overall organization Process Improvement approach.

There is definitely something to the adage “What my boss finds interesting, I find fascinating.” When Executive Management is frequently reviewing labor cost management performance and asking for explanations for variances to targets and negative trends, the organization’s focus on labor cost management significantly increases. This drives accountability to meet targets throughout the entire organization and leads to improved labor cost management performance. Successful organizations integrate review and analysis of labor cost management performance into existing management review meetings or structure management processes around their Labor Cost Management solution.

Best Practice organizations don’t use their Labor Cost Management solutions as merely a “hammer” to beat outliers back in line. Executive Management incorporates outliers into the overall organization Process Improvement approach to provide education for front line managers, department process reviews and ongoing monitoring and communication around improvement efforts.

SciHealth implementations of the Insight Labor Cost Management Focused Solution include obtaining appropriate Executive Management buy in as integral part of the implementation process. Executive Management defines the mission and success criteria of the Insight Labor Cost Management solution and actively participates in design of measures and targets. Executive Management plays a key role in rolling out the Insight Labor Cost Management solution to their organization to ensure continued performance improvement and cost savings.

Hi All:

Just taking a quick break from my steady diet of Labor Cost Management entries to share a neat article I saw in Hospitals and Health Networks magazine. It was a fairly high level discussion of Nursing, Patient-Centered Care and Patient Safety. What I liked about the article was that it was a high level discussion approach followed by a specific list of indicators used to judge success.

Article: The Nurse and Patient Safety By Lee Ann Runy

The indicators from the article were:
A. Patient-centered outcome measures include:
1. Deaths among surgical inpatients with treatable serious complications, such as failure to rescue
2. Pressure ulcer prevalence
3. Falls prevalence
4. Falls with injury
5. Restraint prevalence (vest and limb only)
6. Catheter-associated urinary tract infection rate for intensive-care-unit patients
7. Central line catheter-associated bloodstream infection rate for ICU and high-risk nursery patients
8. Ventilator-associated pneumonia for ICU and high-risk nursery patient
B. Nurse-centered intervention measures include:
9. Smoking cessation counseling for acute myocardial infarction
10. Smoking cessation counseling for heart failure
11. Smoking cessation counseling for pneumonia
C. System-centered measures include:
12. Skill mix (registered nurse, licensed vocational/licensed practical nurse, unlicensed assistive personnel and contract)
13. Nursing care hours per patient day (RN, LPN, UAP)
14. Practice Environment Scale of the Nursing Work Index*
15. Voluntary turnover

I once had a Chief Quality Officer tell me his definition of quality was doing the “Right Things”. It was a matter of doing the right action at the right time to the right process in the right way. Quality staffing is similar situation where the key to success is to deliver the right mix of staff at the right time to enable them to do the “right” things for their patients. Too much staff and you are wasting money. Too little staff and you are impacting patient satisfaction, safety and even quality. You are also impacting employee morale as most employees resent when they think there is not enough staff to do their job effectively.

So much of labor cost management is about staffing to demand. The organization needs to put in place mechanisms to flex staff both down and up to meet changes in volumes.

In other words you want a staffing process that looks like this:

As opposed to this:

Gone are the days where you can staff to meet the 95th percentile of volume all the time.
An organization needs:
• HR policies that support a flexible work force
• Managers overseeing staffing on an hour by hour basis
• Schedules analyzed to ensure that staffing is meeting expected volumes
• Processes & procedures to flex staffing up and down as the situation warrants
• Information / data to encourage accountability at all levels

Once, a while ago, I was watching the television show ER. I was working for a hospital at the time doing a lot of staffing and productivity work. The show portrayed a completely empty department with no patients at all. The employees were playing a game of hockey that involved brooms and rolling chairs. I said to the TV, out loud, “They really need to flex down because they’re wasting a lot of money.” (Quick Note: Lest you question my mental balance, I normally only talk & sometimes yell at the TV during Ga Tech ball games.) Of course, five minutes later the proverbial bus wreck occurred and suddenly they were glad that they had not followed my advice.

I put forth this example to illustrate the yin and yang of staffing. Too much staff and you waste money. Too little and you create an unsafe environment. These opposing priorities are why labor cost management is not easy.

I've been talking to a bunch of folks about labor cost management recently. We are rolling out a new solution that is hosted online to help healthcare organizations better manage staffing expenses. I've been talking to consultants and healthcare executives on ways we might want to tweak the solution and how to best market it.

The first of these systems that I implemented led to a cost savings of 7.5% of per unit labor cost. Of course, that improvement involved much more than merely displaying data. I've also worked with many of SciHealth's clients to implement LCM indicators and, while they all had a positive impact, some were more successful than others. I thought I might share some of the lessons I have learned in implementing these systems.

So in honor of the new SciHealth LCM hosted solution, I will be dedicating my next few posts to effectively implementing a labor cost management system.

The topics will include:
1) The right staffing (not just cost cutting)
2) Executive Management Buy In
3) Good Budgeting Process
4) Position Control & Hiring Process
5) Biweekly LCM / Productivity Management
6) Responsive HR Systems
7) Daily Feedback Systems

Be on the lookout for more posts.....

A couple of recent conversations I've had with a CEO and a CIO at two client sites have been about using SciHealth Insight to track the effectiveness of Information Technology projects.

The CEO was making the implementation of a Physician Order Entry System a key piece of his organization's strategic objectives for the year. If I remember correctly, they were going to track the effectiveness of the implementation using two indicators:
o Percent of Physician Orders Entered Using the System
o Percent of Physicians Using the System
These indicators were going to be displayed on their organization's Scorecard.

The conversation with CIO was a bit more general. She was interested in using Insight to track the promises made by functional people who wanted to buy a new IT system. From my days at working at a hospital, I know the long list of benefits that the vendor and the hospital functional buyer would promise in order to get a system budgeted and bought. Since the organization is spending lots of $$$ to buy these things it would make sense to hold the functional buyer accountable for bringing these benefits to fruition. I would look at the benefits they list to justify the system and then ask them to quantify the results prior to approving the system. As the system is implemented, set up a set of measures that allow you to see if the results meet their expectations.

For instance when buying an Emergency Department patient tracking system the functional buyer might promise to improve the following measures:
o Overall Patient Throughput Time (By Admitted, Treat and Release and other Dispositions)
o ED Patient Satisfaction
o Percent Patients Left Without Treatment

Really this thought process could be used with any capital outlay that comes with a promised benefit. That new Laser for Surgical Services will increase revenue by how much? The new CT scanner will allow you to scan how many more patients?

At the core of this approach is that when a manager or executive asks to spend a lot of money to make an improvement you should follow through to make sure you get that improvement. I would also imagine that knowing that they would be held accountable for achieving these gains, would mean that they would be more realistic in the assessing the promised benefits of the new system.

Patrick Prock, one of SciHealth’s associates, currently working with a customer to develop “Instrument Panels” for nursing units using our Custom Tab / dashboard feature. The “Instrument Panels” provide timely access to decision makes for performance on key quality measures. Review of these “Instrument Panels” in Insight enables managers to quickly identify issues and provide resolutions to improve quality performance in their units and service areas.

The process for building the “Instrument Panels” began with setting up specific views of quality indicators for nursing units in the Insight Custom Tab. Executive Management reviewed and approved the “Instrument Panels.” The next step involved meeting with each Service Leader to explain “Instrument Panel” content and navigation and obtain feedback for revisions and additions. Service Leaders use the “Instrument Panels” in management meetings to monitor quality performance and drive performance improvement.

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I saw a short article in Inc.com that seems to relate very well to my experience with many hospital organizations. In some hospitals the strategic plan becomes a laundry list of things that should get done. The list of “to dos” is way too long for the organizational capacity for change and implementation. What ends up happening is that nothing gets done very quickly. My experience is that a shorter list of “Top Priorities” actually facilitates faster change and implementation leading to much faster transformation.

While this Inc.com article is not specific to healthcare it is reflective of the dynamic that I see at many organizations.

Link to Article