HI 224 Chapter 9

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Calculating and Reporting
Healthcare Statistics, Sixth Edition
Chapter 9:
Statistics Computed within the Health
Information Management
Department

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Learning Objectives
• Relate the following terms: full-time equivalent employee,
budget, fiscal year, variance and variance analysis, payback
period
• Explain the use of various statistics to operations in a health
information management (HIM) department in terms of unit
labor cost, productivity, staffing levels, and budgets
• Differentiate between operational and capital budgets
• Develop the appropriate statistics to use in the
management of an HIM department
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Health Information Statistics
• Usually relate to
• Unit labor cost
• Productivity
• Staffing

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Health Information Statistics (continued)
• Annual compensation for each employee
• Calculated by multiplying the number of hours worked
per year (2,080 for a full-time employee) by the hourly
wage and then multiplying that number by the
percentage of benefits received

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Health Information Statistics (continued)
• Formula for full time equivalent (FTE)
• 2,080 hours × hourly wage = annual salary × amount of
percentage of benefits = annual compensation

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Health Information Statistics (continued)
• Unit labor cost
• Determined by dividing the total annual compensation
by total annual productivity
• Formula

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Health Information Statistics (continued)
• Productivity
• A unit of performance defined by management in
quantitative standards
• A ratio to measure how well an organization converts
input into output

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Health Information Statistics (continued)
• Most health information departments have productivity
standards for different areas in the department
• For example: In the coding section, a productivity standard may
be that employees should code four inpatient records per hour
• In a 7.5 hours work day (taking into account breaks that the
employee will take) that would be 30 inpatient records per day
• Factors that influence this decision
• Other tasks for coder, such as abstracting, answer the phone,
getting additional information
• Types of records coded (for example, long LOS, difficult clinical
cases0

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Health Information Statistics (continued)
• Two simple formulas accurately calculate labor
productivity:
• Completed work = Total work output – Defective work
• Labor productivity = Completed work / Hours worked to
produce total work output

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Health Information Statistics (continued)
• Determining the total work output and the hours
worked is clear
• Determining the defective work involves auditing work
to determine if any work is defective

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Health Information Statistics (continued)
• Three ways to audit records:
• Perform a 100 percent review of records coded
• Perform a review of records coded chosen through a random
sample
• Use a fixed percent random sample audit
• This requires the manager to select a fixed percent of total
records for each employee to review
• Using a predetermined quality standard, work is checked and
classified as completed work or defective work
• Additional records could be reviewed if the manager needs
additional information to determine the type of defect or until all
the records have been reviewed

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Health Information Statistics (continued)
• Staffing levels
• There are a variety of methods to determine staff
• Patient encounters per full-time equivalent (FTE) per month
• Patient encounter = any personal contact between a patient and
a physician or other person who is authorized to furnish
healthcare services for the diagnosis or treatment of the patient
• May include laboratory services, x-ray, etc.

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Health Information Statistics (continued)
• Determined by dividing the number of patient encounters by
the productivity
• An FTE is the total number of workers, including part-time, in an
area as the equivalent of full-time positions.
• The number of FTEs does not always equal the actual number of
employees, as two or more part-time employees might equal one
FTE
• Formula
• Patient encounters / Productivity = Number of FTEs needed

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Health Information Statistics (continued)
• Budgets
• A plan that converts the organization’s goals and
objectives into targets for revenue and spending
• Planning of the budget begins several months before the
facility’s fiscal year begins

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Health Information Statistics (continued)
• Estimates are made of expenses for the department,
including the following:
• Wages and benefits for employees
• Supplies
• Travel and education
• Membership dues
• Subscriptions
• Postage
• Copying
• Equipment maintenance contracts
• Other expenses

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Health Information Statistics (continued)
• Estimates are also made of revenues coming into the
health information department
• Estimates may include release of information
• Outsourced coding, etc.
• Transcription
• Budgets are made for the fiscal year
• A consecutive twelve-month period used by an organization as
its accounting period

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Health Information Statistics (continued)
• Operational budgets
• The amount of money needed to run the business
• Variance
• Differences between what was budgeted and the actual
expenses
• A disagreement between two parts
• This information can be used to monitor the activities of the
department

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Health Information Statistics (continued)
• Variance formula
• Actual amount spent – Amount budgeted = Variance

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Health Information Statistics (continued)
• Capital budget
• Accounts for the major assets that will be purchased
during the fiscal year
• For example, equipment for the health information
department
• Usually “high-dollar” purchases
• A facility will define what “high-dollar” means
• For example, purchases over $500
• The item usually has a “life” of more than one year

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Health Information Statistics (continued)
• Cost justification
• Payback period: How long will it take to recover costs
• Formula
• Total cost of project / Annual incremental cash inflow
• Annual incremental cash inflow
• The savings that a department realizes

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Health Information Statistics (continued)
• Cost justification
• Return on investment-the rate at which cash is recovered from
an investment project
• Formula