The document discusses balancing labor costs and quality patient care. It describes issues impacting the healthcare industry like reductions in payments and increasing costs. It outlines a workforce management solution using a labor productivity tool to track efficiency, identify variances, and make recommendations. The solution helped a 300-bed hospital reduce premium labor costs by $400,000 in the first year and improve labor productivity by $1.8 million with an ROI of 5 months. Within 2 years it led to reductions in premium labor costs, FTEs, and labor expenses.

1. Balancing Labor Costs With Quality Patient Care Michael Bernstein Health Care Director Moss Adams LLP April 23, 2009

2. Agenda Issues Impacting the Health Care Industry Organizational Change Workforce Management Solution Benefits & Results

3. Agenda Issues Impacting the Health Care Industry Organizational Change Workforce Management Solution Benefits & Results

4. Issues Impacting the Health Care Industry Reductions in Federal & State Payments Reductions in Insurance Payments HIPAA Consumer Expectations Quality Initiatives Information Technology Liability Insurance Community Needs Sales & Use Tax Increases Increasing Wages and Benefits Pharmaceuticals Physician Shortages Labor Shortages Corporate Compliance Aging Plant & Equipment Medical Technology Providers Organized Labor Patient Safety Uninsured State Mandated Staffing

5. Daily Balancing Act Quality Patient Care (Proper Staffing Levels, With Skills, State Mandates, and JCAHO) Labor Cost (Control in-house labor costs; use Agency workers effectively) Employee Satisfaction (Keep physicians & nurses happy (and retain them) by not overburdening them) Quality Healthcare

6. Agenda Issues Impacting the Health Care Industry Organizational Change Workforce Management Solution Benefits & Results

7. Strategic Objectives Ensure quality patient care Be “Top Employer” in region Control labor costs to improve bottom line results Increase labor productivity

8. Change Management Buy-in: all levels equally important Benchmark for success: establish baseline & stretch performance metrics “ Don’t expect what you are not willing to inspect!” Timing & timeliness of data Carefully consider (and plan for) your change agents Cross-functional subcommittee to identify program success & challenges Involve internal constituencies and leverage their expertise and relationships Nursing & Finance to inform peer-to-peer

9. Change Management (Continued) Create sense of ownership: timely data input critical to its success, involvement in establishing productivity targets Aggressively train: quicker adoption results in higher acceptance and accelerated ROI Test & Test again: building trust in the data reliability translated into its acceptance Communicate: initiatives and targets constantly evolve

11. Agenda Issues Impacting the Health Care Industry Organizational Change Workforce Management Solution Benefits & Results

12. Workforce Management Solution Labor Productivity methodology and tool System combines right-time time and labor, billing, budget, payroll, and work volume information Tracks efficiency (hours) variances and rate (dollar) variances Creates actionable, single-view, volume-adjusted daily and shift productivity reports Provides cost-effective recommendations to resolve labor shortages/excesses Identifies variances in performance and alerts managers

13. Agenda Issues Impacting the Health Care Industry Organizational Change Workforce Management Solution Benefits & Results

14. Actual Results at a 300-bed urban hospital Reduced premium labor pay by $400,000 within 1 st year of implementation Improved labor productivity by $1.8 million ROI within 5 months through premium reduction alone Within 2 Years: 7.5% reduction in premium labor costs 2.75% reduction in FTEs per AOB 1.5% reduction in labor expense as percent of net revenue

17. Results Year 0 – Year 3 Overall patient volume increased 12.8% Discharges increased 15.9% FTEs increased 6.9% Increased RN regular staff by 30% Labor costs only increased 2.6% Improved employee and patient satisfaction

18. Results Improved accuracy of data flows and calculations providing “credibility” and “reliability” Helped revenue cycle be more timely and accurate Developed infrastructure that supports consistent and timely report distribution Created accountability process and culture