This document provides an overview of labor management in healthcare, including key concepts, metrics, processes, and best practices. The summary includes: Labor management aims to control labor costs, which account for 60% of hospital spending, through measuring productivity, benchmarking performance, and holding leaders accountable. It encompasses hiring, scheduling, and staff management across the organization. Premier's labor management model focuses on measurement, processes/accountability, and program support. Key principles include executive leadership and transparency, using benchmark data to set targets above median performance, dedicating a labor coach, and allowing flexibility in staffing across departments. The goal is continuous improvement through established productivity standards and action plans.

1. Introduction to Labor Management in Healthcare Material in this presentation can be used only with permission of Premier, Inc - Healthcare Informatics Contact: doug_miller@premierinc.com PE200

3. Measurement: Productivity Reporting and Benchmarking

4. Program Support and Resources

6. A high standard of quality attracts and retains clinicians and physicians.

7. Delivering high quality, evidence-based care reduces errors and is crucial to a clinical loss prevention strategy.National Pay-for-Performance (P4P) studies continue to prove that delivering high quality and maintaining low costs are not mutually exclusive objectives.

9. Labor costs, as a percentage of total hospital spending, is approximately 60%.²Given this evidence, it is clear that managing labor cost is a necessary strategy for achieving high-order operational efficiency. PricewaterhouseCoopers, “Cost of Caring: Key Drivers of Growth in Spending on Hospital Care,” February 19, 2003, p. 3;8. “Health Care Costs 101,” p.5. Caroline Sternberg, “Special Report: Cost Drivers,” American Hospital Association. www.hospitalconnect.com/hospitalconnect/index.jsp.

10. The Labor Management Continuum Hiring Scheduling Management An effective labor management program encompasses hiring, scheduling, and management of staff.

11. The Path to Success

13. Processes and Accountability, which encompasses the means in which leaders are held accountable for performance results and the ways in which they are educated to these processes.

15. Understand the benefits of Productivity and Benchmarking

17. batting average = “386” = 85 hits out of 220 at bats (85 ÷ 220 = 0.386)

18. planned to go 60 miles in one hour, but only went 30 miles (30 ÷ 60 = 0.50 = 50%)

19. planned to bake two pies in one hour, but did it in 45 minutes (60 ÷ 45 = 1.33 = 133%)

21. e.g. 10 worked hours per patient day, 6 worked hours per surgical case

22. Productivity Index is the key indicator for measuring results

23. Productivity Index = Target WHpU / Actual WHpU

25. Typically based on budget expectations

26. What can realistically be achieved today

27. Preferably provided bi-weekly but may be monthly

28. The basis for accountability for performance results; acceptable performance between Lower Threshold and Upper Threshold

30. Worked Hours

31. Volumes

33. Job Code

37. Peer Group IdentifiedBenchmarking is the process of comparing your own level of efficiency to peers with “like” operations Comparative

39. FTE/AOB (Full Time Equivalent / Adjusted Occupied Bed)

40. Salary Expense per Adjusted Discharge

41. Salary and Benefit Expense as a Percent of Net Patient Revenue

42. Department Level

43. Worked Hours per Unit

44. Overtime Percentage

45. Skill Mix

46. Labor Expense per UnitTypically we look at one year of data unless we have a specific need to review a smaller time period

47. Relationship of Measurement Mechanisms Benchmarking and Productivity: Two Separate, Distinct Processes

50. Provides overall direction

51. Establishes need for program within the organization

52. Removes political barriers

53. The Labor Coach

54. Primary role in supporting program

55. Typically Industrial Engineer or related background

56. Drives needed organizational changes

57. Establishes improvement process

58. The Labor Management Council

59. Oversight committee

60. Active role in position control processes

62. Tools and Processes Drive the Program Additionally, these tools and processes can help drive the accountability behind the program Requisition and position control process Standardized job request form Replacement positions New positions Focus Review department assessment Scheduling processes Budgeting and labor standards development processes

64. Action plans: departments continually not meeting expectations

67. Learn the components of the Labor Management Cycle

68. Understand Premier’s conceptual model for Labor Management

70. Key Principles of Labor Management Premier has developed 11 Key Principles to further define and support this conceptual model:

72. Quality must be a priority, and preferred outcomes must be clearly established in preparation for achieving effective labor management

73. Better performing organizations focus on results, not just measurement.

74. Practices:

75. Define and establish preferred outcomes

76. Measure quality outcomes in correlation to labor productivity

77. Identify and measure quality outcome indicators before, during and after change implementation.

79. Leadership must drive a consistent awareness

80. Understand that Labor Management is a conceptual model or process that must be continuously refined with an organization

81. Goal: design, implement and support a process that will foster continuous labor improvement over time

82. Practices:

83. Continually establish the burning platform for improvement

84. This journey must broken into measurable and attainable increments (monthly/quarterly/annual)

85. Executive leadership should establish the “end in mind”

86. Stay the course“Even if you are on the right track, you’ll get run over if you just sit there!” - Will Rogers

88. Be consistent and fair in approach, measurement

89. Transparency and clarity are key

90. Practices:

91. Granularity to department level or lower

92. Decision-Making is data driven

93. Include all departments in labor management processes

94. Measurements revenue-based and correlate with budget expectations

96. Development to maturity may take years, but plan for rapid implementation of the program

97. Best practice organizations are adept at rapid deployment of action plans with timelines of six months or less

98. Practices:

99. Utilize the standard implementation project plan that is based on a 3-month timeline

100. Effectively use published action planning in which timelines and accountabilities are assigned

102. Executive leadership involvement, understanding, and support is crucial to the success of the program

103. Establish a culture of focus, commitment, and accountability

104. Practices:

105. Assign an accountable executive

106. Develop a 1-3 year roadmap of the program that includes overall goals and objectives

108. The program should present a consistent, well understood process

109. Practices

110. Install standardized processes for establishing, reviewing, and updating labor standards.

111. Deploy standardized tools (e.g. bi-weekly or monthly productivity reporting) throughout the organization.

113. Use benchmark data to develop understanding of differences as compared to “like” operations

114. Use benchmark data to ask “what if” and “why not”

115. Practices:

116. Use benchmark data to indicate strategic areas of focus

118. Provide a dedicated coach to help drive needed organizational changes

119. Vital member of leadership team

120. Experienced professional is key

121. Practices:

122. Participate in leadership meetings

123. Institute “department coaching” as part of productivity process

124. Lead or assist with staff budgeting process

125. Facilitate process and performance improvement efforts

127. Set goals to achieve performance excellence, not performance average

128. Establish aggressive, albeit realistic, targets

129. Practices:

130. Use 25th, 33rd, or 50th percentile performance when making benchmark comparisons

131. Set expectation of continuous improvement through tightening of labor standards

132. Establish 1 and 3 month goals for each department not performing at expected levels

134. Leadership must work with line managers to establish expectations and assist in evaluating the best methods to implement changes within departments

135. Operationalize the established labor targets

136. Practices:

137. Assist with development of staff schedules

138. Translate “Worked Hours per Unit” standards into a staffing matrix or schedule

139. Eliminate barriers that prevent efficient processes

141. Best practice organizations identify an expectation to flex staffing in support and back office departments on a quarterly basis.

142. It is possible to effectively “flex” labor across all traditional “fixed” departments to an indicator of patient revenue

143. Practices:

144. Review staffing in traditionally fixed departments

145. When vacancies exist

146. Quarterly when financial need arises

147. Annually during the budget process

148. Develop policies to allow flexing of staff without eliminating positions, delaying hiring, or other more drastic measures:

149. For example, allow staff to keep full-time status with 72 hours per pay period, and allow these staff to take unpaid time off with approval of manager