A clinical productivity calculation can help
A clinical productivity calculation can help you allocate resources
TO SURVIVE IN BUSINESS, you must be able to offer your product while operating at a profitable level. In health care, that can be tougher than ever. And in private practice, where operating margins can be extremely tight, every penny and every minute of the day count.
As a result, you must focus on the core operations of your business by using measuring tools. One way to do that is analyzing workplace productivity, which will help you determine whether you're operating close to 100 percent efficiency.
Any facility analysis should begin by looking at variables that can affect productivity, some of which can be controlled and some of which can't.
Among those variables that can't be controlled are cancellations and no-shows, which create gaps in the treatment schedule. When a cancellation occurs, it's always possible to replace that visit with another patient. But sometimes a cancellation occurs too late in the process, and you're stuck. No-shows present problems as well; the visit is lost, since the patient occupies the time slot until he's due to show up.
The best remedy for dealing with both situations is instituting financial penalties for no-shows and cancellations that occur without adequate notice. These penalties can provide partial relief for lost revenue and may prevent these situations from occurring.
Although cancellations and no-shows are out of your control, labor productivity isn't. Productivity measures output (goods and services) in relation to input (labor, materials, energy and other resources). In the case of labor, productivity levels directly correlate to proper or improper staffing levels. So its importance to private practice owners is obvious.
In most practices, the largest expense is labor costs, and an unproductive workforce ineffectively uses these resources. A labor productivity calculation, however, can help you keep labor costs in check, while effectively deploying labor resources and maximizing dollars.
As stated, productivity is a measure of output relative to input. The output component of therapist labor productivity is patient treatment; the input component is therapist hours designated to treatment.
To determine your staff's productivity, you must establish factors for a productivity calculation and parameters to obtain measurements. Productivity is expressed in a ratio of the number of actual visits per month, divided by the number of ideal visits per month.
Variables that factor into a therapist productivity calculation are the following:
* the number of full-time equivalent employees (FTEs)
*the number of ideal patients seen in a day
* the number of working days per month.
To determine therapist productivity, consider this example. Let's say a clinic employs four physical therapists. Three spend 40 hours per week on patient treatment, and one dedicates 75 percent of his time to patient treatment and 25 percent to administrative duties, which gives you an FTE figure of 3.75.
If each therapist is responsible for seeing two patients per hour during an eight-hour day, this puts the number of ideal patients per day at 16. And in most months, there are 20 working days. For this example, estimate that you have 1,000 patient visits that month.
To reach the productivity figure, multiply the number of FTEs by the number of working days for that month, then multiply that number by the number of ideal patients per day, per therapist: 3.75 x 20 x 16 = 1,200. This represents optimal visits per month.
When you divide the actual visits (1,000) by optimal visits (1,200), your productivity yield equals 83 percent. As the practice owner, it's up to you to determine what number you're comfortable with.
While these productivity calculations are a broad tool to evaluate monthly performance, you also can look at daily productivity.
This is important to measure because your facility could be 50 percent productive on Tuesdays and 125 percent productive on Mondays. Overall productivity, however, may be 90 percent.
Looking at daily numbers may indicate the need to re-allocate labor resources. For example, you may need to schedule more therapists and treatments on lower productive days and less on days in which productivity exceeds 100 percent. By further modifying this tool, you may want to evaluate each therapist's daily, weekly and monthly productivity.
In addition to using this tool to evaluate the clinic, you can use it as part of employee performance reviews. Follow the same formula for physical therapists who treat patients 40 hours per week.
You can alter the optimal patients per day figure and the ideal number of visits depending on how well you think individual employees can handle a workload. Some therapists may only be able to handle 12 or 14 patients a day and 300 a month, while others can treat 20 a day and 340 monthly.
For example, a therapist who works 20 days per month with an optimal patient per day figure of 16 would produce an optimal visits per month figure of 320: 1.00 (FTE) x 20 x 16 = 320.
If the therapist actually treated 250 patients that month, his productivity yield would equal 78 percent: 250 divided by 320 = 78.
As the practice owner, it's up to you to decide what productivity yield number--whether it's 75 percent or 90 percent--is satisfactory for your facility and employees.
Using productivity calculations can help you assess efficiency, as well as appropriate staffing levels, current staffing allocations and employee performance.
After all, the production of your facility is counting on it. *
Franklin J. Rooks Jr., MPT, MBA, is a partner with PRO Physical Therapy. PRO is a physical therapist-owned corporation with offices in Delaware and Pennsylvania.
In last month's column, I focused on the PPS elections and their importance to the Private Practice Section. Now it's time to shift attention to the national presidential election and evaluate the political positions of the two primary candidates.
From the standpoint of national politics, owning and operating a private practice is unique. For instance, we have the best interests of our patients in mind, and most practitioners would favor a patient's bill of rights. We'd also hope that all patients would be covered by health insurance and, if not, we'd probably treat the patient for free.
In terms of staff and employees, private practitioners try to offer good health care benefits and are empathetic to those who have familial problems that require family leave. As owners, we try to "take care" of our practice family as best we can. All of these principles seem fairly liberal.
On the other hand, private practitioners are also business people. We dislike regulations, are profit-motivated and disdain government intrusion into our practice. We'd also encourage less bureaucracy in government, especially at HCFA.
How should we position ourselves when it comes time to pull the lever--as practitioners or business people? Based on these concepts, how do we evaluate a Democratic or Republican candidate? Do we come down on the side of the patient? Or do we put our business interests first?
There's no clear answer to these questions. Unfortunately, the presidential candidates have only provided limited information about how they may change the Medicare program, respond to the pressures of managed care, or change the administrative and regulatory philosophies of HCFA. Instead, we have to rely on the candidates' rhetoric and media coverage.
It's unlikely that rehabilitation will be mentioned specifically during the campaign. In the end, you must make a decision based on which liberal or conservative viewpoints you favor the most. A true political examination of your conscience will always give a clear picture.
My statement from last month still holds: The most important thing is to vote! Sort through these thought-provoking questions and decide where you fall along the political spectrum. Ultimately the decision is yours.
Larry Fronheiser is president of the Private Practice Section. To reach him, call (202) 457-1115.