Vol. 12 Issue 11
Measuring Productivity in Rehabilitation, Part II Rethinking Productivity
Editor's note: Part I of this two-part series appeared in the May 21 issue and discussed the findings of a non-scientific productivity survey published in print and online in October 2000 in this publication and its sister publications, ADVANCE for Occupational Therapy Practitioners, and ADVANCE for Directors of Rehabilitation. In all, 284 readers voluntarily completed the survey.
Most therapists are familiar with the concept of productivity. In the strictest financial sense, productivity is the measurement of employees' ability to deliver revenue-generating services to clients. Most survey respondents indicated that productivity in their facility was measured as a percentage, in a manner consistent with this strict interpretation, using some variation of the following formula:
productivity = billable time
In the survey, time was usually measured in minutes, hours or units (usually one unit = 15 minutes). However, anyone who has worked a day as a therapist knows that the formula above does not accurately reflect what was accomplished in a day, as many of the therapist's obligations are not revenue generating.
Non-billable activities usually include such things as documentation (progress notes, insurance forms, calendar sheets, charge tickets), consulting with family members, physicians, rehab team members, nursing staff, medical equipment suppliers, orthotists, prosthetists, past or future caregivers, staff meetings, set-up, clean-up, etc.
The unpredictable nature of rehabilitation calls for a more comprehensive method of appraisal of productivity. A more accurate system to assess staff productivity should use a two-pronged approach. This method should take into account both bottom-line profit/loss and staff productivity. By broadening the approach to productivity measurement, managers can more precisely determine the efficiency and effectiveness of their staff as a team as well as individuals.
Comprehensive productivity evaluates the output of a therapy department by analyzing both department profit/loss and true productive time of the therapists. By comparing target profit and target true productive time levels against the achieved profit and achieved true productive time levels, the calculation of comprehensive productivity gives a more accurate view of the strength of the department than calculating either alone. Calculation of department profit shows if therapy staff meets fiscal expectations while calculation of true productive time shows how they are getting the job done.
Managers usually calculate profit/loss at least monthly. Determining profit is a fairly straightforward process and is already evaluated in most practices. Profit should be determined for either a specific discipline (PT, OT or SLP) or for a rehab department as a whole rather than for individual therapists. For any time period (day, week, month, year) profit (in dollars) can be calculated using the formula:
profit = direct revenue - (direct labor costs + overhead)
In this formula, direct revenue includes all monies paid for therapy services and supplies from any source (i.e., insurance, private pay, grants). Direct labor costs are salaries plus benefits for therapists, assistants and ancillary staff during the time period under review. Overhead includes things such as the cost of space, electricity, water, telephones, treatment equipment, office supplies and patient care supplies. Overhead is generally shown as a fixed amount in the monthly budget.
In a skilled nursing facility (SNF), the direct revenue generally includes items not typically calculated into other settings. In the SNF, direct revenue should be the sum of:
• Rehab reimbursement per day per patient from the Case Mix Adjusted Federal Rates;
• Medicare Part B revenue;
• Rehab reimbursement per day per patient for managed care patients;
• Other private insurance revenue;
• Self-pay revenue.
The rehab revenue generated by Medicare Part A and managed care patients on days that they do not receive therapy should be included in the calculation of direct revenue in SNFs.
Management should determine the target profit expected from a department during the budget process. Target profit varies widely according to the type of practice and the payment sources. For example, a practice with Medicare and private insurance as the primary payers might expect more profit than a practice with Medicaid as the primary pay source.
True Productive Time
When calculating the productive time for a therapist or a department, it is not enough to simply compare revenue generating time to time worked. Every therapist must perform certain non-billable activities in order to provide quality patient care and meet standards for licensure. Consider the following as supplemental (but non-billable) productive time activities:
Documentation - Most insurance will not pay for documentation time unless it is part of the education and training of the patient. However, "if it is not documented, it never occurred." Documentation time should count toward the calculation of true productive time.
Consultation/Patient Care Meetings - Contacting physicians to get orders or discuss progress/problems, patient/family meetings (including care plans), rounds, discussion with other rehab/nursing/ social service staff and agencies on behalf of the patient are everyday examples of consultative activities that are highly productive for patient care, but are non-billable and should count toward the calculation of true productive time.
Staff Meetings - Attendance at mandatory staff meetings should count toward the true productive time of therapists.
Marketing - Allow appropriate marketing time to count toward true productive time.
Inservice Instruction - Therapists providing inservice education to facility staff should have both preparation and instruction time included in the calculation of true productive time.
Licensure Requirements - In some states, therapists must meet certain eligibility requirements for licensure or to practice in a particular setting. Consider counting at least a portion of continuing education attendance toward productive time. In addition, if therapists are required to attend training on topics such as HIV/AIDS, patients' rights, or domestic violence in order to practice in the facility, this training should be counted toward true productive time.
Special Considerations for SNFs
Initial Evaluations for Medicare Part A - Time spent by therapists completing initial evaluations cannot be included in therapy minutes on the Minimum Data Set (MDS), but should count toward true productive time.
Screening - Time spent by therapists on annual or significant change screenings on long-term residents should count toward true productive time.
Each facility should determine what supplemental productive activities count toward the determination of true productive time.
True productive time (as a percentage) can be calculated for individuals or teams using the following formula:
true productive time = (billable time + supplemental productive time)
Using this formula, and including the supplemental productive time activities listed above, it is reasonable to expect that therapists will usually approach 90 percent to 95 percent productive time, and managers will approach 50 percent to 60 percent productive time.
One word of caution about calculating productive time: Facilities and therapists professing 100 percent (or higher) productivity without including supplemental productive time in their calculation are probably billing for non-billable activities (see below), using excessive group therapy, or working more hours than they are claiming. Even counting supplemental productive time toward the calculation of true productive time will rarely produce a therapist or team that is 100 percent productive.
Using Comprehensive Productivity
Projected and actual figures for comprehensive productivity can be mathematically compared for reference. If the department is functioning as projected:
actual profit/loss =1 actual true productive time =1
target profit/loss target true productive time
If either of the comprehensive productivity figures is less than 1, the manager must find the problem(s) and solve them. Using the comprehensive productivity formulae for calculation of profit/loss and true productive allows managers to problem solve through identification of the element(s) of the formulae that are off-track.
Customizing Comprehensive Productivity
Comprehensive productivity contains certain factors that allow facilities to customize the process according to expectations of administrators, owners or stockholders.
• Frequency of Calculation. Facilities can determine if they want to calculate profit/loss on a weekly, bi-weekly or monthly schedule.
• Individual Discipline vs. Team Calculations. Profit/loss can be calculated for individual disciplines (PT, OT, speech) or for the team as a whole. In SNFs, it is easier to calculate profit/loss for the rehab team as a whole so that the amount of revenue generated for Medicare Part A and managed care patients does not have to split according the discipline(s) that participated in the care of the each of the residents. In SNFs, using the team calculation has the added benefit of promoting teamwork among the rehab staff.
• Extra Credit in SNFs. Make certain to include the rehab revenue from those days that therapy was not provided but the facility was paid for Part A and managed care patients in SNFs. For example, if a patient in the Rehab High category receives therapy Tuesday-Saturday each week for three weeks, he received 15 days of therapy while the facility was reimbursed for 21 days at the Rehab High level. The rehab revenue from the off-days should count toward the calculation of profit/loss.
• Target Profit/Loss. During the budget process, set realistic expectations for the monthly and annual profit in the facility. Use these forecasted numbers for comparison with the actual numbers.
True Productive Time Factors
• Frequency of Calculation. Facilities can determine if they want to calculate true productive time on a daily, weekly, bi-weekly or monthly schedule.
• Individual Therapist vs. Team Calculation. Do you plan to determine true productive time for individual therapists, disciplines or for rehab team as a whole? Your choice depends on how you plan to use the information. True productive time calculated for individuals can be used for performance reviews and may help identify therapists performing below expectations.
• Supplemental Time. Determine which of the supplemental productive time activities listed above will count in the calculation of true productive time.
• Long-term Care. In SNFs, calculate billable time according to the number of minutes of care actually delivered rather than for the number of minutes for which the facility is being reimbursed. This method produces a more accurate picture of how therapists are spending their working time.
Using comprehensive productivity allows managers to more precisely gauge department output by comparing actual profit/loss and true productive time levels to target levels rather than calculating productivity or profit alone. Assessing productivity must include revenue generating time as well as therapists' activities that are non-billable. Using the comprehensive productivity method provides an accurate way to evaluate both fiscal soundness and true productive time for therapists. n
Danna Mullins and Pauline Watts are the co-founders of and principal lecturers for Encompass Education Inc., a rehabilitation education and consulting firm in Palm Harbor, FL. You may contact the authors at firstname.lastname@example.org. Look for their online Medicare advice column as www.physical-therapy.advanceweb.com.
profit = direct revenue - (direct labor costs + overhead)
true productive time = (billable time + supplemental productive time) time worked
For a department functioning as projected:
actual profit/loss ³ 1 actual true productive time ³1
target profit/loss target true productive time