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Setting Productivity Goals It Doesn't Mean L

Setting Productivity Goals

It Doesn't Mean
Losing Control of Patient Care

By Chad Cook, PT

If you talk to therapists about productivity goals, you might see this typical reaction: Their faces cloud with dismay and their arms cross in defense.

Productivity is a topic that needs delicate handling; few clinicians understand it, and even fewer like it. But having productivity goals in your practice doesn't mean you're putting patients on a conveyer belt, giving them a few tweaks and sending them quickly out the door.

In today's lean and mean times, productivity is a building block of daily clinical activity and the pulse of your clinic. It has a direct effect on your practice's bottom line.

When determining productivity benchmarks, consider the following three areas, which require critical analysis:

1. Financially appropriate benchmarked levels. Productivity measurements must be grounded by sound financial reasoning. This reasoning starts with analyzing the spreadsheet. The first thing to do is determine the total expense per visit, which is calculated by taking the total numerical value of all expenses and dividing that number by the total visits. The figure can be calculated for any given time period, one day one month, or a full year.

After determining this, break down the values to relate to each therapist's responsibility. Then determine how many patients need to be seen to cover the expenses for that clinic. For instance, if it requires at least 10 patients a day to pay for the expenses of the clinic, then the productivity standard will certainly need to be higher than 10 to realistically make a profit.

In addition, budgeting will determine the projected rate of return--or profit margin--required for your clinic. When determining the productivity using patient visits per day as the standard, add the base number required to make the profit to the percentage required to make the rate of return. The base number of 10 may then be bumped up to the profit margin expectation number of 12, if a 16 percent rate of return is expected from the clinic. The rate of return is typically selected by you and is a function of the revenue you need to make the clinic profitable. A 16 percent rate of return would require that after all expenses are paid, the revenues are 16 percent of the total revenues collected.

The base number of patient visits will include the average charge per visit multiplied by the total visits. This is a calculation of the total for which a particular clinician is responsible. If the rate of return is 0 percent for 10 visits, then it would take 12 visits by that person to increase his revenue profit, or rate of return to 16 percent.

But don't stop at the projections. In a perfect world of no cancellations or no-shows, scheduling 12 patients a day may be all that it takes to make the 16 percent rate of return. By using the additional step of factoring in the percentage of no-show/cancellations, you can budget a realistic productivity standard for each therapist.

If, for example, your therapist is required to see 10 patients to break even and 12 patients to pull a 16 percent margin, but typically demonstrates a 20 percent no show/
cancellation rate, then realistic profits will not hit expectations. Adding the 20 percent to the total brings the productivity standard to 15 patients per day. A requirement of 15 patients a day will offset the total of patients lost due to cancellations or no-shows and will typically represent a total number of 12 after the adjustments. As indicated earlier, if a 16 percent rate of return is the goal of the clinic, then the only way to ensure this total is to include all contingencies and variables. The total should include an adjustment for visits lost to cancellations.

Along with analyzing patient visits per day, you also can look at man-hours for every patient visit. This is also known as man-hours per stat, which is a productivity measurement that allows the clinic to adjust its staffing levels by adding or subtracting clinicians during times of need. For instance, if a clinician and a tech could see 16 patients in an eight-hour day with no additional support, they would display a man-hours per stat of 1.

This is calculated by taking the total FTEs (full-time equivalencies (in this case two), multiplying them by the total hours of operation (eight) and dividing them by the total visits (16). This indicates that one full-time employee's hour of work is dedicated toward treating the patient. It does not mean all the patients are seen in one hour.

Additionally, man-hours per stat can be used as a function of the rate of return for the clinic. By calculating the total number of patient visits using the current level of staff a clinic has, and using the total hours required to meet this number within the budget, you can determine man-hours per stat.

For instance, if the clinic requires a rate of return of 16 percent, you may determine that your staff of two clinicians will need to see 504 patient visits in a one-month operating period (calculated by taking 12 visits a day and multiplying it by 21 days). Since there are two clinicians, that number is then multiplied by two. If 21 days are available within that period, a total of 168 hours of operation (8 hours per day) can meet the target visits.

Therefore, the man-hours per stat to meet the 16 percent rate of return is .66. Because all staff members including techs and front office support are typically included, a realistic man-hour per stat could range anywhere from .8 to 1.5.

Using such a system is foolproof. No one can contest the productivity standard because it represents black and white financial calculations. It paints a complete picture of where therapists stand in their value to the clinic.

2. Reinforcing and controlling levels of productivity. Having productivity standards and reinforcing them are two different issues, however. That's why reinforcing and controlling levels of productivity is a challenge. Your therapists must be accountable for their value to the clinic.

But be prepared: Your therapists probably won't embrace this philosophy immediately. So your approach will go a long way toward how well they accept it. Positive reinforcement will help get people on board. Praise therapists who meet the goals and support those who don't.

In addition, make productivity part of the weekly meeting summarization and the performance review. Base merit increases or bonuses on the therapist's achievements.

Along with creating productivity goals for your clinicians, create them for yourself and share these with your clinicians. Emphasizing that staff performance is a measure of your own performance may help create camaraderie and an even better understanding of the objectives of your position.

3. Walking the tightrope between productivity and ethics. Although productivity should be set by financial benchmarks, the question that resounds in everyone's mind is this: How much is too much? When does productivity breach our ethical codes?

Our professional guidelines may have little say-so in regulating rate of return. However, the Physical Therapy Practice Act may offer insight into the ethical side of productivity by offering suggestions on using rehabilitative extenders. For example, the Practice Act states that rehabilitative extenders can use modalities to treat patients if their base level of education is similar to that of a physical therapist's. Additionally, physical therapy aides can be delegated routine tasks.

Aside from the code of ethics, this practice literature may offer insight into creating productivity standards from the staff level up. By examining the patient population and the licensed clinical staff on hand, you can estimate what's appropriate for your clinic.

But creating productivity suggestions based of the Practice Act alone may not provide a worthwhile outcome. Using the financial guidelines I've suggested is probably a better idea. It's up to you to determine appropriate productivity and staffing levels that meet the goals of the patient, clinician and your business.*


Chad Cook, PT, is supervisor of physical therapy for Munroe Regional Medical Center, Ocala, Fla.

Productivity Analysis
1 Visit equals $70 net revenue

VisitsRate of Return% Increase

Section Notes

"Hi! You have reached the millennium crisis hotline. If you have a rotary phone, please hang up and don't call back, because if you have a rotary phone, you have a lot more problems than Y2K!"

As I listened to the radio, this talk show parody played out for several minutes, illustrating the absurdity of some of the characterizations we hear in the media about the Y2K problem. Will there be a crisis? Will there be a brownout? Will we be able to fly on airplanes? The list of questions is endless. I'm taking this opportunity to add my 2 cents about Y2K and how it may affect your practice.

For most of us, our primary concern is the income side of the ledger. Will we get paid? That is a serious concern, and it behooves all of us to check with our primary payer groups to make sure they're Y2K compliant. We're told that HCFA continues to work on the problem to ensure that Medicare payment will be forthcoming. As of this writing, I have no assurance this is being done. In fact, many governmental agencies, including HCFA, continue to get low grades from those who are evaluating Y2K readiness.

The PPS, along with the APTA, will provide information if we discover a problem with Medicare payments as a result of Y2K issues. You may want to check with some of your state and national payers, however, to ensure that their payment mechanisms, whether they're electronic or otherwise, can process payments after the first of the year.

While payment is one concern, equipment is another, particularly telephone and fax machines. Most of us rely on these communication devices for everything from routine patient calls to referrals to managed care authorizations. Some phone systems and fax machines are not yet Y2K compliant. I urge you to check with your supplier to make sure you won't encounter any problems.

Along with phones and faxes, many pieces of computerized equipment haven't been found to be Y2K compliant. Check to see whether they'll make the conversion following the year 2000.

Utilities--including electricity, elevators, computerized door locking mechanism, emergency and exterior lighting--are another concern. All of these could be affected by computer technology that's not Y2K compliant. As you assess your situation, discuss these concerns with your landlord or building owner.

Although I believe January 1, 2000, will come and go without major incident, it's wise to check your practice thoroughly for potential problems. That just makes good business sense.

Larry Fronheiser is president of the PPS. You can reach him at (202) 457-1115.


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