Vol. 13 Issue 11
One facility develops incentive plan to improve productivity and profits.
Looking at the bottom line often motivates a facility to critically analyze two main components of success: revenue and expenses.
Our hospital setting was no different. After reviewing systems and operations, we knew we could improve the bottom line in the physical therapy division. Based on the amount of services we provided, benchmark data indicated that we were spending approximately $90,000 more per year on labor than expected.
In response to this difference, we planned to develop and implement an incentive bonus
program to improve productivity, patient access and employee satisfaction. Our goal was to achieve the 40th percentile for productivity, a target established by senior management for all hospital services within the benchmarking database.
Improving productivity meant devising strategies for increasing output, namely patient visits. But was there enough demand to increase volume? To answer this question, we reviewed historical
volumes, wait times for initial appointments and "no-show" rates at the facility. We also saw growth in orthopedic and trauma services. So we believed a volume increase was viable.
Developing Bonus Targets
Our facility is a 500-bed tertiary care hospital in New Jersey. In 2003, the hospital had 20,000 admissions, 70,000 emergency room visits and 190,000 clinic visits. More than 60 percent of patients are either medically indigent or covered by Medicaid. Physical therapy services cover inpatient and outpatient care, which is overseen by a physiatry program in conjunction with a rehab institute.
It would have been easy to downsize staff as an initial solution, but we didn't want to do that. We decided to convince therapists, registrars, supervisors and physicians to increase their workload.
To accomplish this goal, we developed a productivity incentive program for therapists and registrars. Productivity standards covered four job titlessupervisor, senior physical therapist, physical therapist and physical therapy assistant. As a teaching institution, we may have as many as eight students doing clinical rotationscalled preceptingwith the staff at various times. We created standards for therapists working alone and when they were precepting students.
Then we developed the following productivity incentive bonus targets.
• A senior physical therapist had to average nine inpatient and 10 outpatient visits per day; physical therapists had to average 11 and 10. Senior physical therapists and physical therapists who achieved 100 percent or more of a monthly productivity standard received a $250 bonus, up to $3,000 per year.
• Physical therapy assistants had to average 12 inpatient and 13 outpatient visits per day. These clinicians who achieved 100 percent or more of a monthly productivity standard received a $175 bonus, up to $2,100 per year.
Physical therapists precepting one or two students had higher averages, based on the number of students and the student's experience (1st, 2nd, 3rd year).
• Clerical support staff received a quarterly incentive of $250, up to $1,000 per year if 70 percent of physical therapists and physical therapy assistants achieved productivity rates of 100 percent or better. This was based on combined inpatient and outpatient performance.
This was the first bonus program established for unionized employees at the facility, an environment in which labor management relations aren't particularly trusting of each other. However, since our intention was to implement a "reward-based" pilot program, the union was comfortable supporting the proposal.
The biggest question was figuring out how to handle staff members who perpetually failed to achieve their targets. We decided to work with these clinicians to overcome their barriers to success by counseling and inspiring them. Underperforming clinicians wouldn't be terminated.
Before implementing the program, we presented the plan to the staff. Several staff members were adamant that, given our payer mix with high no-show rates, it would be impossible to meet the target ranges. Hospital infrastructure issues, such as the slow speed of the electronic medical records system, could also be a hindrance.
Keeping Staff Motivated
Although the program's success hinged on a provider's motivation, we still introduced administrative efforts to support the process. These steps included generating and distributing monthly productivity reports for clinicians and departments.
At staff meetings, we also communicated results and solicited feedback about barriers to improvement. These meetings provided management with information that led to several operational changes. For instance, we relocated computers to improve access to electronic
medical records and adjusted the scheduling system to accommodate no-show rates.
After a year with the program, we saw positive results. For example, total volume grew in inpatient and outpatient physical therapy services by 29.5 percent and 13.5 percent, respectively. Part of the volume increase for inpatient services was attributed to an increase in days worked (34 percent) and improved productivity (8.6 percent). Outpatient service experienced a 4.2 percent reduction in days worked, while productivity increased 17.8 percent.
The inpatient experience was affected by a decision to change methods of weekend coverage. Previously, we hired part-time staff, but it was unsuccessful due to recruitment difficulties and overtime costs. However, weekend care was a vital component to expedite patient care and reduce length of stay. By converting part-time positions into full-time ones, we increased inpatient therapy coverage by 10 sessions per week.
During that year, bonuses tied to inpatients and outpatients were nearly identical–12.5
percent to 12.4 percent. Our total cost for bonuses was $6,375. In addition, average wait time for an initial evaluation dropped from five days during the second half of 2002 to two days during the second half of 2003. Thus, productivity improved without an adverse impact on access to care.
Refining the Program
As the program moves forward, we've decided to implement several program revisions, pending reviews with the union, senior management and rehab staff. Those measures include the following:
• Reduce benchmark targets for therapists when precepting students. Students didn't enhance productivity as much as anticipated. In some cases, they actually had a negative impact. We didn't want to penalize therapists for precepting, since it could undermine the teaching aspect of the position. In addition, we wanted to maintain a strong, nurturing educational environment.
• Reduce the benchmark target for registrars. Rewarding the registrars as part of the team is critical to the program's success. Registrars handle therapists' schedules and are in the best position to properly and efficiently book their time.
Our experience suggests that it would be easier for registrars to achieve bonus levels if we changed targets to monthly reporting, instead of quarterly. Moreover, we may alter the criterion of 70 percent of therapists reaching their monthly bonus to an overall department productivity rate of 90 percent.
• Expand productivity bonuses to the entire rehab staff. This measure includes offering bonuses to speech-language, occupational and recreation therapists. In the beginning, we assured the rehab staff that if the pilot program were successful, we'd roll out benefits to the department. We'll establish productivity targets and hope to expand the program this year, retroactive to January 2004.
Despite a rocky start, we're not showing a negative labor variance in data for the fourth quarter of 2004. Productivity for inpatient and outpatient physical therapy services and patient access have improved. And we expect to see a boost in scores on our annual employee satisfaction scores.
Adam Henick is vice president of ambulatory care services at the University of Medicine and Dentistry of New Jersey (UMDNJ) University Hospital. Edward Jimenez is executive director of ambulatory care services and Kathy Opromollo is director of physical medicine and rehabilitation at UMDNJ. Joel A. DeLisa, MD, MS, is professor and chair of the department of physical medicine and rehabilitation at UMDNJ-New Jersey Medical School.