Dual track approach to productivity improvement in hospitals

Abstract

Hospitals traditionally measure and monitor employee productivity in terms of units of service (output) per employee hour (input), or hours per unit of service. However, many times when productivity increases in hospitals, labor costs also rise. The primary reason for this phenomenon is that a larger number of low-wage employees are replaced by fewer, but more highly paid employees.The OPTIMIS productivity information system integrates monitoring both the number of employee hours per unit of service and the labor expense per unit of service. Every pay period, the actual hours worked and labor dollars paid are compared to the number of labor hours that should have been worked according to a pre-established workload standard (in IE parlance the “earned labor budget”) and labor dollars expended for the workload processed. When managing productivity in hospitals, the goal is to spend fewer labor dollars than the earned amounts on a pay period basis while maintaining appropriate skill level. OPTIMIS provides department managers and division vice presidents with reports and graphs for retroactive analysis and pro-active management of labor costs.