Scott MacStravic, PhD
Employers in general, at least those who see their workforce as a key asset and source of great actual plus potential value, have come a long way in terms of measuring and managing that value. While most lack a formal system for measuring workforce productivity, they have widespread and strong confidence that improving worker health will improve their productivity as well. It has become common for employers and the suppliers they hire for the purpose to label their efforts “Health & Productivity Management,” which is already the title of a journal devoted to this subject, and an organization devoted to the cause.
But in healthcare, productivity is neither the sole nor main focus of efforts to get more out of employees – performance is far more important. For example, a recent study found that medical residents who are depressed are about six times more likely to make medications errors than those who are not depressed. [“Depression in Young Doctors Tied to Medication Errors” WashingtonPost.com Feb 8, 2008] Making errors or any risk to patient safety is properly a far greater concern than pure output – among physicians, nurses, technicians, and professionals of all kinds in the HCO workforce.
Performance is also meaningful when it is explicitly measured, and publicly reported – by the HCO, itself, or by a wide range of private and public organizations that feel publishing HCO performance information is essential to creating an informed public, and thereby improving healthcare. Generally speaking, it is the workforce that most immediately affects the HCO’s performance, which can make large differences in HCO revenue, and ultimately survival.
The direct effects may include significant amounts of revenue, depending on which and how many pay-for-performance (P4P) programs the HCO participates in, and how generous the payers involved are in their performance-based bonuses. The indirect effects may be even greater, when published performance comparisons affect which HCOs insurers, employers, and consumers choose to do business with. While such comparisons have not had dramatic effects as yet, there are signs they will in future.
In many ways, measuring performance is no more difficult, though not much easier either, than measuring productivity. In HCOs, however, especially those that operate 24/7/365, it may be quite difficult to gauge the performance of individuals. If the only systems in place to do so are annual performance reviews, where individual employees are rated on some standard verbal or numerical scale, these metrics rarely serve well for managing performance or for measuring the financial impact of health & performance management efforts.
On the other hand, measuring workforce performance – at individual or perhaps shift, team, or unit levels, can lead to a number of benefits for the HCO, as well as for its workforce. The most obvious is that if it isn’t measured well, how can it be managed optimally? Next is the vast potential for P4P systems to be used directly with employees, not merely physicians, but all whose performance is worth measuring, can be significantly improved through P4P.
Considering the dramatic improvements in productivity achieved merely through paying directly for performance (a 44% increase for a 10% increase in pay, in one case), the potential for improving performance is likely to be at least as great. Moreover, paying for performance is known to help retain more high-performers, while encouraging low performers to go elsewhere.
When paying for performance can lead to explicit improvements in the very performance dimensions that the HCO received bonus payments for, the financial benefits of P4P or HPM can both be measured fairly easily, once performance is reliably and credibly measured. Once workforce performance is measured, it is both easier to manage, and can easily be linked to one of the most effective ways of improving it, namely paying for it. This synergy is too good to ignore. And HPM will be dramatically facilitated if managers have both performance data and performance pay to work with.
Performance measures may very well include productivity metrics, particularly where these are known to link directly to revenue, costs, or other financial value – e.g. productivity-based payment for employed physicians in hospitals or medical groups. Depending on the job of each person whose performance is measured, output metrics may be an important component, or relatively modest in importance compared to clinical quality, patient safety, customer satisfaction, market share gains, and similar measures that depend more on performance quality.
Each HCO can choose the kinds of performance measures that make the most sense for the organization and personnel involved. But the merits in measuring as well as managing performance, and in measuring and managing employees’ health as one of the mechanisms found useful and a wise investment, are too great to be ignored.
