MarieAnn North, FACMPEDirector, Navigant Consulting, Inc., Tampa, Fla.
Leadership, by definition, implies that there are followers. But often this is not the case.
It is the role of leaders to paint a compelling picture that moves people to action for the good of the organization--harnessing energy and passion that produces results. So why is it that so many leaders are out of touch with their own organizations? Many are unaware of the details of what is taking place in the work lives of their “followers,” causing stress for their employees at all levels. Other intelligent, well-intentioned executives are actually “leading” a group anxiously awaiting, or even plotting, their demise!
Relationships change as executives progress in their careers. Leaders become surrounded by those who shelter them from bad news and stroke their egos. The nature of the job changes to focus on the big picture--sometimes at the expense of giving up too many facts and details. Feedback on performance becomes less consistent the higher the position. But is this isolation factor just a necessary evil of the C-suite, or can it be overcome in a way that results in workplaces where top executives are truly in touch with their constituents and an atmosphere is created where performance soars?
One component of how the leader functions that may require change is the approach to the work itself.
As executives move up the ladder, they increasingly stop doing the work themselves, instead relying on staff. While focusing on the big picture is essential, there is value to be gained by not giving up all aspects of “doing the job itself.” A late night spent with Excel files can provide valuable insight and empathy! It can reframe the question at hand so that time isn’t wasted on solving the wrong problem. Understanding the details can only result in more practical “big picture” solutions. Detailed information allows for better discussions, and even healthy debate. After all, how can staff members push against authority and get the best ideas forward if the chief executive has no understanding of the details. Balance is essential--working the details does not imply micromanagement. It does imply that even top executives must continuously gain greater understanding--whether it involves how a referring physician accesses the system or knowing what button to push on the copier or coffee machine. In fact, C-suite executives who still do the work themselves are more likely to take time to study the lessons learned after plans or projects are implemented, rather than rushing ahead to the next item on the “to-do” list. Taking the time to objectively evaluate all outcomes sets great organizations, and great leaders, apart from mediocre ones.
Read more tips to avoid leadership isolation in MarieAnn North’s Leadership and Management column in the October issue of hfm magazine.
Robert FrombergEditor-in-Chief, HFMA
A trip to the airport yesterday gave me several lessons in customer service.
I was escorting my younger brother, who is developmentally disabled, to the airport for his return flight home from a visit. The process began smoothly. After a short wait in line, we got his boarding pass and got my pass to accompany him to the gate. We dropped his suitcase off at baggage screening and proceeded to the security check point. I showed by gate pass and driver’s license to the young man in the red vest and received a barely perceptible nod and the official scribble of approval on my pass. My brother showed his boarding pass and state ID card. The young man looked at the pass and then the state ID. He looked at the pass again and the ID again. He looked at the back of the ID. He looked up at me and said, “This ID is expired.”
Then came The Wait.
You know The Wait. It’s the wait that says, “I have said what I need to say and will stare at you until the end of time and not say another word.” A dozen examples of The Wait bounced through my mind: the contactor who said, “We can’t put that door there.” And waited. The registrar who said, “That class has been canceled.” And waited. The insurance representative who said, “Your policy doesn’t cover that treatment.” And waited.
At the airport, everything worked out fine, but the point is that the young man in the red vest didn’t make the least effort to infer the obvious question anyone in my position would ask--“What should I do to get him on the airplane?”--but instead chose to make me ask that question.
Hospital revenue cycle leaders face customer-service challenges that dwarf those of most businesses. The encounters, even at their most benign, are charged with emotional and physical discomfort. The information that needs to be transmitted is complex and frequently illogical. HFMA’s PATIENT FRIENDLY BILLING® project has provided the profession with guiding principles and tools to make this information exchange effective by looking at it from the patient’s point of view. In addition, HFMA recently has released an excellent training program for revenue cycle customer service.
My airport experience reminded me that the core of good customer service is anticipating the customer’s needs. Please don’t ever present patients or their families with bad news followed by The Wait. Instead, anticipate the obvious question--usually it’s some variation of “What do I do next?”--and answer it.
The airport trip also reminded me of the customer’s responsibilities. In one case, a woman in line ahead of me at the Dunkin’ Donuts kiosk quizzed the attendant about the number of ounces each size cup held, whether they could make her latte with 2 percent milk, and--told they had only skim and whole milk--whether they could mix whole and skim milk. At that point I left. Customer responsibility: don’t be unnecessarily picky. This was an airport Dunkin’ Donuts for crying out loud. If she wanted that much coffee precision, she should have gone to the Starbucks kiosk across the hall.
More to the point, customers have a responsibility to be at least minimally informed about their transaction. The airplane had boarded, and I was the only non-employee left in the waiting area. The attendant made the final announcement, naming two passengers and telling them this was their final boarding call and the flight would be taking off immediately. A minute later, two giggling young women appeared at the gate, saying they didn’t know how they had been confused about which gate the flight was leaving from and how it had gotten to be so late. The attendant smiled, took their passes, and let them through the door. I’m not sure I would have been so pleasant. Somehow every other passenger on the plane had managed to understand the gate location and the boarding time, neither of which had changed in the 90 minutes since my brother and I had arrived at the airport.
Healthcare professionals frequently find themselves at the mercy of patients who do not follow treatment regimens, who miss appointments, and who do not bring necessary paperwork. Although it may be tempting to grimace, gnash your teeth, and mutter under your breath when confronted with such situations, truly excellent customer service calls for a pleasant disposition (like that displayed by the airport attendant), an acceptance of the inevitability that some customers will not uphold their end of the transaction, but also a hard look at how to do an even better job informing patients of their responsibilities.
Scott MacStravic
It is clear that employee health management (EHM) -- from worksite wellness to occupational health to disease management – is becoming an extremely popular strategy among employers. To paraphrase Winston Churchill: “You can count on employers to do the right thing…after they’ve tried everything else first.” (He said this about Americans.) Except for those that still think of their workforce as costs rather than assets, pay them as little and offer as few benefits as possible in order to keep costs down, employers increasingly accept that enabling employees to become and remain healthy is good business.
There have been literally hundreds of findings, in the US, Europe, South Africa, Australia and New Zealand, and even in a growing number of “developing” countries, that EHM produces significant financial benefits for employers. But employer ignorance of precisely how many benefits and how much net value they are getting from their EHM investments is still the rule, rather than the exception.
A recent study involving 242 large employers, for example, found that 75% offered some kind of EHM program to their workers. But only 38% of those who were investing in EHM had even attempted to measure their ROI from their investments, and that minority looked only at reduced healthcare costs as their sole source of return. [K. Capps & J. Harkey “Employee Health & Productivity Management Programs: The Use of Incentives” IncentOne.com 2007]
A larger study, by the International Foundation of Employee Benefit Plans, involving 454 employers in the U.S. and Canada, found 62% offered wellness programs for their workers, with another 15% intending to do so. They cited potential benefits such as improved employee health, higher morale, lower medical costs, reduced absenteeism and turnover, and improved productivity. But 41% said they didn’t really know what benefits they had gained so far, and 87% did not know what their ROI was. [J. Dresang “Exercise May Be Good Business” Beacon Journal July 9, 2007 (www.ohio.com)]
Based on published reports by employers in the U.S. and U.K. and the EHM providers they have hired to conduct EHM initiatives, the results achieved include at least the following kinds of positive impact:
Despite, or perhaps because of this long list of proven benefits, I have yet to see a single published report that includes measures of all of these effects. The vast majority deal with a minority of these effects, often only one, usually reduced healthcare costs. Yet studies that included both reduced healthcare and labor costs (usually absenteeism and presenteeism costs) have reported that the labor costs range from two to five times as great as healthcare costs. Any evaluation that omits labor costs is likely to vastly underestimate the full value of EHM interventions, and lead to making the wrong decisions about whether to continue, add to, reduce, or discontinue EHM investments.
If Ignorance Is Bliss, ‘Tis Folly to be Wise?”
While the blind faith of what appears to be the majority of employers investing in EHM is admirable, and probably justified, it is a poor basis for making decisions. Without accurate, precise and credible measures of ROI, employers have no sound basis for decision making. This means they not only don’t know whether and how much to invest, they do not know where are the best opportunities. If they measure only healthcare costs as the problem and results achieved, for example, they will tend to invest in chronic diseases affecting perhaps 3-5% of their employees, while ignoring the rest where health-related productivity and performance impairment may be caused by totally different problems.
For example, among the productivity impairment factors identified by employers worldwide are conditions and behaviors such as:
These conditions are rarely identified as direct causes of major medical/surgical costs, but they are strongly linked to high levels or reduced performance at work, as well as absences. By contrast, most of the major chronic diseases that are major causes of healthcare expense are not major factors in productivity and performance, simply because they affect relatively few people. In fact, the generally low levels of coverage for medical treatment/management of mental/emotional problems means that these are rarely included in “disease management” efforts when reducing medical costs is the sole focus.
One study found that the absenteeism/presenteeism costs of such problems were 11.8 times greater than medical costs for such problems. [J. Collins, et al. “The Assessment of Chronic Health Conditions on Work Performance, Absence and Total Economic Impact for Employers” JOEM (Journal of Occupational and Environmental Medicine June 2005] Prevention of such problems could save all these labor costs, while management thereof should save a large portion thereof.
Healthcare organizations should be among the leaders in both investing in and evaluating EHM results. They are under constant and continuing pressure to reduce their operating costs, which EHM can do, significantly and even dramatically. They are in a chronic and worsening labor shortage situation, which improvements in productivity can greatly reduce. They are paid more for good performance, so can afford better than most to invest in EHM initiatives that improve workforce performance. And they cannot afford to invest in anything less than the most promising and rewarding EHM initiatives in terms of ROI.
Moreover, HCOs are increasingly becoming involved in EHM as a revenue-generating sideline or hedge against the increasingly dismal revenue vs. cost realities of their sickness care missions. Whether HCOs compete in the EHM market, there will be plenty of other “vendors” specializing in EHM that will be serving the growing market therefor. By competing effectively, HCOs can benefit from the reduced sickness care expenditures that will inevitably result, instead of merely suffering from this reduction.
Moreover, because the biggest factors in reducing employee productivity and performance are not large factors in driving sickness care costs, at least in the short run, HCOs can invest in EHM for other employers without expecting dramatic reductions in the sickness care expenditures they now depend on. And because EHM saves employers money, instead of costing them money, they can afford to be far more generous in paying for EHM than they and the insurers they contract with when paying for sickness care.
But the only way HCOs can successfully compete in the EHM market is to become masters of measurement and evaluation of the results achieved. It makes total sense for them to master these challenges rather than relying on blind faith as is now so popular, since they cannot afford to achieve less than optimal results in their internal EHM investments. And with so much riding on pay-for-performance revenue from payors, measuring employee performance should follow naturally, making such results measurement that much easier.
While improving employee health is by no means the only or necessarily the best way to improve employee performance, it is clearly one of the better ways, and has the potential to deliver significant positive ROI for HCOs that invest in it optimally. And if HCOs cannot be better than average, at least, when it comes to managing health, they should be ashamed of themselves. All that is needed is that they become better than average, preferably at the top of the list, in measuring as well as managing EHM results.
As current and potential additional revenues increase--from pay-for-performance (P4P) arrangements with employers, insurers and governments--the advantages of internal use of P4P systems for compensating employees grows accordingly. To this is added the potential benefits of internal P4P measurement and compensation as elements of both employee health management (EHM) and integrated, value-based benefits management as separate, though related initiatives aimed at improving workforce performance.
While the advantages are great, there can be no question that there are also internal barriers and costs, both financial and managerial, for internal P4P. These include, but are not limited to:
Costs of P4P Measurement and Management
Workforce productivity and other dimensions of performance are not easy to measure in healthcare organizations (HCOs). Even in industries and jobs where individual output is easily measured, the P4P system adds to operating costs compared to existing hourly wage or salary methods. And for jobs where output and performance have not been measured, the challenge of measuring performance, on a team or individual basis, will add significant costs. Fortunately, there are many well-tested and validated methods for employee self-reporting of productivity, and performance on at least a team basis should be facilitated by overall efforts to measure and improve performance already underway.
Numerous software systems are available for performance measurement and management, as workforce performance management has become a major focus in most industries. Any Google search will yield hundreds of references on the subjects, and links to vendors such as SAP.com and Softscape.com. And costs of measuring and managing P4P systems are generally far lower than the benefits they deliver in terms of added performance and workforce value.
Added Compensation Costs
By intent, P4P systems should increase workforce compensation in two ways. First, because they tend to improve workforce performance, they will increase overall compensation as a result. When a windshield repair firm switched to P4P from hourly wages, it achieved a 44% increase in productivity in the first year of the new system. But overall workforce compensation increased only 10%, yielding a 34% “profit” that easily covered the added costs of both compensation and the measurement/management system. [E. Lazar “Performance Pay and Productivity” American Economic Review 190:5 Dec 2000 1346-1361]
The second cause of added compensation is the tendency of internal P4P systems to improve the “performance balance” of the workforce. Such systems tend to promote retention of high-performing employees, while prompting the departure of low-performing (and therefore lower-paid) employees. In the windshield repair firm, turnover among high-performers decreased by 21%, for example, while it increased by over 10% among low performers. This would indicate that on average, the firm will end up with more high performers, and fewer low performers, over time. This will increase average compensation per worker, but with even higher performance and value per worker, hence higher ROW.
Turnover Costs
During the time that more low performing employees are leaving, there will be higher turnover costs. On the other hand, with clear identification of which are the high performers, organizations should be able to identify which personal characteristics best predict high performance, and improve their recruitment of high performers, further improving the mix of high vs. low performers, and thereby the overall performance of the workforce and the organization.
Personal Costs to Supervisors and Managers
There are likely to be some personal costs with P4P systems as well as financial costs that are offset by savings and revenue enhancement from improved worker performance. For one thing, employees will learn how valuable they are to the organization, and may press for even more compensation, beyond what the P4P scheme allows. When the windshield repair firm employees learned that their productivity increased by 44%, while their compensation increased by only 10% on average, and 28% at most, they might have pressed their supervisors for a higher “share” of the gains.
For another, when the true value of employees is known, their input and feedback increases in value to the organization. When their feedback indicates low satisfaction with or ratings of their supervisor, and of other managers, for that matter, the organization may listen more and respond in ways that do not help the supervisor and manager as they see it. More supervisors and managers may join the ranks of “turnover” employees as a result.
And, of course, once there is an objective performance measurement system, supervisors and managers will lose influence in overall performance rating, promotion and raise decisions, as the P4P ratings mix with, or perhaps supplant those of supervisors and managers. They may even find it more difficult to be credited with what they think is their fair share of credit for their employees’ performance, particularly if employee ratings of their performance are low.
There is no way to argue in the abstract that P4P systems will produce a permanent and positive impact on healthcare organizations. It all depends on what kinds of systems are put in place, and how both managers and employees respond thereto. But given the known positive impacts of P4P, and the necessity for HCOs to reduce their costs wherever possible, while improving their quality and safety, to say nothing of customer satisfaction and revenue performance, it seems likely that internal P4P systems will be tried, and we will find through experience whether the overall benefits are worth the overall costs.
Scott MacStravic, PhD
It can be argued that healthcare marketing, as an accepted and common part of the operations and budgets of healthcare organizations (HCOs) is about thirty years old this year. If there was an “official” beginning, it was probably the first-ever national conference on the subject in Orlando, Florida in October of 1977, sponsored by the American Hospital Association and its Public Relations group, since it had no marketing group at the time.
That year was also the year the first book on the subject was published, with the imaginative title of “Marketing Health Care,” published by Aspen and written by yours truly. There had been a few articles published on the subject, more often by academics speculating on the potential, but one or two by practitioners who were trying it out. It was certainly in an incipient phase, with few hospitals and virtually no physician practices active in anything that could be called marketing efforts. The very idea of marketing, mainly as advertising, had been condemned by the American Medical Association.
When I began my own marketing consulting, since I was, at the time, an “academic” myself, though encouraged by the Medical College of Virginia where I taught, and permitted to engage in consulting, it involved mainly modifying the way health care was delivered. The hospital at MCV, for example, offered outpatients two appointment times each day, one at 8:00 AM, and the other at 1:00 PM. Patients who arrived any later than 7:00 AM were doomed to wait many hours before being seen, while those who arrived in the afternoon might wait even longer, depending on how many were left over from the morning.
My first marketing consulting engagement was with a hospital that had innovated by opening its own primary care center, fifteen miles north of its facility, with the idea of “capturing” the patients living in that community as potential hospital patients. It was having trouble, however, attracting and keeping patients. By first making sure that the physician it hired would actually begin seeing patients at the times they had appointments for, vs. the average of one or two hours later as had been the case, and having one or two employees park out front so people could see the practice was actually open, as well as conducting patient satisfaction surveys and responding to feedback, the practice was effectively turned around. The hospital eventually created a network of such practices in its main service area, and both practices and hospital did very well, even with minimal advertising.
Back then, hospitals and physician practices were essentially the opposite of “patient” or “customer” centered; they operated for quality, efficiency, and physician’s convenience, with patients expected to show up, wait as long as needed, and do what they were told. But when a few initiated even simple improvements in how customer-friendly they were, their competitors were virtually forced to join in, often reluctantly and slowly to be sure, but eventually, marketing became an almost universal element in HCO operations.
Most of the early emphasis was on promoting patient satisfaction, learning what it took to attract and retain them, as well as on physician relations, since most hospital patients came from physician referrals or direct admissions. Advertising was a nasty word, at the time, to Medicare, for example, that would not accept advertising costs as reimbursable. Physicians almost never advertised, and even in 1990, when I offered a well-attended seminar on marketing to physicians on the hospitals’ medical staff where I was VP of Marketing, there were none that either surveyed their patient satisfaction or did any advertising then.
I was lucky, since the CEO I worked for expected me to demonstrate ROI from marketing investments even then, and because we were able to do so. The rest of the senior executive staff were happy when we could use projections of increased revenue, resulting from physician relations and advertising efforts, to use rather than the usual budget cuts when the annual budgets were prepared. Recently, healthcare marketers are being expected to demonstrate ROI for everything they do.
But marketing has become more of a competition with rivals to capture a larger share of what may end up being a declining market. There seems to be a “critical mass” of employers, insurers, governments, and consumer advocacy organizations moving toward preventing and managing disease and injury, rather than just waiting to treat it in increasingly expensive ways. And hospitals have serious competition from physician-owned freestanding ambulatory surgery centers, diagnostic imaging centers, and specialty hospitals taking away too many of the profitable patients out there.
The move to make hospitals look more like resort hotels, with huge gardens, inside and out, gourmet meals, concierge and valet services for patients, etc. reflects the “inflation” in this competition, while payers are everywhere trying to reduce their payment obligations, and consumers becoming that much more difficult to collect from. Meantime, many hospitals are understaffed for the patients they are already treating, and the growing shortage of skilled healthcare professionals is threatening the clinical quality of care.
To me, it seems that too much of marketing in healthcare has been tactical, trying new tricks to sell more of the same services, rather than strategic, looking at new and different ways of doing business. I have seen numerous writers and vendors, for example, recommending that hospitals strive for better relations with employers, so that they might steer more of their workforces to the hospitals’ services. Contrast that tactical approach to the strategic one of taking on the challenge of enabling employers to reduce their healthcare and labor costs, improve their productivity and performance vial proactively managing their employees’ health.
Marketers could be beneficially employed as major contributors to hospitals’ own efforts, as employers, to reduce their healthcare and labor costs, improve productivity and performance. While some additional revenue is available from payers who are willing to pay bonuses for better sickness care, there is immensely more generosity likely if hospitals can help payers reduce their labor costs in general, and improve their own performance. Marketers have always been charged with championing the interests of customers, but when they are limited to championing only the current, tactical interests of hospitals, they are severely limited.
In the next thirty years, I feel certain that there will be dramatic changes in healthcare, and in marketing that serves the interests of healthcare customers and providers. I miss being part of such changes on a day to day basis the way I was in the first thirty years, but I will enjoy at least writing about them as long as I can.
James Unland, President, The Health Capital Group, ChicagoTom Campbell, Partner, Baker & McKenzie LLP, Chicago
On August 6, 2007 the full Federal Trade Commission (FTC) released its decision following an appeal by Evanston Northwestern Healthcare (ENH) of the Administrative Law Judge’s (ALJ) October 2005 ruling that had ordered ENH to divest itself of Highland Park Hospital, a hospital it had acquired in 2000 and substantially improved. The FTC had issued its original complaint on February 10, 2004. alleging anticompetitive behavior under Section 7 of the Clayton Act.
The FTC’s August 6, 2007 decision, written by its Chairman, essentially upheld the ALJ’s 2005 decision but, rather than require a divestiture, seeks to compel ENH to implement a completely separate hospital contracting procedure in that payors would be able to negotiate discreet rates with Evanston Hospital as opposed to Highland Park Hospital. The Chairman of the FTC wrote:
In this case, the transaction eliminated the pre-merger price competition between Evanston and Highland Park, as well as the MCOs’ option of contracting with one hospital but not the other. We can seek to remedy this competitive harm by requiring ENH to divest Highland Park or through injunctive restraints. After careful review of the record, we have determined that this is the highly unusual case in which a conduct remedy, rather than divestiture, is more appropriate.
In its press release of August 6, 2007, ENH quite understandably expressed delight that the FTC was not requiring the divestiture of Highland Park Hospital, stating that the “FTC ruling keeps Evanston Northwestern Healthcare intact.” However, make no mistake that the Chairman’s use of the term ‘highly unusual’ means that the FTC does not intend to give hospitals a blanket pass when it comes to divesting previously acquired entities; the odds are that future rulings of this type will require a divestiture. Moreover, a close look at the ruling itself is quite troubling in terms of both the ruling’s content and possible future FTC actions.
The prosecution of this merger challenge was controversial because it came four years after the transaction had been consummated and because there are so many alternative hospitals in the Chicago market that it is hard to see how the FTC’s theory that the hospitals gained market power by merging could be sustained. The Commission’s finding of illegality rests on two principal modes of proof: First, the Commission gave considerable weight to the testimony of managed care payors who said that Highland Park was an alternative that permitted them to threaten to exclude Evanston from their networks. This relied on opinion testimony with virtually no examples of past conduct where MCOs had in fact refused to contract with one or the other of the merging parties to bargain for a better deal.
The other principal basis for finding illegality was the analysis of the price increases that the merged hospital achieved after the merger. The opinion of FTC Chair Deborah Majoras gave considerable weight to the analysis and testimony of the expert retained by FTC Staff Counsel, Deborah Haas Wilson who examined the magnitude of price increases at the merged hospital and compare them to the magnitude of increases at other hospitals.
This approach to proving a hospital merger illegal has drawn fire from commentators. The price study did not consider whether the increased ENH prices were above competitive levels. It just identified a greater increase at ENH than at other area hospitals. Critics of the decision have pointed out that the antitrust laws are aimed at preventing the exercise of market power which means charging prices above competitive levels. That proof seemed to be missing in the record. (Speeding tickets are handed out for exceeding the speed limit, not for how fast one accelerates to reach the speed limit.)
The Majoras opinion found that the merged hospital would have market power and identified the harm to competition as resulting from unilateral effects as opposed to coordinated effects. In other words, in her view, the merged hospital by itself could control prices in the market place or exclude competitors. It did not need to collude with other market participants. To reach this conclusion the Majoras opinion had to discard the finding of the ALJ that “the four non-ENH hospitals in the geographic market would have the ability to constrain prices at ENH, either now or in the future, and could be utilized by managed care organizations to create alternate hospital networks.” The ALJ was referring to Lake Forest, Advocate Lutheran General, Rush North Shore and St. Francis Hospitals which he included in defining the geographic market in which ENH competes. Unlike an appellate court reviewing a trial court’s decision, the Commission does not need to give deference to the ALJ’s findings of fact. Instead the Commission can reach into the record and make its own findings and disregard what the ALJ decided. While the Commission’s procedures permit it to refind the facts, it is difficult to understand how it can come to the exact opposite conclusion from what the ALJ concluded based on the same record.
It turns out that a few days after the February 2004 filing of the FTC complaint, an FTC official addressed the Chicago chapter of the HFMA (the First Illinois Chapter) thanks to the efforts of the dynamic program chair, Elaine Scheye. This official, Mr. Jeffrey Brennan, stated in reference to the string of previous losses by the FTC, “I think it’s fair to say that there are many on the Agency’s staff who believe the Government should have won some of the prior hospital antitrust cases,” going on to express clear frustration and a determined desire to win a hospital case.
Many of us at that Chicago meeting concluded that the FTC would invent new ground rules and then pursue the ENH case on the basis of those ground rules. That is exactly what has happened. Space does not permit us to critique the reasoning of the FTC exhaustively item by item. A few general points, however, can be made along with an exhortation to CFOs and hospital attorneys to read the actual ruling or detailed summaries of it:
The CEO of Evanston Northwestern Healthcare indicated that ENH may or may not take their case to the federal courts on appeal of the FTC’s decision, acknowledging that they have already spent considerable time and resources. He added, however, that the entire approach by the FTC from 2004 through the present should be very concerning to all hospitals. We agree, and we encourage top managers and hospital legal counsel to take these developments seriously and to study the FTC’s decision in this case.
The concept of employee benefits enjoyed a major boost during World War II, when the government froze wages, but permitted employers to use benefits to promote recruitment, morale and retention. Since then, the costs of benefits, particularly health benefits, have risen exponentially, while their value has largely remained unexamined. This is changing, as two developments converge: 1) “Value-Based Benefit Design”: and 2) "Integrated Benefits Management.”
Jack Mahoney and David Hom, at Pitney Bowes, have made the case for both in two books: Total Value/Total Return 2006 and BeneFIT Design 2007, both published by GlaxoSmithKline. They cited the fact that employers spend millions, even tens and hundreds of millions on employee benefits, yet normally fail to do even elementary analyses of their value and return on investment (ROI). While their focus in both books is mainly on health benefits, what is true for health is generally the case for the total benefit packages that employers offer, as well.
The first question that arises in considering and evaluating benefits as investments is where to look for returns. The breadth of possible benefits is suggested by the authors when they wrote: “Healthy people have higher productivity and are happier on the job, and this shines through to the way they deal with customers and fellow employees.” (fourth page of “Foreword” in Total Value/Total Return).
As the authors describe it: “Your people create your competitive advantage. All your products and services are a reflection of their creativity and execution. When our people lose effectiveness, we lose customers.” (p. 1 of Total Value/Total Return) When any one employee is ill, for example, this can have widespread negative impact on teams, units, departments, and the entire organization. The total benefit package, including retirement, vacation/holidays, tuition aid and other career development/job training efforts, add to the value of work to employees, and the value of their performance and retention to employers.
Within the organization, it is often unclear whose job responsibility/accountability it is to continuously improve workforce performance. Unless the organization measures employee performance, it cannot even know if it has problems and opportunities therein, much less manage it.
Healthcare organizations (HCOs) have a special reason to measure and manage employee performance, since they increasingly gain added revenue if their performance is good enough to qualify for “pay-for-performance” (P4P) bonuses offered by third-party payers. Moreover, as HCO performance is increasingly published or made available for online access by consumers when choosing a provider for care, HCOs have even another reason to measure and manage their performance.
The starting point is clearly to measure employee performance, at whatever combination of individual, team, unit or departments is both feasible and useful. Then, determining the impact that employee unhealth has on performance as a problem, and employee health investments have as a solution is at least possible. And once performance measures are available and used, examining the entire benefits investment to determine its ROI becomes at least possible.
There is a rapidly growing body of literature, from both the “scientific/academic” community and the “practical/business” community, describing what has already been accomplished through health and benefits management. HCOs should ideally be adding to, as well as gaining from the body of proven results and returns that are being achieved throughout the business world. The two Mahoney/Hom books are a good place to start.
Extended Business Office Perot Systems Extended Business Office solutions can help you achieve a high-performing revenue cycle through strategic collaboration with your team. 800-659-8883 revenue cycle solutions www.perotsystems.com/revenuecycle
Perot Systems Extended Business Office solutions can help you achieve a high-performing revenue cycle through strategic collaboration with your team.
800-659-8883
revenue cycle solutions
www.perotsystems.com/revenuecycle
