Should Nurse Leaders Accept Productivity Measures?

Mention “productivity measures,” and many nurse leaders will clench up, ready to defend their FTEs. “They think it’s evil,” says Jill Fuller, PhD, RN, chief nursing officer of Prairie Lakes Healthcare System, who thinks many nurses still associate labor and productivity management with the downsizing agendas of the 1990s. A firm believer in productivity standards, Fuller thinks it is high time this valuable tool got an image makeover among nurse leaders.

In the July-August issue of The Business of Caring, Fuller and other experienced leaders urge nurse executives and managers to be more open minded about using productivity management to rein in labor costs. They also urge finance leaders to collaborate with nursing to develop a productivity management approach that works for both the clinical and business leaders of a hospital.  

Here is some advice pulled from The Business of Caring article:

Embrace fiscal responsibilities. “CFOs need to help nurse leaders understand that they have a great responsibility for the hospital’s fiscal well-being … Nurse salaries and benefits can account for close to one half of a hospital’s entire labor costs,” says Daniel Heckathorne, CFO and associate administrator for finance, Pioneers Memorial Healthcare District, in Brawley, Calif.

Ensure nurse input. The finance and nursing departments at Saint Thomas Hospital worked together to create bi-weekly productivity reports that are useful to clinical managers in managing their volumes. The new reports included volume-adjusted productivity and staffing information, such as patient days and equivalent observation days, target and actual hours worked, overtime and agency hours, and variances.

Aim for simplicity. Consultant Paul Fogel believes that productivity monitoring reports should be simple enough for staff to understand quickly. “Nurses aren’t against monitoring systems--after all, they use staffing grids every day. But the whole area of productivity management needs to be cleaned up so that we have simplicity."

Identify realistic benchmarks. Finance needs to work closely with nurse leaders to come up with productivity targets that are reasonable. “If a department is really having a hard time meeting a productivity standard, we’ll look at what’s going on,” says Fuller. “For example, with med-surg, we decided there was work intensity around observation patients, because they don’t show up on hospital systems as a head in the bed at midnight. Only inpatients show up that way. So we found a way to adjust the system so they got a credit for observation patients.” 

Make managers accountable. Fogel is a big believer in making managers more accountable for meeting productivity standards--as long as the manager had a strong say in setting the standard.

Quality and cycle time count. Nurse leaders need to establish and track a variety of measures that provide a bird’s eye view of how well a unit cares for patients and staff. These measures should cover the various dimensions of quality, including cycle time, clinical effectiveness, employee satisfaction, and productivity.

Prairie Lakes Healthcare System in Watertown S.D., is a case example of a kinder, gentler approach to managing labor hours and dollars--and the approach has paid off for patients, nurses, and the bottom line. The hospital’s 52-bed medical-surgical unit used to run about 10.2 hours per patient day (which includes, nursing, clerical, and management hours). It took about five years, but the unit recently met a daunting productivity benchmark of 7.5 hours.

“We decided we were going to do less with less. In other words, we decided to get rid of a lot of wasteful practices and processes,” says Fuller. Senior management empowered frontline unit staff to identify and implement ideas for reducing unnecessary work and streamlining processes. In addition, the hospital invested in an integrated information system and electronic medical record, medication servers, and other upgrades that helped reduce workload and improve patient care.

The med-surg unit has seen labor expenses related to inefficient staffing decrease. Yet the nurse-to-patient ratio has remained the same: 1:4 or 5 (depending on medical severity). The nurses on the unit would argue that patients now receive better quality care, which is reflected in higher patient satisfaction scores. Nurses are also happier, with job satisfaction skyrocketing to 83 percent in 2006 from 46 percent in 2000.

Click here to read this entire article from the July-August issue of The Business of Caring, which is a special issue on nurse productivity. To access the entire July-August issue—as well as past issues of this award-winning newsletter—subscribe today for yourself or your nurse leaders.

Learn more about motivating clinical managers to improve productivity at HFMA’s Fall Seminars, which include a session on “Superior Productivity: Controlling Your Labor Costs.”

Every issue of HFMA’s newest newsletter, Healthcare Cost Containment, provides advice on reining in labor costs. Subscribe today to access the August issue, which includes six strategies to consider when undergoing a labor productivity initiative.

Visit HFMA’s web site for more answers to pressing healthcare business questions.

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