From interviews conducted with senior chief financial officers in the not-for profit hospital sector, it is abundantly clear that a fear of tackling productivity projects exists among some hospital leaders. Often, there is a reluctance to pursue a formal productivity assessment and coordinated program to improve labor productivity.

Among the possible causes of fear and reluctance cited are the following:

• Productivity has a richly deserved bad reputation based on failed attempts that executives have participated in or have heard about (e.g., the slash-and-burn approach).
•  Hospital leaders are often in a precarious position. High turnover, short tenure, and concern about trustee, leadership, and employee reactions can make even fearless CEOs pause.
•  Hospital leadership often assumes that trade-offs are necessary due to potentially competing goals (e.g., decreasing labor costs will lead to decreased quality and patient satisfaction).
•  Hospital leaders are concerned that if an objective assessment of hospital productivity reveals significant improvement opportunities, the result will be interpreted as a failure of management.
•  Many hospitals have an existing productivity measurement system in place and, in the absence of an objective assessment, feel that productivity has already been maximized.
• In the context of a perceived nursing shortage, many executives are reluctant to pressure nursing productivity for fear of losing nurses to competing hospitals.
•  In some highly mission-driven hospitals, an emphasis on productivity can be seen to be in conflict with concern for employee well-being.

How to Alleviate the Fear – Hospital Productivity

1. Respect for operational and strategic realities.

Any productivity target should be carefully tailored by leaders in individual departments. These targets are based on a thorough understanding of circumstances, strengths, and challenges within the department. Significant strategic initiatives that the hospital is putting in place need to be taken into account—for instance, expanding a cardiology program. Large organizational initiatives have definite consequences for all departments. This core principle of setting productivity targets within each department makes good sense to managers, whereas the establishment of arbitrary quartile or percentile targets is generally resented or dismissed by department managers.

2. Fair and all-inclusive.

Another guiding principle, and one that managers find to be reassuring, is that the process of establishing productivity targets should be fair and all-inclusive; that no sector or department should be left out of the process; that politics should not influence the setting of targets. While one or two individual departments may feel singled out by this principle, the vast majority of managers applaud it.

3. It’s not just staff cuts.

Although expense reduction is the ultimate goal, the credibility of the standard-setting process is enhanced by the stated willingness to add to staffing whenever it is indicated. There are also other payroll expense reductions that are not related to FTEs (e.g., overtime, premium, skill mix changes).

4.  Respect and genuine interest.

Really listen to your mangers’ concerns about issues in their departments. How could process changes assist them in meeting a reasonable target while improving value to physicians, staff, and patients? How can you help?

5.  Building trust.

Don’t be locked into a departmental standard for life. You will build trust with managers if you are open to changing a standard as new information develops, changes occur within the department, or new insights emerge.

6.  Support for “managing to the numbers.”

Provide tools and education to managers so that you are not only giving them the objective, but also the means of reaching the objective.

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For more information on tackling hospital productivity issues, call us a 1-800-241-0142 or email info@compassgroupinc.com for a free,  30-minute confidential discussion.

Read more:

• A Customized Approach to Healthcare Operational Improvement
• Productivity Improvements Yield Extraordinary Return on Investment