the labor management journey: from data quest to labor ... · •four pillars of success:...

© 2018 PROPRIETARY & CONFIDENTIAL | 1 TRANSFORMING HEALTHCARE TOGETHER®

The Labor Management Journey: From Data Quest to Labor Expense Conquest

Daniel Carcioppolo

National Director, Labor + Physician Practice Management Solutions

[email protected]

mailto:[email protected]


The Five W’s (and How!) to Establish a Workforce Management Program with Accountability


Who Is Interested in Workforce Management?

• Different Stakeholders for Different Reasons

Chief Financial Officer Chief Operating Officer Chief Nursing Officer

• Labor Expense

Reduction

• Interested in

Margins

• Bottom Line

• Interested in Volume

Increase

• Efficiency

• Improved Processes

• Optimizing

Resources

• Appropriate Nurse

Staffing

• Impact on Quality

• Does not always

care about CFO +

COO focus if

quality is being

affected


What is a Workforce Management Program?

• A structured, sustainable plan to create a culture change in your organization to improve

your operational efficiency and drive own your labor expense line item.

• Four Pillars of Success:

– Leadership Resolve: Buy in from all parties. From the housekeepers to the Chief Orthopedic Surgeon

– Education: Assessment-being mindful to where you currently are and open to a path to getting better. Sharing

the culture with your staff and educating them on why this is taking place.

– Workforce Management Tools: The use of data and systems to aggregate, collate and monitor performance to

ensure results

– Support: If you need help, get it! Set up a workforce management steering committee or council. Utilize labor

coaches in your areas.

• A quality Workforce Management Program takes these four components and consistently

works to elevate them.


Leadership

resolve Culture of focus,

commitment and

accountability

Workforce Management Program Model

Process and Tools

Support Assessment /

Training

Infrastructure

Project

Management

Value

Sustained

Improvement

Knowledge

Transfer

Workforce

management tools Productivity,

benchmarking,

accountability policies

and position requisition

Support Labor coach and

workforce management

committee

Education Training and

knowledge

transfer


Workforce Management Program


Where Should Workforce Management Programs be implemented?

• Entire Acute Workforce

• Employed Physician Practices

• Nursing Homes + Post Acute Entities


When Should Workforce Management be Considered/Implemented?

• Now is the time to build your sustainability for

the next 50 years


Why Should an Organization Consider a Workforce Management Program?

• External:

– Decreased Revenues as a result of ACA. Predicted impact was revenue annual increases

changed from +3% to +2.2%. This means less money coming into the hospital.

– Competitive landscape: if peers workforce management initiatives and are seeing the financial

reward, and you are not…advantage goes to them…more capital to invest

– Instability in healthcare environment:

• The two buckets of clients that traditionally sought workforce management initiatives were

the financially sick organizations who need labor costs reduced ASAP + strong financial

organizations who had money to spend

• More recently, we have witnessed the middle of the bell curve showing interest. Strong

leaders know the uncertainties of the healthcare environment could mean financial viability

is not guaranteed and want to be in front of future change.

• Internal:

– Layoffs

– Operating Margin shrink

– Offset lower revenues with lower costs

– Control Operating Expenses


How Should an Organization Create a Workforce Management Program?

• What is Not Recommended

• Subjective Approach, each organization will finds its own rhythm/path.

• What we are seeing that works

• TodayShort-Term Goal

– Low Hanging Fruit. Correcting overtime, aligning skill mix, staffing to volume

• Short-TermMid-Term Goal

– Novice Process Improvement

– Flexing Part-time/half-time staff UP instead of flexing full-time staff down

• Mid-TermLong-Term Goal

– Advanced Process Improvement

– Tracking steps

– Finding 7 sources of waste and eliminating

• Expectations at end of process

– Leadership

– Solution-oriented minds

Today

(Point A)

Short-Term

Goal

Mid-Term

Goal

Long-Term

Goal (Point

B)

Labor

Management

Program Launch

Identify Where

Performance

Stands Relative

to Peers

Identify Strategy

to Improve

Identifying Target

Performance for

Immediate Future

(End of FQ or FY)

Reasonable and

Achievable

Quantify Impact

Input into

Productivity as

Budget Target

Track

Consistently

Identify Next

Level Target for

Midterm (ex. End

of Next FY)

Reasonable and

Achievable

Builds Off of

Progress from

Short-Term Goal

Quantify Impact

Input into

Productivity as

Budget Target

Identify Long-

Term Target (ex.

Where Do We

want to be in 3

Years?)

Identify a Target

that is Aggressive

yet Achievable

This is a Target

that You Would

Like to Sustain

Long-Term

Achievement of

this Long-Term

goal Provides

Significant

Savings



• Case Study #1

• Health System X: Each department leader hired onto their role must agree to an

improvement target for their area and they have 6 months to achieve that target. They are

empowered with financial and process improvement resources to achieve their goal in the

period and given a blank slate. If they achieve their goal, financial incentives for this leader.

If they do not achieve this goal, they are placed back into a non-leadership role.

• Accept the risk/challenge when they take on the position

• Encourages “leadership” vs “management”

• Not at risk of losing work, but demotion is possible if criteria of position is not met



• Case Study #2

• Health System Y: “Workforce Management Constitution” . Department performance

juxtaposed to an external benchmarking cohort. Targets are then derived from current

performance:

– IF operating between 50th (median) and 75Th (lowest) quartile, you must target 50th (median)

– IF operating between 25th (top quartile) and 50th (median), you must target 25th (top)

– IF operating greater than 25th, maintain current performance as target

• Revisit each year for new target setting

• Discussions of value add variables at onset of setting targets



• Other Workforce Management Program Initiatives

• “Additional Cost Drivers/Skill Mix Opportunity”


Workforce Management Program Chasm


Leadership

resolve Culture of focus,

commitment and

accountability

Workforce Management Program Model

Process and Tools

Support Assessment /

Training

Infrastructure

Project

Management

Value

Sustained

Improvement

Knowledge

Transfer

Workforce

management tools Productivity,

benchmarking,

accountability policies

and position requisition

Support Labor coach and

workforce management

committee

Education Training and

knowledge

transfer


How to Aggregate Data in a Workforce Management Program?


Data Elements For Best Practice Workforce Management

• Acute + post acute internal monitoring + external benchmarking:

– Cost Centers

– Pay Codes Listings (regular 1, regular 2, overtime, holiday, etc.)

– Payroll Data by Pay Code + Job Code (Advanced Workforce Management includes by employee)

– Agency Contract Payroll Data

– CPT4 Data

– Charge Data

• If seeking acute + post acute external benchmarking:

– Facility Volume Data

– General Ledger Data

– MS-DRG Data

• Physician practice management:

– Billing

– Scheduling

– Payroll

– General Ledger

• Elements can be extracted from Payroll, Time & Attendance, EMR, General Ledger source systems through common reports.

• Daily, Bi-weekly, Monthly, Quarterly Extractions-Depending on YOUR organizational needs


Operational Efficiency Lower Labor Expense?


Module 1: Chief Financial Officer

Labor Expense Reduction: Labor

expense represents between 50-60% of

total OpEx (Operating Expenses)

Operating Margin: (Revenues-

Expenses)/Revenues

2017 2018 Δ

Labor

Expense $55,000,000 $50,000,000 -9.1%

Operating

Expense $100,000,000 $95,000,000 -5%

Ratio 55% 52.6% -2.4%

2017 2018 Δ

Revenues $98,000,000 $98,000,000 0.0%

Expenses $100,000,000 $95,000,000 -5%

OM -2.0% 3.2% +5.2%


Physician Practice Workforce Management


21

Why are hospitals acquiring physician practices?

Physicians may be seeking income certainty, relief from

billing hassles, security from healthcare reform, avoid IT

investments to satisfy regulatory requirements

Grow market share, increase referrals, leverage

negotiating power with payers, prepare for physician

shortage, accommodate payment reform (e.g. bundled

payments, medical homes, ACOs)

The New England Journal of Medicine estimated hospitals lose

$150,000 - $250,000 per year for the first three years they employ

a doctor!




• Physician Migration:

2012 2016 2017 2018 Future

Employed 25% 42% 48% 55%* 75%*

Private 75% 58% 52% 45%* 25%*

Per Becker’s Hospital Review:

• From July 2012 to July 2016, the number of hospital-employed practices

increased by 36,000 practices, reflecting a 100 percent incline.

• As of July 2016, nearly a third (29 percent) of physician practices were

hospital-owned.

• Between July 2015 and July 2016, the number of physicians employed

by hospitals increased by 14,000 nationwide. The percentage of

employed physicians grew by almost 11 percent during the same time.

*Estimates


23


Median loss for employing a physician in 2012 was $176,463

Market uncertainty and region variation exists regarding rate of future acquisitions

Why continue to

acquire?

• Downstream revenue

opportunity from

integrated network

• Control quality

Ramifications of

On-going Losses:

• Negative financial

impact on health

system/medical group

• Possible decreased

bond ratings

Post Practice

Acquisition:

• Costs increase ~32%*

(overhead, salaries, IT, office staff,

etc.)

• Productivity decreases

*Cited by 2013 American College of Physician Executives survey



PERSONA CHALLENGE

• Visibility to performance data of

owned/managed practices

• Data to engage physicians and practice leaders

for improvement

• Credible performance data

• Understand how physicians’ performance

compares to peers

• Detailed data to run an effective practice (ex.

RVUs by physician, E&M coding, procedure

utilization)

• Time for analysis, opposed to data collection

• Credible performance data

• Understand how their performance compares to

their peers

Heath System

CEO, COO, CFO

Practice

Managers

Medical Group

Leadership

Physicians

Financial Analysts

Who?


25

What can

we do to

reduce our

physician

losses?

How can we provide

meaningful data to

our providers and

administrators?

What,

specifically, is

causing our

provider losses?

Health system and medical group leaders need help

answering:

How can we

engage our

providers to make

improvements?



26


Well-managed medical practices significantly out-perform

less well-managed peers

Best performers

out-earned

peers >26% per

physician FTE

Best performers

RVUs per

physician FTE

>24%

Best performers

have lower

overhead costs


27

WHAT is Driving the Investment?


28


Entire Employed

Provider Practice:

183.0 Physicians

Emergency

Medicine: 16.5

Physicians



• Non-Clinical Provider Activity

• Clinical Productivity Relative to Compensation:

– Are there opportunities to generate more RVUs? More

Procedural RVU’s and less E & M? New Office vs.

Established Office visits?



• Billing Collections + Processes



• Payer Mix:

• Strategic Marketing (Below)

• Strategic Provider Acquisition



• Lack of Ancillary Services Credit

• Use of Payer Incentive Programs

• Payer Contracted Rates

• Strategic Provider Acquisition

• Support Staff Ratios


How Do We Get Results?

• Strong clinical leadership

• Good data

• Ability to compare

• Quality analysts who can standardize, automate and distribute reports


Thank you

Daniel Carcioppolo

National Director, Labor + Physician Practice Management Solutions

[email protected]

mailto:[email protected]

the labor management journey: from data quest to labor ... · •four pillars of success:...

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