Wednesday, April 23, 2014

Rethinking Clinical Productivity Models

Is it just me? Or, has there has never been more of a time of strain for productivity in healthcare than the present? I think we're all in this together. Also, I think across the board, we can all agree - measuring productivity tends to alienate things like quality care, patient/customer satisfaction, protecting market value, expanding market share, goodwill, etc.  And yet, we have to measure productivity as it directly affects the bottom line - AND - if we don't turn a profit, then we won't have the finances to stay in business to provide the care we aim to give.

I think it's high time to rethink our clinical productivity models.

Rethinking Clinical Productivity Models

Straight Units Model
Pretty straight forward - how many 15 minute, units did you see/bill for today? I think this the most common form of tracking productivity in the clinical world. Some SNF's just spin it down to minutes of direct, billable patient care versus the total time spend in facility. Either way, a percentage is held as standard and everyone is measured against this. Sound familiar? Yep... Is it working? Meh..

Zoned Unit Model
I've seen this emerging in both thought and implementation for inpatient settings, primarily for acute care. The idea is that certain zones of patient care require more time, effort, and unbillable time. These zones then are appropriately given booster points in addition to the units billed. I think this works well, however, I don't think this actually accounts for the "easier" cases per setting.

Base Pay & Commissioned Model
This is something that is getting some attention in the outpatient settings. The general function is that each clinician is given a base rate as a fixed cost to the clinic itself. However, each service rendered and billed for, the clinician will take home a piece of that pie earned. What this essentially does is functionally eliminate the "need" to attend to productivity since the cost to the clinician is shared to the cost of the site. If the clinician isn't very efficient, they won't be making much money. The only skin off the back of the clinic itself is that fixed cost in clinician base pay. However, if the clinician *is* efficient, then much money is being made for both clinic and clinician. The weak spot here is that fixed cost... if an army of clinicians are all less than efficient, the revenue stream will be weak and the fixed costs will continue to swamp the profit margin. However, the same thought exists in kind by which inefficient clinicians will self-select out of this type of system due to insufficient income on their part.

Weighted Service Model
I see this as a very popular model for service based settings, most popularly in home health. Most commonly, a base rate of pay is established with each clinician. This base rate is used to calculate pay for each service performed on behalf of the clinic, site, setting, department, and/or agency. To balance this out, service types are weighted a determined (and assumingly fair) ratio by which the service rendered and billed for is appropriately matched to that reimbursed to the clinician. Many times, basic follow-up visits are weighted between 0.75 and 1.0. Examinations, evaluations, specialty visits are more heavily weighted at 1.5-3.0. Each firm will weigh their services differently, of course, nevertheless each clinician then must perform services to make any money. The effect is similar to the Based Pay & Commission Model, and hence, holds the same weakness - that darned fixed cost factor... unless employers decide to use a productivity dumping point by which benefits are no longer eligible to those who do not make the mark. It's getting increasingly popular... for better or for worse?

Weighted, Shared Cost/Benefit Model:
Now, I'm not exactly talking partnership, per se... that is another post of its own. However, I do mean to suggest that productivity tends to be optimized when the productivity directly affects the financial health of both firm & staff, together. In my humble opinion, the weighted service model is quite clever; it makes things "fair." However, I feel that the fixed cost risk of this model poses a less than controllable problem, that is, unless you dump people's benefits below a certain benchmark of performance - not exactly cool. Philosophically, I feel that financial risk factors founded in human behavior are best tempered by positive reinforcement and negative punishment.

So how would this work functionally? I think that the weighted model of staff pay is still a very valid and reasonable way of compensating staff. It is the benefits that makes or breaks the financial health of any department, firm, or organization. Addressing this, having staff share the cost & benefit of their... benefits... (I should've thought that sentence structure out, it was too humorous not to keep) -- could be an option to consider. Costs that do not meet budget could possibly yield a financial structure by which associates withhold their own pay to keep the firm financially healthy. After all, isn't it better for a firm to stay open so that everyone can be paid a bit now, and, continue to get paid later... than to pay out now and close down tomorrow? Just a thought.

And, yet! The opposite should be true. Should profit margins exceed projections, shouldn't staffed employees share in this? Perhaps, at least a part of this piece of this slice of pie? If a publically traded company is being discussed, well... that's another mess. However, I still think this model can be (and has been, in other industries) implemented in the clinical environment. This model gives more and more compensation to staff who are willing to help bring in the revenue. This model also negatively punishes unproductive behavior by contracting as such that staff must assist the financial health of their own jobs... revenue that would otherwise go to their own bank accounts which are withheld - transferred back to the firm such that their jobs remain operationally secure. I'm sure some mathematician is more than able to bring forth some pro-rated, shared cost/benefit formula per FTE and weighted service group to make this model more numerically equitable. Nevertheless, it is the conceptual elements of this model that finds interest.

Should all hired employees be privy (or subject, depending on your point of view) to this model? Certainly not. I think this is best for full time employees, and, even better for clinicians whose services are specifically reimbursed for. In effect, this model pays employees for what they earn; if they do not earn enough, then they pay back a percentage of their lack of contribution. If they bring in more than what would otherwise be projected, they get a percent of that margin. Fair enough, yes?

Considerations for Fixed Budgets
Just to name a few: capitated systems, center-satellite models, hospital based multi-setting department - they all these tend to work with a fixed budget with the usual command from on high... "Do more with less!" Nevertheless, one of the better ways to deal with this is to utilize a modified zone-weighted productivity system. This is particularly useful in acute care by which different units and associated diagnosis groups typically yield a different demand on the labor and involvement of the clinical staff per patient.

The best suggestion I can offer is the use of incentive. If there is no incentive to work the tougher zones and see the tougher populations, then you can't assure for efficiency nor quality of care. With such elements accounted for, a little Nash-Equilibrium in the positive would tip this equation into something truly interesting. This requires buy-in from upper management. If a budget is set and expectations are exceeded, the unused resources should reflect as a bonus to be given to those who helped make it happen as well as for the group as a whole. However, this also requires buy-in from upper management not to magically shrink the budget the following year since the team was able to do more with less to begin with.

The financial strain on these departments exist in a manner by which much work needs to be done with a fixed pool for resources. And thus, if the incentive exists for the entire team to benefit from working together more effectively, and, being held accountable in a fair manner (and rewarded as such via bonuses) via an agreed upon system, less loafing is sure to occur. Moreover, no one would escape the negative attention if one were to be inefficient in a group setting where financial pressures are mutually tied. This would certainly yield some self selection to drop out due to social pressures. However, this would also naturally develop a very strong and high performing team to where mutual benefit is a constant driving force to foster positivity in the workplace - the better one does, the better we all do!


Some Closing Thoughts
Productivity standards are in place to protect the financial health of a department, firm, and organization. Financial health means stable compensation to employees. Making for such an environment requires a robust revenue stream into the firm at large. However, many productivity models don't exactly measure employee contribution/financial value in the flow of operations.

In a time when healthcare economics are getting tighter and tighter; a time when eliminating costs and scrutinized medical necessity seems to have become a virus of financial hazard upon human health, I think that a careful rethinking of clinical productivity models can help temper this precarious situation and refocus our attention on what healthcare truly is... what it can be, and, what it should be.

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