A Phase 2 Consulting White Paper

Now a part of the Premier healthcare alliance

Ten Components of Successful

Clinical Performance Improvement
 TEN COMPON E N T S O F S U C C E S S F U L
CLINICAL PERF O R M A N C E I M P R O V E M E N T
I
n our first White Paper, “The Ten Components
of a Successful Hospital/Health Care Delivery
System,” Phase 2 Consulting identified ten ini-
tiatives we found always worked in troubled
hospital/system turnaround projects. The focus of
that report was to describe what was needed to quickly
achieve significant improvement in bottom-line results.
Critical to the successful implementation of those com-
ponents is achieving the buy-in of the hospital’s clini-
cal and financial managers. In this, our second White
Paper, we share how Phase 2 Consulting identifies and
evaluates the key components of successful clinical
operations, and show how having these components in
place can significantly remove barriers to achieving sus-
tained positive results.
1
Effective Leaders Are Often
Made, Not Born
Sound and effective leadership is critical to a
healthy clinical operation. Without it, optimal financial
performance is rarely achieved.
Phase 2 Consulting has conducted numerous interviews
over the years with senior management, staff, and physi-
cians at hospitals nationwide. Almost without excep-
tion, the health care professionals we spoke with agreed
that effective leaders share these personal and profes-
sional characteristics:
1. Extensive experience in their specialty field.
2. Highly developed mentoring skills.
3. The ability and strength of will to drive change.
4. Effective communication skills with respect
for and to staff.
5. Knowledge of industry trends and related specialty
fields.
In our role as management consultants, we are often
asked to assess a leader’s ability to identify, drive, and
facilitate change. In assessing successful leadership, we
often ask, “Do staff and peers respect the leader enough
to support the change?” If they do, we move on to
1
assessing a leader’s process improvement and planning
skills. However, when evaluating a leader’s ability to
perform on the job, the most important - and telling
- question is simply this: “Has the leader achieved real,
measurable results?”
Effective leaders are often highly visible to staff, res-
pected by peers, and skilled at facilitating change that
achieves positive results.
Leaders don’t get to their position by being sub-optimal
performers. The fact is, even the best leaders may lose
their influence or become overwhelmed when faced
with the task of affecting difficult but necessary change.
Many professionals in leadership positions do not pos-
sess the special skills they need to navigate political
land mines. More often than not, many talented and
highly qualified clinical managers are promoted to lead-
ership positions even though they lack the requisite
business management and mentoring skills necessary to
lead in times of upheaval.
The truth is, to be truly successful in their new role
within the organization, many leaders must be taught
and nurtured. The following are useful tools a health-
care organization can take advantage of to help improve
overall leadership performance:
Reassignment
A change of responsibility often re-energizes leaders
and has the added benefit of bringing fresh perspec-
tives and specialty experience to under-performing
business units.
One-on-one management coaching
Effective at the senior management and manager lev-
els, one-on-one feedback and coaching is an underval-
ued tool that fosters the skill of converting a process
into quantifiable results. It usually elevates not only
the performance of the individual, but of the entire
business unit as well.
 Change of personnel
Most leaders strive to succeed. However, if perfor-
mance continues to be sub-par a leadership change
may be the only option, even if it is the most painful.
If a business unit is in danger of being closed, often
the only course of action is to let someone go.
Extensive experience has shown that individual lead-
ership skills are critical to the successful performance
of any healthcare organization. Identifying leadership
deficits and taking steps to eliminate them will result
in dramatic and measurable change for the better.
To keep it simple, we have identified three indicators of
“optimal outcome performance” to help evaluate leader-
ship skills in an organization:
1. 90% or greater patient, physician, and staff satis-
faction.
2. Unit-specific quality indicators within acceptable
standards (e.g., waiting times/turnover/infection
rates).
3. Clinical business units perform within 1-3% of a
volume-driven budget.
Ask yourself:
Does the number of effective leaders I have correlate with
my financial performance?
Improve Decision-Making
2
With More Accurate Data
Making business decisions without reliable data
is, especially in today’s environment, a costly and
unforgivable mistake. Using available technology and
a few simple management practices, virtually any clini-
cal operation can improve decision making and deliver
optimal outcome performance.
A business unit requires the following in order to make
more informed decisions:
• Accurate and timely data.
• A mechanism for data analysis.
• A plan to utilize the information in daily operations.
• On-going evaluation of the entire data process.
A common complaint among managers is that they
don’t have the information they need to do their jobs.
Usually the opposite is true. Individual business units
usually have more than enough information. The prob-
lem is not knowing what to do with the data.
In the typical healthcare organization, a business unit
manager needs to keep four separate and distinct func-
2
tions running smoothly: finance and accounting, human
resources, clinical services, and customer services.
Effectively managing these functions requires the fol-
lowing data:
1. Volume trends.
2. Labor cost per unit of service.
(Total labor cost compared to total volume; charge trends.)
3. Supply cost (fully-allocated) per unit of service.
4. Average length of service.
5. Trending budget reports.
6. Productivity reports with periodic benchmark comparisons.
7. Payer mix.
8. Profitability by service line, quarterly.
9. Daily staffing patterns.
10. Customer satisfaction indicators.
11. Key clinical indicators.
If this data is readily available, thoroughly understood,
and well managed, it can be assumed that well-informed
business and operational decisions across all clinical
departments will result.
Unfortunately, too many business units do not adequately
value the collection, management, and analysis of data.
In part, this is because many perceive the process as
complicated and of little value (a good reason to keep
the tools simple). Here are a few steps toward creating
an environment in which both data and its use are prop-
erly valued.
• A good first step is to create a “productivity/financial
analyst” position to assist senior management in
tracking, supporting, and monitoring results.
• Second, clearly identify and communicate that the
business analyst’s function is to support the clinical
structure, consult with each department, provide
data/trends analysis, and educate department leaders
on how to perform their own analyses, as account-
ability should not shift away from the manager.
• Third, conduct monthly meetings to review depart-
ments with unfavorable variance trends. Discuss
action plans to get departments back on track.
• Finally, a critical component of improving the
quality of data collection and decision-making with-
in business units is to instill accountability for
success with managers.
Ask yourself:
How many of your clinical departments hit budget last year?
What kind of data do your managers have? What kind of sup-
port system is in place to assist with informed decision-making?
3
Effective Use of Management Tools Daily Staffing Grids Tied to Budgets
In many healthcare organizations, managers are Many areas have staffing grids, but often they are not
inundated with unreliable or outdated data, making tied to department/unit budgets, frustrating both the
it next to impossible to monitor operations and, more operations and finance departments. The usual scenario is
important, respond quickly to effect change to meet that staffing grids are not monitored for compliance and
budget and productivity goals. often ignored. An example can be seen in Table 2 below.
To optimize both the financial and operational results
of the organization, the management team should have
these tools at their disposal:

Bi-weekly Productivity Reports

These summary reports are especially useful for evaluat-

ing current productivity and spotting areas that need
improvement. Properly utilized, automated biweekly
reports can significantly reduce labor expenses and help
assure budget objectives are achieved.

These rarely used reports typically look like Table 1 below.

TABLE 1: BI-WEE K LY P RO D U C T I V I TY R E P O RT
DEMOGRAPHICS VOLUME STANDARD PRODUCTIVE FTE’S NON-PRODUCTIVE FTE’S NP% TOTAL FTE’S TOTAL SALARY DOLLA RS SAVI NG S
03 Target- Difference

2003 2003 % Budget from

Budgeted Targeted 03 03 03 03 Non- 03 03 Variance 03 budget vs.

Dept ID Name 2003 Productive Productive Budget Target Difference Budget Target Difference Prod Budget Target FTE’s 2003 Budget 2003 Target target

6231 Emergency Dept 36,032 3.55 3.1 61.50 53.7 (7.8) 6.57 5.7 (0.9) 10% 68.1 58.9 (9.2) $ 2,946,208 $ 2,548,810 $ (397,398)

6040 Step Down 4,470 13.46 11.2 28.93 24.1 (4.9) 3.90 3.2 (0.7) 12% 32.8 26.9 (5.9) $ 1,612,578 $ 1,322,797 $ (289,781)

6120 ICU 3,769 19.33 17.4 25.02 31.5 (3.5) 4.74 4.2 (0.5) 12% 39.8 35.3 (4.5) $ 2,196,563 $ 1,949,472 $ (247,091)

6211 OR’s 6,773 15.88 14.41 51.70 46.9 (4.8) 6.99 6.3 (0.7) 12% 58.7 52.5 (6.2) $ 2,284,324 $ 2,043,607 $ (240,717)

6025 Medical 18,272 8.53 8.10 74.93 71.2 (3.8) 10.15 9.5 (0.6) 12% 85.1 79.6 (5.4) $ 3,498,899 $ 3,275,228 $ (223,671)

TABLE 2: DAILY STA F F I N G G R I D T I E D TO B U D G E T

ADMINISTRATION PROFESSIONAL STAFF
# Director Supervisor Educator Secretary RN Unit Clerk Prod Prod Prod/Hrs Prod
CEN Day Day Day Day 12 Hr. Day 12 Hr. Night 12 Hr. Day 12 Hr. Night Hours Salary Pt Day Sal Exp/
$36.00 $23.00 $27.00 12.00 $22.00 $26.00 $9.00 $10.00 8.34 Pt Day
46 1.00 1.00 1.00 1.00 8.00 7.00 2.00 1.00 383 $6,750 8.32 $147
45 1.00 1.00 1.00 1.00 7.00 7.00 2.00 1.00 371 $6,486 8.24 $144
44 1.00 1.00 1.00 1.00 7.00 7.00 2.00 1.00 371 $6,486 8.34 $146
43 1.00 1.00 1.00 1.00 7.00 6.00 2.00 1.00 359 $6,174 8.34 $144
42 1.00 1.00 1.00 1.00 7.00 6.00 2.00 1.00 347 $6,066 8.26 $144

Hours/Day 8.00 8.00 8.00 8.00 12 12 12 12 Dept. Num: 6024

Days/Week 5 5 5 5 7 7 7 7 Dept. Name: Routine Surgical
Days/Year 260 260 260 260 365 365 365 365 Manager: Mary Wilkes
Total Hours 2,080 2,080 2,080 2,080 4,380 4,380 4,380 4,380 Hrs per Shift: 12.0
Patient Days: 16,237 44.48 ADC

3
Bi-weekly Cash Flow Reports
Monitoring cash flow coming in and going out every
two weeks, rather than using an accrual system,
provides lead time for asking questions and making
necessary changes.
Supply Cost Allocation System
To more effectively manage the costs of a clini-
cal unit, each department manager should see the
expense numbers and take part in developing a fully
allocated budget.
Allocating expenses requires improved communi-
cation and cooperation among all departments at
budget time. All must agree on the requirements for
each business unit, requiring more time up front. The
payoff, however, is often an improved sense of part-
nership among team members and, in the long run,
more accurate budgets.
Loss Charge/Daily Revenue Reports
Lost charges and revenue optimization often take
care of themselves when clinicians are informed
about the revenue cycle. However, nine times out of
ten, the departments Phase 2 Consulting encounters
do not have Daily Charge or Revenue Reports at
their disposal - often because it takes too much time
and energy to generate them. Fortunately, automated
routine monitoring tools have reduced the time it
takes to capture quality charge/revenue data.
Monthly Budgets
Most clinicians are not fans of the budget process
- and for good reason. The process itself is not well
understood and, too often, vital information that can
effect future variances is left out.
But managers should not be permitted to throw up
their hands and blame finance for their shortcom-
ings. Instead, they must be held accountable and
trained to see budgeting as a valuable skill. Indeed,
the best organizations engage managers in long-term
strategic planning, volume forecasting, and zero-
based budgeting with measurable cost benchmarks.
Managers are required to understand and participate
in the budget process, and are held accountable for
results.
As managers become more involved with the budget
process, they are more likely to provide accurate
variance reports and improve clinical and financial
outcomes.
4
Quality Indicators and Satisfaction Results
When the correlation between quality and satisfac-
tion are monitored against financial objectives like
hours per patient day (HPPD), low productivity is
often seen to be associated with poor quality and sat-
isfaction results.
For example, Phase 2 Consulting studied a Skilled
Nursing Facility that was in danger of being shut
down and was closely monitored by state regulators
due to compliance problems. The facility’s initial
reaction was to increase the staff to meet require-
ments, resulting in position vacancy >25% and dis-
satisfaction due to inability to recruit.
In the end, a new management team took over and
redesigned the model of care, moving from 9-10
HPPD to a best-practice standard of 7.50 HPPD,
decreasing the number of full-time employees
required.
The results were dramatically improved quality,
compliance with state regulations, elimination of the
position vacancy, and a cost savings of $671,027.
A key to optimizing financial and operational results is
assuring managers have the information they need when
they need it. Several steps can be taken to accomplish
this goal. First, assess the reliability of and ease of access
to your organization’s data. As you do, remember that
the finance department does not make up the data, they
only report the results; The operations department is
accountable for the reliability and validity of the data.
Second, senior management should be responsible for
assuring that accurate reports are readily available to
unit managers. If optimal performance is expected,
input should be solicited from users when reports are
being developed. This will assure that useful informa-
tion is gathered.
Finally, remember that it is not the quantity of data that
matters, but the quality of data and what the manager
does with it.
Ask yourself:
Do your managers have the information necessary to make
informed decisions? Do they have access to this information
when they need it?
4
The Right Care Model Can
Make Or Break You
With sound data in hand, you are now ready to
define your ideal “care model.” Generally speaking, a
successful model meets three key criteria:
• It is supported by revenue projections and budget
forecasts.
• It is grounded in the principles of case management.
• It clearly defines the role and accountability of
every team member.
The importance of determining the right care model
cannot be overstated. It provides structure for your
operation, direction for your people, and the vision for
long-term planning. In other words, your care model is
your foundation, and can either support or undermine
the financial performance of your clinical business units
or practices.
The following spells out these criteria in more detail:
Reconcile your care model with revenue projec-
tions and budget forecasts
As you define your care model, ensure that it coin-
cides with your current revenue structure and bud-
gets. Otherwise, you have a model in name only.
Phase 2 Consulting often finds organizations whose
revenue structure and budgets are based on one
model, while the model by which care is actually
delivered is something else altogether. Regardless
of the reason for the disconnect, such situations are
almost always ineffective and never sustainable.
For example, such “disconnects” are often observed
in nursing:
• Phase 2 Consulting identified several organiza-
tions with a budget/revenue structure based on
team nursing, relying on a mix of RNs, LPNs and
nursing assistants. Upon review, we found that
the actual delivery model was closer to one of
primary care, with a high percentage of RNs.
Roles were blurred, leading to lack of accountabili-
ty, poor delegation, and decreased productivity.
• In another case, a hospital using a primary care
model in which the majority of nurses were RNs
found itself with a shortage of RNs. The hospital
began replacing them with LPNs and expected
them to perform the same role in care manage-
ment. This was a major source of dissatisfaction
for both nursing groups. The hospital rectified the
situation by changing its care model to a team
5
approach, with each team consisting of an RN
leader, an LPN, and a nursing assistant. By doing
so, the client reduced the nurse-to-patient ratio
from 1:3 to 1:5. The result: increased satisfaction
for the staff and a major cost savings for the
organization.
Put in place a strong case management program
Regardless of whether a primary care or team model
is used, a strong, well-integrated case management
program is necessary for a clinical business unit to
achieve optimal financial performance.
In today’s environment, this means direct care pro-
viders have to recognize their role as case managers
and be able to easily communicate:
• The discharge plan.
• Their role in expediting the patient through
the system.
• Issues that are derailing the plan of care.
• Ways to intervene, timely and effectively, to
achieve expected outcomes.
Health care organizations must create and facilitate
an environment that makes this dual role possible.
That entails allocating department and case manage-
ment resources directly to the nurse manager, provid-
ing simple tools that can be used to integrate daily
documentation into the nurse’s practice, and putting
in place a data tracking and management system
(delays in service, ALOS, top DRGs, etc.).
Clearly define each team member’s role
An effective care model clearly defines the role of
each team member. This is the only way for an orga-
nization to assure accountability. When all team
members are aware of their responsibilities, there is
minimal room for shifting blame to others. Moreover,
well-defined roles create greater awareness that
working in tandem is essential to getting the job
done. This, in turn, often increases job performance
and satisfaction.
The bottom line is this: clinical business managers must
have a clear understanding of the factors driving their
revenues now, as well as the trends that will drive them
tomorrow, so they can assist in developing a care model
that achieves optimal performance.
Ask yourself:
What is your care model? Does it have the keys for success?
Can you see it in your results?
5
Manage Direct Care Delivery
For A Better Bottom Line
A major area of weakness in many clinical opera-
tions is ineffective management of direct care hours.
Too often, human resources are not aligned with other
resources, or restructuring personnel for maximum
advantage is seen as a low priority in times of organiza-
tional change.
By periodically measuring all activities of the opera-
tion by day of the week and by hour, each clinical
manager can understand workload distribution and
be able to anticipate future changes.
In one RN workload case study, Phase 2 Consulting
found that the workload for the day shift peaked
in the first four hours, with a sharp decline in the
following four hours as shown in Table 3.

Because the remedies can seem daunting– TA B L E 3: RN W O RK L O A D C A S E S T U D Y

staffing patterns and trends, workload Procedure Minutes per Hour (7 am - 3 pm shift)
distribution, skill mix management,
and daily scheduling–the task is often
neglected, resulting in budget variances
and perceived nursing shortages.

The good news is that areas of great weak-

ness represent great opportunities to
improve financial performance.

Use trends and tools to match

personnel with needs

For many clinical operations, scheduling

and staffing patterns have not kept pace
with new technology or health care
utilization trends. This often produces
higher labor costs and dissatisfied staff,
physicians, and patients.
For example, in Phase 2 Consulting’s studies of OB
departments we have seen induction trends rising
over the past several years. Organizations that have
accommodated this trend - allocating more time for
inductions in their schedules - are able to more accu-
rately project staffing requirements. Those who have
not factored in this trend often find themselves with
patients arriving unscheduled, and no staff on hand
to manage the situation.
Advanced technology has a greater effect and will
continue to require changes in staff scheduling. High-
tech tools such as Acuity Systems and Staff Scheduling
Systems are in widespread use and can take much of
the guesswork out of meeting staffing demands. Even
so, we have observed many clinical operations with
excess staff scheduled for nights, weekends, or low-
volume days, as well as not enough help on hand for
heavier workloads during days and evenings.
While any change takes time to be fully integrated,
the payoff cannot be realized until it happens. If
managed properly, the task of scheduling can change
from a history of expensive unpredictability to more
predictable, flexible staffing.
To achieve optimal productivity levels, it appears
this unit would have to double its staff for the first
four hours and dismiss half by 11 a.m.
An alternative would be to redistribute the
workload, balancing staffing requirements over
the eight-hour shift.
Key considerations in this redistribution include
the demands of intense workload activities such as
admissions and discharges, shifting certain activities
to optimize efficiency, and utilizing workload analysis
tools quarterly (and whenever technology changes).
By constant and careful monitoring of workload
distribution and technological advances, a clinical
operation can shift staff - as opposed to adding staff
- in order to adapt to changing demands and give
managers the ability to precisely reallocate resources.
Put experience back into skill mix management
Another key factor to improving direct care delivery
management is staffing according to skill mix, based
on licensure and years of experience. Depending on
the intensity level of the service provided, staffing
the appropriate number of licensed personnel is
not nearly as critical as the years of experience and
delegation skills of each individual.

6
 6
Indirect Care
Unfortunately, many nursing schedules are developed
Judicious investment of resources, time, and
with more weight given to the number of people
talent into care delivery can lead to improved cus-
rather than the experience level, often resulting in
tomer satisfaction, an enhanced financial position, and
a fully staffed unit lacking the requisite experience
move a clinical operation closer to achieving optimal
required for smooth operation.
outcome performance. As important as commitment is
to this investment, direct care providers must be willing
Strive for flawless daily management
to shift from traditional methods to more sophisticated,
technology-driven care delivery. To that end, organiza-
The final piece of the puzzle in direct care delivery
tions can quickly adopt a rapidly growing number of
management is effective daily management. If a clin-
data-supported activities to enhance productivity.
ical operation’s daily manager has to search (through
a centralized or decentralized system) for staff each
Here are a few examples:
day to cover demands, there is a flaw in the schedul-
ing system.
Charting by exception
The questions an organization should ask to promote
Phase 2 Consulting has conducted several studies
more effective daily management include:
that have found that documentation alone takes
up 20-25 percent of a professional staff ’s time. By
• Is there a staffing grid with volume changes that
changing to the charting-by-exception method, the
can be easily tracked? Is the grid congruent with
time spent on documentation can be cut by more
the budget? How do you know? If not, could this
than half.
be a contributing factor in your difficulty to hire
more staffing?
Shift reporting systems
• Are there adequate personnel for core staffing?
Reports have come a long way from how and why
they were generated a decade or two ago. The care-
• Does the staffing pattern vary for volume/mix
giver’s role has changed, and therefore reporting
demand by day of the week?
systems have had to change as well.
• Are the guidelines for staffing clearly defined for
Today, progressive clinical operations require physi-
productive and non-productive hours? Are they
cians and staff to also serve as case managers,
operational?
providing more comprehensive patient reporting
than in the past.
• Who, ultimately, is accountable for staffing? For
the safety of each patient?
We have found that reports by high-quality caregiv-
ers address, at minimum, these questions:
• Finally, what is the human resource plan to fulfill
1. What is the plan of care for discharge?
core-staffing requirements? Are you using premium
2. What have we accomplished?
dollars for core staffing? What is the root cause?
3. What is the objective for today?
How many short-term solutions, such as double
4. What is my role?
pay, have been attempted? Have they achieved
desired results?
Supply automation
Ideally, an organization’s staffing and scheduling should
Supply Automation provides many advantages. By
be developed based on multiple factors: model of care,
tracking inventory more effectively, automation can
revenue demands, workload distribution, appropriate
cut expenses and minimize waste. Moreover, if
skill mix for the patient population in the clinical unit,
supplies are easily accessible, treatment delays are
human resource supply, defined roles, and customer needs.
reduced, staff productivity is enhanced, and patient
satisfaction is increased.
Ask yourself:
Does your model of care address these factors? How do
Medication delivery systems
you know? Are your results within optimal performance
standards?
Automatic charging systems have been known to
reduce workload and improve revenue recording

7

significantly, particularly when manual systems are
deleted and do not run on parallel tracks.
Tube systems
Even though tube systems have been around for
years and are one of the easiest ways to streamline
and improve communications, these systems are still
underutilized in care delivery.
Timeliness is key to maximizing efficiency, and these
low-tech systems are a relatively low-cost, rapid
means of communication and a logical choice for
clinical operations looking to improve time manage-
ment and financial performance.
Information technology
Although most organizations are not capable of creat-
ing a simplified, automated clinical chart that reduces
charting time, there are some tools that every clinical
unit should be utilizing.
An automated “kardex” is one example. Kardex
systems have been proven to reduce time and errors
in preparing documents if the proper check systems
are in place.
In one Phase 2 Consulting case study, a nursing
organization completely redesigned its structure
and care model, including utilization of additional
technology. Among the changes were automated
kardexes, a new Medication Administration Record,
and a charting-by-exception documentation system.
Within nine months, these changes yielded a 12
percent improvement in productivity while keep-
ing the nurse-to-patient ratio at an acceptable level.
Utilizing these systems, the organization anticipates
further improvements.
A second example of a technological advance with
the power to increase satisfaction for staff, patients,
and physicians alike is the use of pagers. Working in
tandem with beepers and cell phones, pagers elimi-
nate running back and forth to and from desks to
answer calls.
In summary, clients that use many tools to improve indi-
rect patient care generally achieve improved customer
satisfaction, higher productivity standards, and better
financial performance.
Ask yourself:
Has your organization invested in technology that will maxi-
mize care delivery?
8
7
Ensure A Real Return On
Investment In Educational
Programming
Educational programming currently accounts for a
whopping 1-2 percent of the average healthcare orga-
nization’s total labor outlay. Whether for community
outreach, public education or staff development, an
investment on this scale should pay dividends and con-
tribute to the competency of staff and quality of care.
In reviewing such programs, it is helpful to apply these
simple tests:
• Are the programs keeping pace with technological
advances and, more importantly, with customer needs?
• Are staff orientation programs markedly decreasing
turnover rates?
• Are customer-training programs playing a significant
role in increasing market share?
• Is money spent for advanced education to create
critical thinkers who can effectively manage a unit?
Every education program or service should have a mean-
ingful purpose and measurable objectives, with regular
reviews of effectiveness.
In our experience, we have found that facilities that
invest in mentoring programs structured to yield long-
term career advancement are most successful. However,
clarity about the role of these programs and the services
offered is vital. It is also important to regularly remind
staff of the services and programs available to help them
succeed.
As for methods, Performance Based Development
Systems increase the effectiveness of any education
program by concentrating on developing demonstrable
skills, so they tend to be more valuable than generic
training, if not structured in such a way that is cost
prohibitive.
Ask yourself:
Is the investment your organization makes in development
programs paying off in improved quality of care and staff
competency?
8 Stay Fully Staffed: Put The Focus
On Retention
While staffing shortages can result from supply and
demand cycles in the labor market, more often than not
the root cause is high turnover within an organization.
To keep staff at optimal levels, successful organizations
focus on retention rather than recruitment. Not only
is this less costly, it is often the best way to ensure staff
continuity and create an atmosphere of teamwork. At
the end of the day, strong leadership and fair and equi-
table treatment of personnel keep vacancy rates low.
term fixes that rarely make a positive difference over
the long-term. Moreover, such strategies are a blow to
morale among existing staff, and may increase retention
problems.
Ask yourself:
Do RN turnover rates vary by more than 10 percentage
points across nursing units? Is turnover performance publicly
reported to the staff? Is there a unit-based plan to address
retention? Do you offer incentives for nurse managers to
improve staff retention on their unit?

For example, at one hospital Phase 2 Consulting found

9
a disproportionately high turnover rate in nursing. Use Capacity Threshold Analyses
Upon examination, we discovered that some physicians To Minimize “Side Effects” Of
treated nurses poorly and were the cause of the high Specialty Units
turnover.
Through our studies of clinical operations nationwide,
we have identified three ways specialty units effect pro-
Beyond identifying the underlying causes of staff turn-
ductivity management and create capacity problems:
over, an organization must be willing to solve those
problems wherever they exist.
High fixed costs
A good first step is to review staff expectations on shift-
changing, compensation, and incentives. For example, While many clinics have turned to post-angio-
scheduling that requires “floating” to other departments plasty, post-CAB, and pediatrics units for promised
can, at times, cause feelings of job insecurity among improvements in efficiency, utilization, and customer
staff. Likewise, compensation should reflect the demands service, these specialty units typically add high fixed-
made on staff and should be perceived as fair. Incentive costs to budgets.
models, while not yet widely employed in the Clinical
industry, should also play a role. Poorly utilized resources

It is also key to monitor each business unit’s turnover In specialty units like telemetry, enforcing admission
rates so disruptive personnel shortages don’t “suddenly” and discharge criteria is difficult. The result is often
become apparent. that patients are placed in these units and never
leave, so nursing resources are poorly utilized, creat-
As a general rule, each unit should be evaluated quar- ing the perception of shortages.
terly. If a problem exists, a formal plan to deal with it
should be instituted. The key is to measure and monitor
turnover rates by unit and shift. Partner with human
resources in deficient areas to decrease turnover below
11%. Guard against using global strategies. Instead,
develop unit-based solutions with measurements to
T A B L E 4: I M P A C T OF P RO D U C T I V I T Y C H A N GE S
monitor success and limit recruitment incentives.
Current Vacancy Rates Vacancy Rate

• Table 4 shows one hospital in which the current Based on Current Productivity with
vacancy rate is contrasted with the same vacancy Department Productivity Improvements
rate with productivity improvements. (Change in 3East 37% 15%
model of care, mix, and/or scheduling changes). 3West 46% 30%
Note that while all departments still have a high Oncology 6% -3%
nursing vacancy rate, there are other departments SUBTOTAL Medical 37% 19%
that have plenty of staff and one even overstaffed by Orthopedics 3% -9%
27 percent. Post OP 27% 15%
Renal 8% -27%
Too often, healthcare organizations respond to staffing Combined Post-op/GU/Renal 18% -5%
deficits with knee-jerk recruitment initiatives. This is a SUBTOTAL Surgical 9% 0%
costly mistake, because funds are misdirected into short-

9
 High nurse-to-patient ratio
Step-down units were often created by clients under
managed-care pressures to accommodate patients too
sick for the routine floor but too well to qualify for
ICU reimbursement.
munication. Inviting input and feedback from each part
of the organization can improve the health of the opera-
tion as a whole.
In that vein, we have found that many successful clinics
adhere to the following tenets:

Unfortunately, these units require a high nurse-to-
patient ratio even though patients do not necessarily
need a high level of care throughout the length of
stay.
To minimize these problems, we recommend that
occupancy and utilization patterns are examined on
a quarterly basis. We also recommend establishing
minimum occupancy thresholds for optimal produc-
tivity and satisfaction.
Assign a Medical Director to each service unit
Clearly defining the role of Medical Director will go
a long way toward forging relationships between the
staff and physicians who work together within a unit.
As relationships form, the Medical Director actively
supports the staff and the delivery of care through
open, constructive communication.
Create Physician Champions in the ranks

Having a detailed spreadsheet like Table 5 below should While a Unit Physician Leader establishes support
make it easy to identify departments with occupancy and rapport, there must be support for the unit as
problems. well as physician credibility.

Ask yourself: • One hospital established a Physician-Nurse

Do I work with the appropriate departments to increase Liaison Committee to identify educational
occupancy if I observe a three-month trend with occupancy agendas, support practice excellence and review
below the minimum threshold? Or, do I consider consolidat- complaints from nurses about physician behavior
ing areas with compatible diagnoses? and physician complaints about nursing behav-

TA B L E 5 : B E D C A P A C I T Y A N A L Y S I S
AVAILABLE
LICENSE OPERATING OCCUPANCY/ OCCUPANCY/ BENCH BEDS (Based
DEPARTMENT YTD YTD-ADC BEDS BEDS LICENSED OPERATING MARKS on License)

2110 – Oncology 1910 12.48 26 20 48% 62% 80% 13.52

2115 – Orthopedics 4234 27.67 52 52 53% 53% 80% 24.33
2120 – Post-Op 1974 12.9 26 26 50% 50% 80% 13.1
2125 – Renal & GU 1962 12.82 26 26 49% 49% 80% 13.18
2160 - 3A Medicine 3132 20.47 26 26 79% 79% 80% 5.53
2165 - 3B Medicine 3167 20.7 26 26 80% 80% 80% 5.3
2170 - 3C Medicine 3097 20.24 26 26 78% 78% 80% 5.76

ior. While no one knew the outcome of the

A Network Of Support Fosters

10
Better Service, And Optimal
Performance
No clinical business is an island and all can ben-
efit from the support of physician champions and well-
run ancillary departments.
A support network of medical directors, physician champ-
ions, and ancillary support teams working together not
only produces excellent service, but also creates an ideal
atmosphere for achieving optimal outcome performance.
Establishing such a support network begins with com-
behavioral reports, it was clear that the individu-
als involved demonstrated positive behavioral
change. Lunchtime educational sessions provided
by expert physicians and nurses increased knowl-
edge and morale as both groups felt respected and
supported. Also, with input from the nurses and
physicians, the committee named a Physician and
Nurse of the Year.
A network of support in the form of a Medical Director,
Physician Champions, and ancillary support teams
creates an atmosphere that enables optimal outcome
performance.

10
 Build bridges between ancillary support
and clinical staff
By their very nature, ancillary departments should
work in concert with clinical staff - but that ideal is
not easily achieved.
Because ancillary departments usually support many
units, sometimes departments such as radiology and
phlebotomy may not get the immediate response
they require. This lack of response is a source of
growing frustration for both the unit and the support
department. If ancillary departments work together
as a team, excellent service can be achieved, which
translates into higher satisfaction for both patients
and staff.
It is a good idea to periodically review how different
departments rate each ancillary service. A simple
spreadsheet such as Table 6 can identify any friction
between departments.
Ask yourself:
How do I know the relationship between ancillary and other
departments is positive and supportive? Are physicians
pleased with the level of nursing care provided for all levels
of patient care? How do I know? What do I do if they are
not satisfied?
Historically, there have not been performance expecta-
tions for all clinical units. Often, only units seen as rev-
enue-producing departments were mentored in business
or accounting principles, given the resources to produce
or analyze data, and held accountable for the results.
Departments such as nursing have been viewed only as
cost centers and are neither taught nor held to the same
standards of clinical business management.
For healthcare organizations and the profession of nurs-
ing to move forward and achieve the performance levels
expected by healthcare executives, everyone must be
held to the same standard and receive the same support.
To create such a system, leadership must view each clin-
ical unit as a distinct and separate business unit. Each
unit should be viewed as a small business that purchases
services from others. The unit must be accountable and
hold others accountable for the entire delivery of profes-
sional services. Therefore, the budgeting process and
reporting systems must be altered to account fully for
allocated expenses. Executives must foster an environ-
ment where managers can be successful through:
• setting clear expectations
• holding to standards
• producing data
• creating a feedback system
• rewarding success

TA B L E 6 : S A T I S FA C T I O N G RI D
al
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A
Department
4 East 5.0 4.0 4.0 5.0 3.0 2.0 3.83
4 West 3.0 3.0 3.0 4.0 4.0 4.0 3.50
Ambulatory 3.0 4.0 4.0 2.0 2.5 3.10
Behavioral Health 4.0 4.0 3.0 3.0 4.0 4.0 3.67
Cardiopulmonary Services 4.0 3.0 2.0 4.0 3.0 3.0 3.17
Clinic Services - Somerdale 2.0 4.0 3.0 5.0 4.0 3.0 3.50

Now that you know the 10 steps to achieving optimal

E
very CEO/COO/CFO should expect optimal operational and financial performance, your next step is
outcome performance from each clinical unit. to see how each clinical business unit performs in each
As mentioned before, we have identified three area outlined in this paper. The simple test on the next
indicators of “optimal outcome performance”: page will identify areas in which your organization is
struggling.
1. 90% or greater patient, physician, and staff
satisfaction.
2. Unit-specific quality indicators within acceptable
standards, e.g., waiting times or infection rates.
3. Each clinical business unit must be within 1-3% of
its service-driven budget. In other words, each clini-
cal business unit must cover its direct expenses based
on payer mix, service complement, and revenue.

11
 Specialty units have optimal occupancy to manage
Rate your organization on a scale of 1 to 5. productivity.

1 - My organization performs poorly. 1 2 3 4 5

2 - My organization gets by.
3 - My organization makes a moderate effort. My organization is built around a network of sup-
4 - My organization is moving in the right direction. port services that function together to create an
5 - My organization excels. atmosphere that enables optimal outcome perfor-
mance.

1 2 3 4 5
My organization hires true leaders in each businesss
unit who possess the skills to drive financial, Physician leadership is well demonstrated through-
clinical and satisfaction performance. out the organization.

1 2 3 4 5 1 2 3 4 5

Each department has access to and is supported by

concurrent, and accurate information. If you scored a 3 or below in any one of these areas, Phase
2 Consulting can help implement the steps necessary to help
1 2 3 4 5 you and your organization achieve optimal outcome perfor-
mance.
Senior Management created a culture for easy
access to management tools.

1 2 3 4 5

My organization has a case management delivery

model that is house wide to drive optimal perfor-
mance.

1 2 3 4 5

There is a well defined staffing and scheduling

system tied to budget.

1 2 3 4 5

Does your organization invest in technology, and

does the technology achieve results?

1 2 3 4 5

My organization’s commitment to education and

development is reflected in quality of care, staff
competency and clearly demonstrates a return on
investment.

1 2 3 4 5

Turnover rates are low; if not, each department/unit

has a working policy to address retention.

1 2 3 4 5

12
 About Premier Inc., 2006 Malcolm Baldrige National Quality Award recipient
The Premier healthcare alliance is more than 2,100 U.S. hospitals and
58,000-plus other healthcare sites working together to improve healthcare
• 12255 El Camino Real
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repository of clinical, financial and outcomes information and operates
• T 858 481 2727
F 858 481 8919 a leading healthcare purchasing network. A world leader in helping
deliver measurable improvements in care, Premier works with the Centers
• 2320 Cascade Pointe Blvd (28208)
P.O. Box 668800
for Medicare & Medicaid Services and the United Kingdom’s National
Charlotte, NC 28266-8800 Health Service North West to improve hospital performance. Premier has
• T 704 357 0022 offices in San Diego, Charlotte, N.C., Philadelphia and Washington.
F 704 357 6611

• 3600 Market Street

7th Floor
Philadelphia, PA 19104

• T 215 387 9401

F 215 387 9406

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Suite 625
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• T 202 393 0860

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FOR MORE INFORMATION:

Please visit us at premierinc.com or call the
Premier Solution Center at 1.800.805.4608.

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