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Productivity: the magic work pays off.

The old Groucho Marx show, "You Bet Your Life," had a profitable gimmick. If a contestant said the magic word, a duck would drop down from the ceiling and the contestant would win some money. Ducks don't drop from the ceiling in health care institutions, but administrators do have a magic word with dollar signs attached to it. That word is productivity.

Managers in every department are feeling the pressure to cut costs through higher productivity, and the laboratory is a prime target. In a recent survey of 450 hospital administrators throughout the country, six out of 10 hospitals reported a lower average daily census during the last 12 months. The survey showed declines in 46 per cent of hospitals in the West, 82 per cent in the upper Midwest, 75 per cent in the Midewest, 52 per cent in the Southwest, 63 per cent in the Southeast, and 42 per cent in the Northeast.

These figures represent a growing trend as we move toward a more competitive health care system. Hospitals are acting like businesses and demanding effective management skills from their department heads. Keen price-based competition in the next several years will make productivity, rather than increased revenue, a top priority.

As the Federal prospective payment system spreads to other third-party payers, it will become very difficult to generate operating revenues through price or volume increases. And since personnel account for more than half of a typical hospital's operating costs, better productivity has the greatest potential for cutting those costs. Productivity goes beyond the cost of labor, though. It is the ratio of work input--labor, capital, and material--to work output in a given period.

The accounting firm of Arthur Andersen & Co. recently asked more than 1,000 hospital and other health care administrators, physicians, legislators, suppliers, and insurance firms what they considered the major target areas for improving productivity. Here are the top four responses: 1) compensation tied to productivity, 2) better automated information systems, 3) improved employee training, and 4) better productivity measurement and monitoring. Participants then listed ways to achieve these for goals.

These recommendations make valuable reading. Implementing them, however, will require some changes in traditional laboratory operations and work attitudes. The stronger a group's commitment to survival, the more likely it is to adopt new ideas willingly.

Here are the recommendations on maximizing lab productivity:

* Set up productivity systems based on established standards and objective data, and monitor them regularly. This is impossible without goal-oriented, competency-based position descriptions and measurable standards of performance. You will also need an accurate work measurement system to assess productivity. If you use the College of American Pathologists workload recording system, be sure that the units accurately measure your methodologies and that you calculate paid, worked, and specified productivity. Calculation of specified productivity helps identify many variables that can drag down lab efficiency.

* Establish incentives and disincentives for employee and departmental performance. These catalysts should apply to quality of work and other long-range concerns as well as immediate output. Merit pay systems are growing more popular as administrators seek ways to tie a reward system to measurable performance. Remember, a successful merit pay plan requires a goal-oriented performance appraisal system linked to position descriptions, as described above.

First-line supervisors are the key to making such a system work, and they must have appropriate authority, accountability, and supervisory skills in addition to technical expertise. Managers must be evaluated on their ability to manage a cost-effective operation while still maintaining efficient, high-quality service.

* Reward employees for contributing to the laboratory's quality and cost-effectiveness. Many institutions have incentive programs for cost-cutting suggestions. Such programs depend on management willingness to involve all employees in decision making.

* Enhance communication by holding more frequent supervisory and general laboratory meetings. This helps dispel uncertainty about the future and frustration at being powerless to change it--factors that can be devastating to productivity. Keep meetings short and meaningful, and allow open discussion if you want to do more than waste precious time.

* Consider retaining and job sharing to develop a more flexible staff. The age of extreme specialization is on the wane. Technologists or technicians who can move from one department to another or share jobs on a part-time or part-shift basis will be the core of most laboratory staffs. This kind of arrangement lets you schedule for peak times while maintaining a lean staff.

* Create tight purchasing and inventory control systems to make the most of volume discounts. Take advantage of any shared-service arrangements at your institution.

* Get an in-house industrial engineer, if there is one, or a consultant to evaluate the department's performance and work flow systems. An outside objective view can identify areas in need of improvement that are not apparent to laboratory insiders. Analyze any functions and transactions that cross departmental lines; you may find opportunities to improve productivity in your own and other departments.

* Restructure schedules to focus on peak volume periods and reduce idle time. This may mean abandoning the traditional three-shift system and rotating day, night, and weekend personnel to make best use of staff expertise. These changes will encounter varying degrees of employee resistance. If you have a good information system and involve employees from the outset in designing the changes, cooperation will grow.

* Implement computer-based systems to review financial data, monitor employee productivity, and analyze new systems or projects. If your institution has a mainframe system that will provide appropriate data, you are in luck. If not, a laboratory microcomputer can perform most of the basic calculations.

* Encourage pathologists to begin an educational program that will improve physician ordering patterns and lab service utilization. Laboratory managers can help by pointing out unusual or obviously unnecessary orders. Document the impact of inappropriate physician practice patterns on productivity by keeping careful records, using the CAP specified productivity formula.

* Start strategic planning now. Examine the laboratory's services ruthlessly. If a test cannot be cost-justified, then it should probably be sent to a reference laboratory. The days of performing tests for public relations value--or to satisfy a particular physician--are over. The laboratory in a non-teaching hospital can no longer afford the luxury of new test development and research projects.

* Evaluate the possibility of extending your services to the ever-expanding ambulatory market. All the alternative health care facilities need lab services: birthing centers, freestanding outpatient clinics, ambulatory care centers, surgery centers, and hospices. Why shouldn't they use yours instead of developing their own?

As productivity pressures grow, managers must realize that their survival depends increasingly on the support of their staffs. The success and efficiency of a hospital will hinge not just on the number of employees, but also on their competence, flexibility, and dedication.

Reaching the optimum level of staff concern and commitment will require a laboratory management system that gives top priority to human relations. Successful managers will take more business risks, but they will also take care to preserve the personal side of health care--respect for employees and quality care for patients.
COPYRIGHT 1985 Nelson Publishing
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1985 Gale, Cengage Learning. All rights reserved.

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Title Annotation:for medical laboratories
Author:Barros, Annamarie
Publication:Medical Laboratory Observer
Date:Feb 1, 1985
Previous Article:Comparable worth: an idea whose time has come - and gone?
Next Article:PROs presage tighter squeeze on hospitals and labs.

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