Introduction

At many hospitals, revenues are not keeping pace with expenses. If patient volume is growing, then additional costs often consume all supplementary revenue. If patient volume is
stable, then revenue growth is frequently inadequate to offset
rising overhead expenses. Whatever the case may be, expenses
must match revenues, or deteriorating margins will jeopardize
the organizations mission. The purpose of this book is to help
organizations move from weakness to strength by controlling
their largest single expenselabor. The book lays out enduring,
practical solutions to the continual challenge of improving productivity. This program can be achieved in a surprisingly short
time and at low cost.
Chapter 1 outlines where the industry stands in its current
approaches to labor management, including layoffs, changing
the skill mix, benchmarking, overtime and registry use, and
hospital mergers. Chapter 2 discusses how to develop standards,
while Chapter 3, which is new to this second edition, focuses
on developing the most accurate workload measures that managers will accept as valid and fair, measures that work best for
the organization over the long term. Chapter 4 addresses implementation, Chapter 5 monitoring, and Chapter 6 incentives and
consequences. Finally, Chapter 7 takes up organization politics.
The Program Summary diagram at the end of this Introduction
presents each of the chapters as spokes on a wheel, with the hub
being productivity standards. The Appendix presents actual case
studies, taking readers through the process, from analysis to implementation and beyond. Key terms are italicized in the chapter
text and are included in the Glossary of Terms at the back of the
book. For the e-book edition, the key terms in the chapter text
are linked to the Glossary of Terms.
xiii

xivIntroduction

This book addresses productivity throughout the healthcare

organization, stressing concepts of accountability, measurement,
fairness, and simplicity. The following Program Summary gives
an overview of the method for developing superior productivity
as it is presented in the book.

Program Summary
1. Evaluate each department against its own performance over
the last several years. Using history as a standard against
which to evaluate current performance is called historical
benchmarking.

Introductionxv

2. Establish monitoring reports and management protocols

that executives and managers will follow. These reports and
protocols tie directly to the organizations objectives. They
are simple to read and understand, and reflect true underlying trends against which to measure performance. Monitoring can be easy to set up and maintain indefinitely without
expensive and troublesome software to install, licensing fees,
contracts, or multiple-year entanglements.
3. Institute a powerful set of incentives and consequences. Managers need clear consequences for poor management. They
also need incentives for superior performance. Without these
incentives and consequences enshrined in policy, efforts to
increase productivity will not work.
Taking into account the organizations unique culture, traditions,
and strategic goals, rules and principles replace politics and the
taking of testimony. The organization will find that it is much
easier and more effective to manage by rules and principles than
by exception.
The goal is lasting prosperity, not financial turmoil from
month to month. To do this, organizations have to allow for a
high level of autonomy and establish accountability for results
so that managers have both the authority and the incentive to
pursue what is good for the organization.