Expectations exceeded in productivity gains
'Rolling forecast' budgeting yields quick dividends
When the University of Michigan Health System, Ann Arbor, instituted a "rolling forecast" approach to budgeting, its administrators established a target to improve labor productivity by 2% in fiscal 2010. While the health system far exceeded this goal, boosting overall productivity by 4.7%, the ED at the University of Michigan Medical Center, also in Ann Arbor, took the prize with productivity gains in excess of 7%.
"We had 7.6% improvement in FTE per 10,000 units of service [visits]," says Jennifer G. Holmes, RN, BSN, MHSA, CEN, the ED's director of operations. For fiscal 2009, Holmes notes, the department used 38.1 FTEs per 10,000 units of service, and in FY 2010 there were 35.07, yielding the 7.6% reduction. "When we think of productivity, we think of how many patients were seen per doctor and per hour," she explains.
More specifically, leadership achieved reductions of two FTEs in clerical, two FTEs of overtime usage in allied health (ED techs), and two FTEs of nursing overtime, she says. "With folks from industrial engineering, we looked at all arrival data, occupancy data, staffing data, nursing ratios, and built them into a model that could show us where to move people around to optimize productivity," Holmes says. "We found we had more people than we needed in the early morning hours, so we worked to optimize that. We added them where we needed without any incremental expense. We began training interns we would need later on rather than having open positions and then having to backfill them."
Jon Fairchild, MS, RN, CEN, the ED manager, adds, "In the past, because of that need to increase staff, we were never really caught up."
What is a "rolling forecast," and how does it work? In past years, Holmes explains, building a budget meant a significant amount of activity around budget time January and February and then waiting until it was approved to take any new actions. "Your fiscal year started July 1, and you spent the rest of the year arguing around that budget. If things changed during the course of the year, there was not an effective mechanism to address it," she recalls. "You probably carried a variance, because the hospital could not anticipate or hold off on things until the next budget year."
Now, Holmes says, the team considers whether anything is going to change in their practice. For example, what service lines might be added or subtracted? "We now look out four to six quarters," says Holmes, noting that these projections are updated quarterly, thus the "rolling" aspect. The team considers issues such as input and staffing needs, and team members view the budget more "globally" and plan for potential changes in partnership with other departments.
"We developed some cohorts of groups whose activities directly or indirectly impact each other," Holmes explains. So, for example, surgery, orthopedics, and EDs are all interrelated. "If orthopedics plans some new procedures, that may generate more transfers. There could be more cases to us," says Holmes. In such a case, she explains, future ED activity predictions would be based on projections and historical data. (Your processes should be continuously reviewed, says Holmes. See the Management Tip, below.)
"If things are known ahead of time, they can be planned for," Holmes says. "For example, can we plan for beds that will not be used by other departments?" These issues previously were not talked about much, until these cohorts started to look ahead, she says. "Now, we can with better accuracy know what we'll be creating and what others may be generating for us," Holmes says. (For a more detailed look at the "rolling forecast" process, see the story below.)
Detailed budget helps predictions A detailed budget is one of the keys to success in the "rolling forecast" approach, says Jennifer G. Holmes, RN, BSN, MHSA, CEN, director of operations in the ED at University of Michigan Medical Center in Ann Arbor. "We started at a baseline, where each of our FTEs is designated," Holmes explains. She also includes how many patients she expects to admit, revenue projections based on activity, what will be spent in salary and wages, and commodities. "We don't submit every name and quarterly variance explanation, such as adding more techs and fewer nurses. Those kinds of changes would generate red flags in previous years because we would be over or under budget," Holmes says. Now, managers are held to the bottom line, she says. "The administrators recognize that directors and managers are in the best position to make decisions about how to manage resources, with the expectation that they will do so within the overall budget," says Holmes. In addition, she points out, projections are updated along the way. "Last year, for example, we had higher acuity and thus higher charges, and we let senior management know in September that by January we would have several million dollars more in revenue," Holmes says. While this updating is formally done quarterly, all budget components are looked at on a monthly basis, she says. |
Productivity focus is liberating One of the challenges from administration at University of Michigan Medical Center in Ann Arbor was to improve efficiency by 2%, says Jennifer G. Holmes, RN, BSN, MHSA, CEN, director of operations in the ED. "In the past, that meant you needed to get expenses down," Holmes says. "But the focus on productivity frees you up on how to do that." Holmes' ED is process-oriented, and when managers are considering a metric they think they could improve, they use Lean processes. "We look at how we could do things differently, at the root causes of variability, how we staff different areas by time of day and day of the week," she explains. So, for example, when it came to the clerical area, a staffer had been doing the schedule. The employee basically wanted to make everyone happy and set aside specific times per their requests. "We changed that responsibility to an administrative assistant who considers who is here, what shifts we have, how they interplay, and what staffing we need, so we now have the closest match to what the unit needs," says Holmes. Previously, she says, although the unit need is 14 clerks, there would be 17 working on some days. The unit would be short on some other days because staffers were not assigned to shifts appropriately, Holmes says. |
Continuously review your ED processes "You should constantly be looking at your processes for opportunities to improve," says Jennifer G. Holmes, RN, BSN, MHSA, CEN, director of operations in the ED at University of Michigan Medical Center in Ann Arbor. "Try new things even if you have never done them before and involve your staff in the review." Holmes recommends using small tests of change and pilots, and being open to staff suggestions even if you've considered or tried them before. "The time may now be right to implement the idea and achieve real improvements," she explains. This approach can yield real results, she says. "We have an overall goal to reduce length of stay by one hour, and we have reduced the time from arrival to room by 43 minutes with our most recent process improvement designed by our ED Arrival Team," says Holmes. She emphasizes the importance of listening to your staff. "You can't tell the staff 'this is how we're going to do it,'" Holmes says. (The ED team uses Lean thinking to inform their process improvement initiatives. An illustration of this approach can be found with the online issue of ED Management.) |
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