Superior Productivity in Health Care Organizations How to Get It, How to Keep It By Paul Fogel, M.B.A.

Excerpted from the Preface for Superior Productivity in Health Care Organizations: How to Get It, How to Keep It by Paul Fogel.

Copyright © 2004 by Health Professions Press, Inc. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.

Preface

Productivity management, central as it is to financial health, is a mysterious topic to most administrators and department managers. Not having a body of literature that clearly points the way to what works in the real world is partly to blame. Industry journals address the subject in piecemeal fashion, and such literature is accessible only to a specialized audience. In fact, as of 2003 there is no other book on hospital productivity management currently in print. Certainly, there are many general management books, but it is difficult to know how to apply them specifically to the hospital industry. 

From my perspective as a professional consultant in productivity improvement, benchmarking, operations analysis, forecasting, and business planning, too often hospitals are buying hopes and dreams, spending time and money on purely temporary gains. Cut first and ask questions later? Ask yourself this: Will we have to do this all over again in a year or two? 

Of course, many consulting firms do good analytical work, but their approach often lacks a conceptual framework that fits productivity into the overall management structure of the hospital. The conventional approach leaves intact the existing management configuration with all of its policies and procedures. If existing management practices remain untouched, if the same things are tried again, then the same results will be repeated. If health care organizations are not happy with the previous results, they will not be any happier this time. That is not the approach taken by this book. This book is a practical guide to achieving superior productivity at any organization that is willing to take on the challenge. Moreover, such fundamental change can be done at a fraction of the cost and time that consulting firms might charge.

It is too easy to blame an indifferent Congress, wicked HMOs, greedy labor unions, tight labor markets, overregulation, and a million other things over which managers have essentially no control. No doubt, these pose serious challenges. Troubled organizations could be pushed over the edge into bankruptcy. However, there is much under management control. It is all very well to manage an organization in prosperous times. The real test comes when faced with challenges that threaten existence, those that demand fundamental changes in how business is conducted. Many other industries are heavily regulated — airlines, construction, and banking, to name a few. Yet, excellent management finds a way to eke out a profit regardless. They learn, they adapt, they experiment, and they survive. Health care can do the same. If hospitals fail as an enterprise, it will be largely of their own making. 

Many organizations may not survive these challenges. They will be merged, bought up, or closed. The survivors will distinguish themselves by challenging entrenched policy and procedure that worked well in another time, but are failing today, and replacing these with the business ethic of entrepreneurship and innovation, injecting fresh vigor into their organizations. The goal cannot be merely to survive, limping along for one more year. 

In this book, I identify the central issue as management responsibility and accountability. The two terms are not identical but are complimentary. This means the focus is not on technology and monitoring software but on management structures that address consequences for poor management, incentives for achieving superior outcomes, and a process that drives responsibility and accountability down to the proper management level. No amount of software or “budget policing” can make up for a lack of individual responsibility and accountability. The core issue has always been, and always will be, management.

This book focuses on explaining the underlying management philosophy necessary for developing superior productivity. Based on my experience with more than 50 hospitals, detailed implementation plans without any concepts behind them are destined to fail. The reality is that we cannot design or execute our implementation plans flawlessly. Unforeseen events crop up that must be dealt with. If the implementation team is well versed on the underlying management concepts, then they will be equipped to deal with any snags that may arise. We have to draw the conceptual blueprints before building the house. 

Most hospitals have the technical expertise to implement these concepts. The approach of this book is not ruthless, unethical, or disjointed. All of it is presented as a package, and each component supports the whole program.

Here are some of the problems that hospitals face:

• Profitability is eroding at many health systems. Even while hospitals are becoming filled with patients, many hospitals are encountering profitless growth. 
• Conventional organizations generate conventional results. We keep trying the same practices, hoping for better results than what we got last time. 
• Central planning no longer works. Top-down micromanagement has serious limitations in a technologically sophisticated industry with an educated workforce. 

Here are some of the goals that hospitals try to reach: 

• Bring labor costs, the largest expense in the organization, under control. Define what constitutes good management, and create real accountability to achieve that end. Build security and prosperity for the organization by creating a sustainable economic foundation.
• Remove arbitrariness and politics from decisions. Develop superior analytical expertise. Learn to live by certain ground rules and values that everyone can understand and accept.

The challenge of productivity management is how to turn around the operating structure, culture, and prevailing incentives that counteract lasting results. Any program involving significant change runs into this hidden problem, and it is often unrecognized or ignored. Procedure and policy, incentives and disincentives will have to change before we can change behavior. Hospital culture will follow. This book describes how to do that. 

My purpose is to help you turn your health care organization into a prosperous and secure organization, the best place in which to work and practice. Is such a thing possible with Medicare, Medicaid, and managed care paying the bills? I think it is. Improvement is always possible. Most hospitals have already reduced management layers and the average length of a hospital stay. Those were the right things to do then. Now it is time for the next wave of performance improvement.

Much of what I propose in this book takes proper time to conceptualize, develop, analyze, fund, execute, and monitor. There are no shortcuts. For those in a hurry, remember that the short-term was the long-term one year ago. 

This book is a call to action for hospital administrators, physicians, corporate health system staff, and other people of authority and leadership. They have the power to effect change, but they cannot do it alone. They will need to collaborate with their clinical and technical managers, financial analysts, and consultants.  On a related note, this book represents a management philosophy of fairness, clear expectations, discipline, and rules, although it does not delve into developing the personal skills that make for great managers: working relationships built on trust, mutual respect, and what some call “emotional intelligence.” Readers interested in learning more may want to acquire Becoming an Effective Health Care Manager: The Essential Skills of Leadership, by Len Sperry, Ph.D. (Health Professions Press, 2003).

Is the program in this book the last word on productivity? No single book can be a complete compendium of everything a health care organization can do. This book will get you off to a fast start, give you the wherewithal to keep it going for the long term, and yield considerable, lasting savings. After that, the potential for further improvement is limitless.