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Optimizing the Value of Healthcare Workforces

by Scott MacStravic

Given the constant warring challenges of having enough of the right people in their workforces despite severe labor shortages, and keeping costs within the limits set by miserly payment for patient care, healthcare organizations (HCOs) have no choice but to ensure they get the most value possible from their existing workforce.  While concepts such as “return on employee” (ROE) and “employee performance optimization” may not be commonplace, they are increasingly essential, as is equally true for “customers”.

While there have been many examples of re-labeling employees as “associates” or even “cast members”, what is really needed is the combination of thinking about and treating them, as well as motivating and enabling them to act as “partners”.  This may well require revolutionary changes in how employees are managed, and how managers function in healthcare.  And it will certainly require a revolution in the feedback systems that HCOs use in their employee relationship management (ERM) strategies.

When I began my career as a healthcare marketing executive, after teaching the idea for ten years, one of the practices I introduced in the two multi-hospital systems where I worked was a system-wide customer feedback mechanism, including patients, physicians and employees as “customers”.  But this was generally limited to measures of the satisfaction and suggestions for improvement of each of these customers, with “marketing” implications in terms of recruitment and retention of all three categories, with only physicians monitored, managed and marketed to in terms of the value they delivered to the system.

In the current competitive and “reimbursement” climate, seeking ways to optimize both patient and employee contributions are just as essential, and employee contributions include their impacts on both physician and patient value.  And the first, most essential requirement for optimizing employee value is to measure their performance and contributions, in order to manage them.  In many cases, this can only be accomplished on a team, categorical, or unit basis, but without measures of current employee value, and ways to monitor changes therein, there is little hope for increasing it.

Fortunately, the growing practice of pay-for-performance (P4P) measurement and bonus payments for HCOs provides yet another motivation and mechanism for measuring employee performance and value.  At a minimum, the contributions that employees make to P4P bonuses should be measured using the same metrics that determine the amount of added revenue their performance on such criteria delivers.  This can then be used as the foundation for a wider system of measurement of total performance and value based on the HCO’s “balanced scorecard” of performance measures.

An added source of ROE should be actionable feedback and input into HCO operations and their improvement, in quality, customer satisfaction, and efficiency.  The value of employee feedback can then be evaluated in the same performance dimensions as their overall worth is calculated. [“Designing Enterprise-Wide Real-Time Feedback Systems” CustomerSat, Inc. Aug 10, 2007 (www.mycustomer.com)]  This will require system-wide collaboration across the HCO’s “silos” and systems, along with increased development and empowerment of employees.

When and if HCOs master the art and science of employee performance measurement and management, they may be able to offer their mastery as part of services and relationships offered to local businesses.  This should help with employer relationship management and the public relations as well as marketing advantages improved relationships in that market deliver. And it would certainly be a great advantage for HCOs that venture into the employee health and performance market as a revenue-generating service to such employers.

To the extent that HCOs can achieve an integrated approach to employee performance optimization, for external ell as internal use, they may find a significant new source of revenue from employers, in addition to the added cost savings and revenue enhancement value of their own workforce optimization.  In any case, it is an opportunity that few HCOs can afford to ignore.


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