Crittenton Hospital Medical Center in Rochester, Mich., has reportedly saved more than $4 million by using the LaborConnect staffing management program developed by the Premier healthcare alliance.
With proposed reimbursement cuts posing a significant threat to hospitals – and with labor costs comprising more than 60 percent of hospital expenses – CHMC officials say they're operating in a dynamic and competitive environment where most hospital workers are unionized. That makes an effective labor management program key to maintaining costs.
“We have definitely proven the value in Premier’s benchmarking/productivity system integrated into our labor productivity program,” said Gary Altman, program leader for process engineering at CHMC.
[See also: Small changes help Premier's QUEST hospitals save $577M.]
A little over four years ago, CHMC implemented LaborConnect’s OperationsAdvisor productivity and benchmarking solution, joining more than 500 hospitals that have implemented Charlotte, N.C.-based Premier's software. Over three years, hospital officials say they saved more than $4 million in labor expenses.
Premier executives say OperationsAdvisor is the only Web-based total labor management solution that fully integrates a productivity measurement system with quarterly benchmarking. Hospitals using LaborConnect, they said, saved more than $120 million last year.
“To be compared to other hospitals at a high level is an enormous benefit," said Altman. "We have been pleased with the support and guidance from Premier. The best practices for establishing a labor productivity program were an excellent guide to getting us started.”
Premier helped CHMC outline best practices, such as solid senior leadership support. CHMC’s Labor Productivity Steering Committee was reorganized and revitalized, with executive team members meeting weekly to strategize their labor productivity improvement.
In doing so, hospital officials say they have significantly reduced overtime. The use of agency nurses has been eliminated for the past two years. Physician, employee and patient satisfaction has increased with a decrease in turnover. And new positions are under tight control as they must result in significant savings or new revenue to be approved.
“Our labor productivity program is designed to protect resources, not to reduce them,” said an LPSC representative. "You cannot lay people off and expect to keep morale up or maintain a high-quality community image."
The LPSC used Premier’s recommended business plan to develop department-focused initiatives that are posted on a weekly project tracker for all employees to access on the hospital’s intranet.
The goal for CHMC is to achieve top percentile on OperationsAdvisor benchmarks, officials say.
“Our leadership team understands that to do this correctly, we need to have the dedicated time and commitment to accomplish our goals," Altman said.
In 2008, Premier helped CHMC reset productivity targets to adapt to changes in the environment and the addition of new programs. CHMC also hired a new labor productivity engineer, Kerry Coran, to further support for the initiatives.
Each year, CHMC reviews each department, giving priority to those below the 50th percentile. Today, the number of departments within a 5 percent variance of target has increased from 31 percent to 75 percent and continues to grow, officials said. The LPSC also closely monitors agency and sitter use overtime, and new position requests with the metrics are presented to the governing board of trustees.
[See also: 40 health systems join Premier's ACO Readiness Collaborative.]
CHMC has also used the Premier Performance Improvement Portal, a library of industry best practices. Participants tap into a networking community for knowledge sharing and interaction with industry specialists, hospital and health system peers and Premier's knowledge experts.
"The Premier Performance Improvement Portal is a good resource for finding new ideas when a manager needs help,” said Coran.