Improving hospital productivity under PPS: managing cost reductions

In this article, a number of tenets of faith concerning hospital productivity improvement are explored: cutting staff harms service quality; more staff buys more quality; reducing staff translates into reduced employee morale; and performance gains come only to those who work harder. Alternative mechanisms by which the organization may work smarter, rather than harder, are advanced. The use of efficient scheduling systems and work unit reorganization, especially when reinforced by an incentive pay plan, has led to significant scale cost reductions.