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Alternative indicators for measuring hospital productivity.

G D Serway, D W Strum, W F Haug

    Hospital & Health Services Administration
    |July 9, 1987
    PubMed
    Summary

    Traditional hospital productivity measures are less effective due to changes in healthcare delivery and payment models. This study suggests adopting alternative productivity indicators for better management in evolving healthcare environments.

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    Area of Science:

    • Healthcare Management
    • Health Services Research
    • Hospital Administration

    Background:

    • Traditional hospital productivity metrics are challenged by organizational restructuring, evolving data sources, and ambiguous full-time equivalent employee (FTE) measurements.
    • The shift to prospective payment systems, such as diagnosis-related groups (DRGs), and the rise of capitation programs have significantly altered hospital financial and operational landscapes.
    • These environmental changes necessitate a re-evaluation of standard productivity management approaches in healthcare settings.

    Purpose of the Study:

    • To explore how changes in healthcare delivery and payment models impact the effectiveness of traditional hospital productivity measures.
    • To identify the need for and present alternative productivity indicators suitable for the contemporary healthcare environment.
    • To provide a framework for hospital management to adapt productivity measurement strategies.

    Main Methods:

    • Analysis of productivity data from four hospitals within a multihospital system.
    • Illustration and interpretation of a range of alternative productivity measures using ten months of actual operational data.
    • Examination of the effects of organizational restructuring, prospective payment, and capitation on productivity management.

    Main Results:

    • Established hospital productivity measures, particularly those relying on FTEs, are becoming ambiguous and less useful.
    • Alternative productivity indicators are presented that better align with current internal operations and external business dynamics in hospitals.
    • The study demonstrates the practical application and interpretation of these new measures using real-world data.

    Conclusions:

    • Hospital management should adopt an expanded set of productivity measures to accurately reflect performance.
    • Regular review of these enhanced productivity metrics is crucial in light of evolving payment modes and their impact on revenue and expense management.
    • Adapting productivity measurement is essential for effective financial and operational stewardship in the modern healthcare system.

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