Avoid ‘FTE Creep’ With Productivity Monitors

Of all the financial monitors hospitals must scrutinize, none are more important than productivity. The biggest threat to keeping productivity on track is that of “FTE creep,” an often used — but very often misunderstood — phrase for an increase in FTEs beyond reasonable control.

Wages and benefits generally are about 50 percent of any hospital’s expenses, and that percentile generally walks a very tight line between profitability and falling into the “red zone.” Often hospitals do not have a clearly defined method for monitoring “FTE creep” and keeping it at bay.

To promote productivity actively, hospitals need to ensure that their managers receive timely and regular reports…and more importantly, that the managers know how to interpret the data. It’s not uncommon for a sizable portion of hospital management to have a poor grasp on calculating productivity requirements based on a reasonable, industry-accepted indicator. Too often managers base productivity on the voices of personnel “gripes” or unreliable and compromised indicators.

Good management means grooming good leaders, and a good leader can orchestrate established industry standards to help the organization meet its financial goals without sacrificing patient care or other service outcomes. Keep in mind that productivity has two factors: maintaining good outcomes or services, and affordable staffing. If a hospital cannot afford to provide the right staff to ensure good outcomes and services, a thorough third-party operational assessment should be obtained as soon as possible.

A good operational assessment will include a staffing assessment and a productivity analysis, correlating labor with established processes to determine inefficiencies and opportunities for improving outcomes and services.

Michael Carr, RN, NEA-BC, CJCP is Vice President, Clinical Services, at Alliant Management Services. For more information or to discuss this article, contact him at 502.992.3525 or mcarr@alliantmanagement.com