Hospital drives $4M+ in savings using labor management app Last Updated: July 25, 2014
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Crittenton Hospital Medical Center (CHMC), Rochester, MI, a 290-bed hospital, serves Oakland, Macomb and Lapeer counties. It provides a full continuum of clinical programs with a medical staff of nearly 500 physicians. It partners with the University of Michigan Health System for cardiac surgery and with the Barbara Ann Karmanos Cancer Center for cancer care. It is a teaching hospital for Wayne State University’s School of Medicine’s family medicine and ear, nose and throat residents.

Challenge

With more than 60 percent of hospitals’ expense going to pay for labor, healthcare reform’s proposed reimbursement cuts are a severe threat to hospitals. Crittenton Hospital Medical Center (CHMC), in Rochester, MI, operates in a very dynamic and competitive environment where most hospital workers are unionized. An effective labor management program is a necessity.

Solution

CHMC began using OperationsAdvisor® four and a half years ago and struggled to get traction. Gary Altman joined CHMC in 2008 as program leader for process engineering. His first assignment was giving new life to the labor management program.

Premier outlined best practices; a critical one is solid senior leadership support. The Labor Productivity Steering Committee (LPSC) – reorganized and revitalized with 75% of the executive team – committed to meet weekly because of the strategic significance of labor productivity improvement.

As stated by the LPSC, “Our labor productivity program is designed to protect our resources, not to reduce them. You cannot lay people off and expect to keep morale up or maintain a high quality community image.”

The LPSC took Premier’s recommended business plan and developed department-focused initiatives posted on a weekly project tracker that all employees can access on the hospital’s intranet. The goal is for the entire hospital to achieve top percentile on OperationsAdvisor benchmarks. “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 assisted CHMC in resetting productivity targets to adapt to changes in the environment and the addition of new programs. At this time, CHMC brought on Kerry Coran, Labor Productivity Engineer, to further support for the initiatives.

Each year CHMC critically and individually reviews departments at the 25th percentile or better, those between 50th and 25th, and those below 50th. The highest priority is those below 50th percentile and the action steps needed to improve. The LPSC also closely monitors overtime, agency and sitter use, and new position requests with the metrics are presented to the governing Board of Trustees.

Result

  • CHMC has saved more than $4 million in labor expenses in the past 3 years
  • Overtime has been reduced significantly
  • Use of agency nurses has been eliminated and sustained over 2 years
  • New positions are tightly controlled and must result in significant savings or new revenue to be approved
  • Physician, employee and patient satisfaction has increased; turnover has decreased
  • The number of departments within a 5% variance of target has increased from 31% to 75% and continues to grow