The Healthcare Entrepreneur Blog

Productivity Question

by Tannus Quatre PT, MBA | March 12th, 2010 | No responses

The following is a Q&A with a seminar attendee (CSM 2010, San Diego, CA) on the topic of productivity:

Q: On the financial production assumptions, my productivity is showing 236%. What does this mean?

A: Productivity is defined in this model as billed hours divided by total hours worked. If a PT bills out 4 hours in a day and worked 8, they would have a productivity of 50% for that day (4/8 = 50%). A clarification of this model is that productivity is not an “assumption,” it is a “metric.” In other words, productivity is calculated by the model (an output) and is not assumed prior to running the model (an input).

For a productivity of 236%, this means that your particular model is billing out 236% of the hours worked by your staff. This is not possible under a traditional 1:1 care model give current regulations surrounding 3rd party reimbursement. Again, the productivity is an output, so other inputs must be altered in order to achieve a productivity in an acceptable range (less than 100%). The most obvious input to adjust will be that of FTE’s, increasing to a number that places your productivity at appropriate levels. Remember though, that increasing FTE’s will also increase staff expenses, therefore decreasing profitability. And herein lies the iterative beauty of financial modeling!!

via Vantage Forums: Productivity Question.

Tannus Quatre PT, MBA
Tannus Quatre is a private practice consultant and principal with Vantage Clinical Solutions, Inc., a nationwide healthcare consulting and management firm located in Bend, OR and Denver, CO. Tannus specializes in the areas of healthcare marketing, strategy, and finance, and can be reached through the Vantage Clinical Solutions website.