Few areas have caused more heated debate in recent years than healthcare and the need to rein in ballooning costs. Battle lines drawn even before the passage of the Affordable Care Act remain, and efforts to repeal it or to keep it in force are ongoing. In the meantime, consumers continue to worry about the portion of hospital bills they are obligated to pay for. And with good reason, many of those expenses are sky high, not least because of employee payrolls. Health Qlix Inc., a Tampa-based provider of labor management and labor analytics solutions, has stepped into the fray. David Clement, the company's president and CEO, sat down with SupplyChainBrain in October to discuss how healthcare providers must control staffing costs – and how they often can do so without necessarily reducing headcount.
Q: Of course, yours is a private company, and you need to make money. But how would you characterize your mission in the marketplace beyond that?
A: Clement: Our mission is nothing less than to help lower the cost of healthcare while simultaneously improving patient quality, and to do that we focus on labor analytics.
Q: So let's walk through that. Describe the importance of labor cost in a healthcare setting or environment.
A: Clement: Labor expense can be up to 60 percent or even more of a hospital's total operating expenses, so that in and of itself shows you the importance of looking at labor and having the best analytics possible. This is true in other businesses as well because they experience many of the same things. For instance, it's very challenging to keep your workforce in alignment with your workload, or in the healthcare setting, with your patient care requirements since they are constantly evolving and changing. It's a hard thing to do, and our solutions are oriented to help people navigate those challenges and get the results that are possible.
Q: As you say, many issues are similar across across industries, and the need for analytics is similar as well. Everyone's concerned with receiving the benefits they might derive from appropriate use of analytics tools. But what is it in healthcare that you tell your customers are the specific benefits that they might see?
A: Clement: I'll answer that by saying that while our leadership team has been involved with labor analytics in healthcare for more than 27 years, and we've developed some widely adopted labor management and labor analytics solutions, we've also recognized in more recent years that newer and better approaches and tools needed to be developed. It's not just about patching legacy systems but really developing some new tools. That's driven by changing technology, that's driven by having more extensive information available that you simply haven’t had in the past, that's driven by having more timely information than in the past. So we recognized that a whole new tool and solution set really needed to be developed to leverage all those changes.
Q: And the benefits?
A: Clement: To start with, the first thing any labor analytics solution in any industry needs to do is help you manage your workforce or align your workforce with your volume, with the workload that you have. To do that, you need to have all kinds of robust productivity and performance reporting abilities in your solution. And that needs to be across several different time frames. It might be biweekly, or daily or even real time. With the availability of information now, a good solution brings all that together, all that performance and productivity information. Also it links it with electronics FTE requests processing and dynamic position control. So, all productivity and performance information gets linked to other business processes that have to do with labor. You have a nice, complete solutions set, everything is in sync.
On top of that, not everything that gets produced in the healthcare setting is the same – not every patient is the same, not every test performance in a laboratory is the same – so there's the concept of intensity and how the mix of things you're doing, and the mix of patients you’re treating, can really impact productivity. So through intensity adjustment and patient classification or acuity, you can account for those variances in your business as well.
All that being said, I think the real power is to provide more focused analytics. Providing analytics that will draw you to see the things that you need to see instead of it being just an open-ended tool that you use to draw your own conclusion.
Q: Elaborate on that, if you would.
A: Clement: Here are some examples: we provide some focused insights – we just push them right out to you – having to do with other aspects of your labor management programs like on-call and charge-pay. In the area of on-call alone, that's something that hasn’t been analyzed much over the years. It's an under-analyzed part of the labor-cost structure. We estimate that there is a billion-dollar opportunity in just that on-call piece. Our view is that the best solutions provide focus like that to your efforts.
Another example is incidental labor. Those 15 minutes of extra time here or there that somebody is working on site, or that they haven't clocked out, can drive significant overtime. The best solutions are going to bring that to your attention, not wait for you to find out and then have to analyze that type of information.
There' s also an educational component. When we look at labor in any industry, sometimes it's about meeting targets and expectations. A lot of times it's about giving your front-line managers the information they need to know when they've got the best outcomes just by comparing themselves against themselves, benchmarking themselves. Once they see when they've got the best outcome and why, you obviously now have some good knowledge, and you want to replicate that.
Q: Characterize the typical results they are likely to get.
A: Clement: In a few words, extensive and lasting. For example, if you have a $50m payroll, if you can use analytics to move that needle just two percent and increase your cost effectiveness just two percent, that's a $1m that you saved. And if you can keep your workforce in alignment at that performance level, that’s a $1m every year for moving the needle just a little bit. The best tools can help you do that. Beyond that, there's a couple of other ways to get results. One way is in not necessarily reducing your workforce or reducing your hours but increasing the cost effectiveness of the hours that you have. We talked about on call being under-analyzed in our industry. Well, if you focus on that and reduce that labor expense, you’re not cutting your workforce, just giving a more effective labor management program and saving money on top of that. There are lots of examples like that.
A whole third category has nothing do with cost reduction, just maybe staying cost neutral but aligning your workforce with labor gains. Here's an example of that: there might be a department or area of the hospital – the emergency room is a good example – where overall the ER is meeting their cost goals and their labor management goals, right on plan. But when you use analytics to dig a little bit deeper, you might find that on Thursdays they're very unproductive and on Mondays they're extremely productive. So it all washes out in terms of meeting their goals, but there’s a problem with that when you have such differences in productivity on different days. What's probably happening is this: there are a lot of ER visits on Mondays, so staff has great productivity, but they're probably very frazzled, and the ER wait times are probably very long. You're getting a lot of throughput, a lot of work done, but the workforce might not be providing the quality they need to, patients might not be as satisfied as otherwise they might be. So when you see that on Thursdays you have excess capacity because you're not so busy, shift some of the workforce resources you typically don't use on Thursdays to Mondays. You haven't saved any money as a business, but you’ve just had a huge win increasing customer satisfaction, and probably increasing the quality and increasing the satisfaction of your workforce. So results can be all over the spectrum. We all love to save costs where it's rational and realizable, but some of it is just doing a better job for all of your constituencies.
Q: What's the takeaway you want to leave the constituency reading this?
A: Clement: Don't leave your results to chance. Get a partner and get a solution set that has that deep domain expertise that can really help you get to the point that you need – and want – to get to. This is complex stuff, and there's nothing wrong with needing help. And if you can go outside and get the results you want sooner and even cheaper than you can on your own, why wouldn’t you?
Health Qlix Inc.
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