June 18, 2019

Staff input enriches labor benchmarking data

Sharon Ulep, MBB, MBA, CMCA, CPHQ

Labor is the most important resource in an OR and must be used effectively to maintain the financial health of an organization and the well-being of patients. “OR leaders need data tools to manage their labor dollars. How do you know if you are doing it well?” asks Sharon Ulep, MBB, MBA, CMCA, CPHQ, principal of healthcare strategy and operations consulting for Plante Moran, Southfield, Michigan. “More than half of your expenses are labor, so rightsizing your staff to the work of your OR can result in a significant return on investment.” Benchmarking provides a baseline of metrics to support appropriate management.

Ulep says labor management depends on aligning leadership vision with services a facility provides. At the same time, OR leaders must acknowledge staff’s passion for their work. “It’s important to recognize that there is more to your staff than just dollars,” Ulep says. “These are people who are doing this because it’s what feeds their souls.” Helping staff learn how their labor is measured and what is counted as productive can get them involved in reducing unnecessary work.


Value of benchmarking

“You benchmark to compare your organization against similar organizations so you can determine how you are doing,” Ulep says. “You want to know how you rank, and what you can do to be better.” Commonly used sources of benchmarking data include Truven, Premier, the American College of Surgeons, and the Medical Group Management Association.

Labor benchmarking often provides a positive return on investment by helping to identify areas where productivity can be enhanced. Ulep cautions, however, that optimal use of benchmarking depends on staff involvement, understanding variables, and careful analysis of findings.


Staff involvement

Some leaders worry that staff will not be receptive to talking about labor management, but Ulep disagrees. “Respect the fact that these are intelligent people who know that the hospital needs to be doing things efficiently and profitably in order to keep the doors open,” she says.

Ulep gives examples of positive effects of staff involvement. First, frontline staff best know how to reduce wasteful steps in processes. Second, benchmarking can help staff know where they should be spending their time. And third, involvement helps avoid the perception that the numbers have been imposed by finance.

“You want your team to be engaged in understanding benchmarking and know that benchmarks are important for meeting organizational goals,” Ulep says. “If you don’t involve them, you’re missing your greatest resource for change and improvement.”

Once staff understand the variables involved in benchmarking, they can help the organization be more successful (sidebar, above). Ulep says a goal should be for everyone in the department to consider how they can work more productively, so that their team “wins.” Sharing biweekly reports with staff will help keep them engaged.


Benchmarking variables

Several variables go into effective labor benchmarking, including department mapping, worked hour statistics, compare groups, characteristics, sample size, and percentile rank. The ability to pull specific data elements from the organization’s data systems will drive some of the choices of which variables are used.


Profiling departments

A first step in benchmarking is to interview each department manager. Use these face-to-face interviews to learn about the day-to-day operations and identify appropriate characteristics for mapping, as well as barriers to best practices. Discuss current staffing and skill mix, and share information about the labor benchmarking process. Record this information in a document that describes the services of that department and identifies what may be different or unusual relative to a similar department in a comparable organization.


Department mapping

Next, consider how cost centers are mapped to various departments. The number of cost centers will vary by facility size, but Ulep says those in finance may make the designations too broad. For example, the OR, postanesthesia care unit (PACU), preoperative area, sterile processing department (SPD), and perfusion services may be considered different departments when it comes to staffing, yet the finance department may map all of them to a single “OR” cost center.

Staff flow between the departments also affects labor benchmarks. If, for instance, PACU staff routinely work in the preoperative area, an OR leader might want to benchmark the two together, not separately. Mapping should be based on analysis of staffing and the services each department provides.

“Every cost center that the finance staff gives you as a number needs to be mapped so that it accurately reflects how the space is used and how the staff are used,” Ulep says. “If it’s not mapped correctly, your benchmark probably isn’t valid.”

Ulep provides several examples of how cost centers should be mapped to a department, depending on services provided.

• When mapping anesthesia, consider all areas where anesthesia is provided, such as the OR, emergency department, and intensive care unit.

• Consider whether the SPD provides distribution services such as cart filing and inventory management in addition to instrument processing. Also consider whether SPD provides services for non-OR areas of the hospital such as infusion centers or clinics.

• Determine if there is a separate cost center for surgical services administration that includes personnel such as the OR director, OR managers, and clerical and scheduling staff.

• Identify other services that might not be reporting to the OR director, such as endoscopy and the cath lab. “Think about who does the work and where the revenue is credited,” Ulep says. “If your PACU staff are recovering patients who received anesthesia during an interventional radiology procedure, how and where is that work effort credited?”

Once the mapping is done, the manager of the cost center should review and sign off on the profile document.


Worked hour statistics

This refers to the minutes or hours it takes for someone to perform a task, but that description is deceptively simple. OR leaders have to consider several factors affecting this statistic. For instance, does it reflect what the cost center staff are doing? Suppose SPD tray processing is the chosen statistic. If the staff are performing multiple other tasks such as distribution, they will never meet the benchmark. In this case, either the worked hour statistic used has to be revised or other staff have to take on activities not included in the statistic.

“You don’t make money if there’s nobody on the table; you need patients all day long to stay productive and profitable,” Ulep says. In too many organizations, only one case is scheduled for a room, with the hope that add-ons will follow. “That does not make for good OR management,” she says, adding that staff must understand the need for starting and finishing cases on time. “You’re not going to get more cases into the OR if you always start late,” she says. “Start on time, stay on time, finish on time, and you’ll win the labor game.”

Ulep recommends analyzing the worked hour statistic for each mapped cost center. There are often choices such as number of cases, OR minutes, PACU minutes, and SPD trays processed. For example, how many items are SPD staff processing over a particular time frame? As a general guide for OR productivity, Ulep suggests using minutes for large, tertiary care facilities and number of procedures for average-sized ORs (between 6 and 20 rooms). Minutes should be used for PACU productivity.

Some cases are more complex than others, and in that situation, Ulep emphasizes that collecting data to show complexity is key, although many organizations lack the ability to gather sophisticated statistics.


Compare groups

The most common comparison factor is a hospital’s total occupied beds. “This usually provides a robust compare group,” Ulep says. Case mix index is gaining in popularity as a compare group, particularly for larger hospitals with more complex, higher acuity patients. Case mix also helps in addressing variables such as certain cases needing additional circulators or surgical technologists: Hospitals with a higher percentage of complicated procedures such as open-heart surgery will have similar staffing demands.

Other factors to consider when choosing a compare group include:

• Magnet designation. Ulep gives less weight to this because it doesn’t include total occupied beds or case mix index.

• Teaching status. Residents need to practice skills, which often prolongs case time.

• Skill mix (RN to LPN). Ulep notes that many smaller facilities in rural areas employ a higher percentage of LPNs.

• Multihospital system status. Multihospital systems are more likely to centralize services such as supply chain.

The goal is to match the OR leader’s organization as closely as possible with a compare group, but it’s also important to recognize unique characteristics.



“When I talk to a facility trying to understand their benchmarking, the first thing they want to tell me is how special or different they are,” Ulep says. Most of time, there aren’t as many differences as people think, but some characteristics are important. For example, a hospital that also has a children’s hospital attached will likely perform more complex pediatric OR procedures; that needs to be considered when examining data from a compare group.

Other characteristics that could affect benchmarking analysis are smaller. For example, do environmental services or OR staff clean between cases? Is there a dedicated materials management staff, or does SPD order the OR supplies? Each factor should be evaluated in the profiling process to ensure the best match.

“There are characteristics that you can apply in your benchmarking to better reflect what is unique to your organization,” Ulep says.


Sample size

Ulep cautions not to apply too many characteristics. “The more you put in, the smaller your sample size will go, so that eventually you’re comparing yourself to yourself,” she says. Organizational leaders need to establish a comfort level with how many compare facilities is the best fit. “It’s not an exact science,” Ulep says. She recommends that those starting to use benchmarking systems experiment with the number of characteristics applied to see how sample size is affected. Ulep suggests having a minimum of 15 compare facilities, with more than 30 being ideal.


Percentile ranks

Typically, productivity reports include how closely a cost center is performing to a percentile rank. “The percentile rank is what your leadership team sets as a goal for your organization,” Ulep says. She notes that it can take as long as 18 months for all the cost centers in an organization to achieve a 50th percentile ranking. Conversations with senior leaders help establish time frames for achieving established goals.

As goals are met, leaders should raise targets incrementally, rather than expect large gains over short time frames. For example, the goal could be to achieve the 50th percentile by year end, and the 55th percentile the next year. “This helps your organization mature into benchmarking and gives staff goals that are achievable,” Ulep says.


Analyzing the benchmarks

When it comes to analyzing benchmarking reports, Ulep says, “I am not a big fan of saying ‘Let’s trim staff.’ I am a big fan of saying, ‘Let’s make our staff productive.’” For example, if circulating nurse positions are eliminated, the OR might not be able to keep rooms open to do more cases.

Ulep says that a first step in analyzing benchmark reports is a reality check of the data. If, for example, a report indicates the department has four more full-time equivalents (FTEs) than required as the benchmark goal, the OR leader should ask questions such as:

• Are the people in the cost center actually doing the tasks that they are measured on with their worked hour statistic?

• How are the data representing worked hours being collected?

• Is the revenue lining up with the cost center where the staff members are allocated?

• Are some people charging their worked hours to the cost center, but not actually doing work for the cost center? Ulep notes that one hospital brought in an infection prevention specialist for a special project, and after the project was completed, the specialist’s hours were still being charged to the OR. The OR leader received reports showing that two FTE positions should be eliminated. “Regularly check to be sure that everybody who is charging hours against your cost center really should be charging those hours, and if not, where they should be charged,” she says.

• Is there a minimum staffing reality? Patient safety and regulatory requirements play a role here. For instance, an OR can’t be run with 1.2 nurses, even though a report may produce that number. “There may be certain locations where you’re not going to be able to make the benchmark because of the need for minimum staffing,” Ulep says. This is particularly true at smaller facilities.

What if the data are sound, and staff aren’t meeting productivity benchmarks? Ulep says not to assume that staff aren’t trying, but rather determine if there are reasons why the benchmarks can’t be met.

“Missing benchmarks should be a clue for leaders to say, ‘Let’s dig into this a bit more,’” she says. For example, an ambulatory surgery center may be open during hours where there aren’t sufficient cases to justify the time.

“Look at the processes and talk to your team,” Ulep says, adding that in the OR, the solution is usually either increasing case volume, or rightsizing staff to meet the actual volume.

Here is where laying the groundwork with staff in all cost centers can pay off. For example, an environmental services staff person may suggest staging patients outside an OR as the case is finishing to reduce turnover time and overtime. The staff person will then feel that he or she is contributing to the department’s success.

Ulep advises double checking where staff time is being credited. “If you have staff teaching a class or supporting a clinic on a certain day, you need to be sure they are putting their time against the cost center that is benefitting from their hours,” she says.

The goal should be to increase productivity instead of downsizing staff. In some situations, that might mean running fewer ORs so that each room has maximum cases.

Ulep suggests engaging surgeons where appropriate. For example, if the first case on-time start statistic is low, let surgeons know that staff might have to be eliminated if the problem isn’t corrected. “It’s a partnership where both you and the surgeons recognize that ‘if we’re not productive, we’re not making money,’” she says.


A journey

Ulep says OR leaders need to understand that it takes much more effort to go from the median percentile to an upper quartile percentile than it does to get to the median percentile. “The better you get, the harder it is to stay there,” she says. “It takes work, and it takes understanding.” Thoughtfully creating alignment between labor management and leadership vision is a good place to start.

OR leaders also should not think of benchmarking as just a one-time event to provide a financial return. “It’s a journey,” Ulep says. ✥

Cynthia Saver, MS, RN, is president of CLS Development, Inc, Columbia, Maryland, which provides editorial services to healthcare publications.



Ulep S. Busy vs productive: How to meet surgical labor benchmark goals. OR Business Management Conference. 2019.

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