Improving productivity depends on the convergence of both knowledge and incentives.
We have to acquire the knowledge of what to do, but we also must have an incentive to act on that knowledge. One without the other will not produce the results we want.
Knowledge means knowing what to do—choosing the best course of action, having a detailed plan, and using the best tools. If refers to the necessary facts, data, comprehension, and method, but having knowledge isn’t enough to get action. It is incentives and consequences that attend to our motivation to powerfully act on that knowledge.
We often assume that everyone will automatically act selflessly for the good of the organization, because this is healthcare and we’re different from everyone else. But we’re not that different, and people need a compelling reason to take up a challenge and follow it through to successful completion.
Productivity management is not only about hardware and software, data, or flash reports; it is about management. Managers must have the authority to act and to learn from the consequences of their decisions. Learning is not just a technical or systems issue, but one of motivation, skill, and developing good judgment. Motivation is enhanced when people are accountable for results; skill comes with experience, and judgment is the result of much experience. The emphasis should be on developing the necessary management principles, operating procedures and policies.
A logical program to develop superior productivity requires four components:
- Specific, simple, and realistic labor productivity standards
- Effective monitoring protocols that everyone can easily understand
- Accountability and authority explicitly drawn at each management level (i.e., governing rules)
- A system of incentives and consequences
Workable labor standards are simple, easily understood, and accepted as valid and practical. We must resist the temptation to over-engineer labor standards. If people cannot understand what they are being held accountable to, then they can’t be held accountable.
Executives may have the incentive to act, but they don’t have the detailed operating knowledge that the department managers have. Department managers, who know operations, are charged with improving productivity. Yet, there are typically no incentives whatsoever to improve, and no consequences to prevent decline. In fact, the opposite is more often true, albeit unintentional: initiative is punished and inaction is rewarded.
We have to break the spend-it-or-lose-it mentality by giving managers an incentive to innovate, improving operations to reach a new level of superior productivity. To have managers eagerly participate, instead of dragged along kicking and screaming, we need meaningful incentives.
Executives usually get some kind of incentive for steering the organization to a higher level of performance. Why not department managers?
The next wave of performance improvement will have to focus on introducing accountability and responsibility into the business side of healthcare delivery.
- We will have to introduce a greater degree of autonomy for managers balanced with clear performance expectations, backed up by incentives and consequences for performance.
- We will need to explore management concepts and business models from other industries and apply them to our own – something we’ve been very reluctant to do because we’re “different.”
- We will need to inject market mechanisms into the hospital so that all managers can think and act like entrepreneurs and CEOs.
Rather than fear what’s coming, we ought to welcome change. Healthcare will ultimately be a more exciting and more rewarding industry in which to work.
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Paul Fogel is President of Executive Information Systems, Inc., and author of Superior Productivity in Health Care Organizations: How to Get It, How to Keep It, Health Professions Press, 2003. He can be reached at Paul.Fogel@ExecutiveInfoSystems.com.