Best Practices

Do you have the right number of employees?

Solving the staff equation involves cold, hard stats and listening skills.

By Andrew Maller, MBA, COE

Do I have too many employees? Do I have enough? How do I determine the right number to run my practice?

As a consultant, these types of questions are probably the most common I receive from practices. This makes sense, considering that staff salaries and benefits are the largest expenses practices incur (typically around 25% of revenue). Having the right number of staff who are trained to efficiently assist physicians in seeing patients, accurately manage billing and collections, and provide excellent customer service can be the difference in what makes a practice successful or not.

The truth is that there is no simple, “one-size-fits-all” staffing-level answer for all practices. To find the best solution for your practice, gather some objective and subjective data that will assist you in determining any need for staffing adjustments. The following action steps will help you get started.

DECIDE ON BENCHMARKS

To begin, I recommend starting with an objective analysis. To do this, consider using the following three staffing benchmarks. Please note that with benchmarking, it’s a good idea to explore trends over time. I suggest reviewing the last three fiscal years for the practice.

• The first common metric is referred to as the staff payroll ratio, in which staff wages (excluding those of physicians) are divided by the practice’s net collected revenue. This ratio essentially indicates what percentage of revenue is spent on staff wages for every dollar the practice generates in revenue. The typical range I see is 20%–26%.

• A second useful benchmark is net collected revenue per full-time equivalent (FTE) support staff. To determine the FTE amount, take the total number of staff hours (including paid time off) and divide by 2,080. BSM Consulting uses a benchmark range of $140,000–$200,000.

• The final staffing ratio I recommend tracking is the FTE support staff per FTE physician; it typically falls in the 4-8 range. A result lower than this could indicate the need for additional staff while a higher total could mean staffing inefficiencies.

CHECK MULTIPLE SOURCES

One pitfall of the staff benchmarks is using just one metric to determine if your practice is “healthy.” For example, if a practice’s payroll ratio is 32%, the natural reaction would be to assume that the practice is overstaffed. Instead, practices should compare the result to the other two ratios to see if there is a correlation in the results. Let’s assume, for this example, that the FTE staff per FTE physician is 5.0, and the net collected revenue per FTE support staff is $210,000. In this situation, it is not clear if the practice is overstaffed. Perhaps this practice pays higher wages to its employees, which could explain the high payroll ratio. Drawing conclusions based on the result of just one data point can lead you astray.

DETERMINE THE SUBJECTIVE

After completing the objective part of the assessment, the next step is to gather input on staff levels from various stakeholders, including physicians, staff, and — most importantly — your patients. This information can provide valuable insight based on real-world views and expectations. Here are several tried-and-true input-gathering methods that can be implemented easily:

• Patient satisfaction surveys. A great way to determine how your patients view your staffing levels is to ask them directly. They will tell you if they called for an appointment and waited on hold for 10 minutes. They will tell you if they felt adequately taken care of by the technician or physician. Asking for feedback from your patients shows that you want to make their experience as positive as possible.

• Staff satisfaction surveys. Another way to determine if you have the appropriate number of staff is to ask them in an employee satisfaction survey. Gauging their opinions on morale, patient wait times, and so on, can provide valuable insights that would not be gained by only looking at the benchmarking numbers.

• Physician interviews. Physicians often share with practice administration their opinions on whether they feel the practice has the appropriate number of clinical staff. For group practices, consider bringing up the subject at a scheduled physician meeting. Discussing staffing levels in a group setting can provide another meaningful subjective data point.

• Observation. One final recommendation I have for administrators or physician-owners is to observe each department in the practice. For example, spend a morning observing patient flow in the exam lanes. Do patients flow smoothly through the entire exam process, or are there bottlenecks between diagnostic testing and the physician exam? Do staff members appear confident in their ability to handle a busy clinic session? Similar observations can be made in other areas of the clinic.

MARRY THE OBJECTIVE AND THE SUBJECTIVE

Now that you have a number of objective and subjective data points, finding an answer to your staffing equation should be achievable. Using only the objective part of the analysis — the benchmarking data — will point you in the right direction; but it won’t necessarily provide the conclusion. Adding the subjective analysis will bring the overall picture into focus, helping you to make a better decision. Conducting this level of analysis is worth the effort, as your staff is your largest expense and, arguably, your most important asset. OM

Andrew Maller, MBA, COE, is a principal and consultant with BSM Consulting, an internationally recognized health care consulting firm headquartered in Incline Village, Nev. and Scottsdale, Az. For more information about the author, BSM Consulting, or content/resources discussed in this article, please visit www.BSMconsulting.com.