Having written about low productivity in my previous
post (Symptoms and Signs of Employees who Need Training), I thought I should
write a bit about basic productivity measurements in the hospital.
Productivity is simply the ratio between the units
of output produced and the units of input consumed in the process of
production.
As a hospital entrepreneur, it is very important
that you have a good understanding of productivity. You should also know how to
determine who or what is productive and who or what isn't productive. This
knowledge will enable you assess your present productivity level. You will be
able to determine where you are on the productivity scale.
Knowing where you are will give you a clearer
picture of where you want to be. It is only then that you can decide what to do
to improve the productivity of your hospital. Determining productivity is not a
difficult task but you must keep good records– accounting/financial, clinical records
etc. - in your facility. In addition to having good records, knowledge of
primary arithmetic is essential.
In the
healthcare industry, the units of output produced could be expressed in several
ways. Firstly, output could be the number of patients seen per month, the
number of successful surgeries performed in the OR per week or the number of
babies delivered yearly in the maternity department.
Secondly, the output of the hospital process could
be seen in financial terms i.e. the amount of profit made annually or Return on
Invested Capital (ROIC). In this case, your output is defined by how much money
the system produced over a given period of time.
Thirdly, the output could also be defined in terms
of “value-added time”. The value-added time is the amount of time that your
workers are actually adding value to your hospital process. Good managers should
always know how much time their workers spend on productive activities while
they are at work.
The inputs in any process are the resources that go
into production e.g. manpower, materials, capital etc. Again, we can simplify
the idea of input by looking at the financial input and the time input.
The financial input include the money spent to
procure the units of production (land, labor). This is the capital you invested
into establishing and maintaining your hospital. The money invested in
procuring land, buildings, beds, equipment and other vital infrastructure is
known as fixed capital. On the other hand, what you spend in the day to day
running of the hospital is your working capital.
The time input in productivity is seen as the total
time that your employees are expected to work for you. The ratio of time output
and input is known as productivity.
In mathematical terms therefore:
Productivity= value added time /total time spent x
100
We will put it all in perspective by solving a
simple problem.
Yunusa
is a pharmacist working in your hospital. He is expected to work for 8 hours
every day for 230 days in a year. But from observation, he actually spends a
total of 3 hours daily in adding value to your hospital. He spends the other
part of his time chatting on Facebook and visiting colleagues in their offices .What
is his level of productivity?
To calculate Yunusa’s level of productivity, first
determine his output which is his total value added time over a year.
Then determine his input which will be the total
time he is expected to work every year.
Output= Value added time= 3 x 230 =690 hours
Input= Total time = 8 x 230 =1840 hours
Labor productivity= 690/1840 x 100= 37.5%
Hence, the productivity of your pharmacist is just
37.5%. In contrast, he earns 100% of his pay. You therefore lose 62.5% on the
chap!
I will give you another example.
Dr.
Obande invested N15 million in acquiring lands, infrastructure and equipment
for his new hospital. At the end of the first year, he returned a profit of
N700,000. Calculate the productivity of
Dr. Obande’s new hospital in financial terms.
The productivity in financial terms is stated as the
Return On Invested Capital (ROIC). ROIC
is determined thus:
ROIC= Annual Profit/Invested Capital x 100
In this case,
Annual profit=N700,000
Invested Capital=N15, 000, 000
ROIC= 700,000/15,000,000 = 0.467 or 4.67%
The productivity of Dr. Obande’s investment is 4.67%
for the first year. Having this knowledge, in the following year, he can strive
to improve on this level.
These are simple productivity measurements. What is
important is that you are able to determine how productive your employees and
facilities are. The next thing is to determine why they are not productive.
Finally, you have to decide what to do to improve productivity. That way, you
end up getting value for your money.
See you soon….
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