Human Resources: Right-Size Your Practice

May 1, 2006

Do you have too many employees, too few, or just the right number? You may be surprised by the answer.


Wouldn’t it be great to wave a wand and magically solve all the staffing issues that continually plague your practice? Sure it would. But in the absence of such a wand, there are some great techniques that can help you accurately determine your staffing needs, fine-tune your practice’s inner workings, and retain great employees - and it doesn’t take magic.

Benchmarking is a comparative measure that can get you started. The Medical Group Management Association (MGMA) provides benchmarks by specialty for the number of full-time employees (FTEs) in an average practice - both as a total and by separating out clinical and administrative staff. Staff costs as a percentage of revenue is another benchmark you should examine.

To apply benchmarks to your specific situation, make an effort to obtain a better understanding of what makes your practice tick. Pull your organizational chart. Does it make sense? Does it reflect how your practice currently functions, the specific level of staffing responsibilities, and whom each person reports to?

I’ve seen many practices that lacked a chart, had an outdated one, or simply did not consider it important enough to enforce. The chart is more than a document - it is critical to establishing a foundation for human resource structure, communication, staffing needs, and accountability. So if you do not have a chart, you need to develop one.

Next is preparing job descriptions that define what is needed and what is expected of each position. Typically, the job description includes the position title, educational requirements, and the essential skills needed to be considered for employment in your office. It will also define the job responsibilities, so each person knows what is expected of her or him.

The job description is a living document, and should be updated from time to time, as events and processes in your office evolve. For example, if you automate patient registration, it will take less time to schedule new-patient appointments and open up time for your scheduler to take on additional responsibilities that should be added to her job description.

Establishing performance measures specific to the job description helps you understand your staffing needs, lets the staff member understand what is expected of her, and provides an objective tool when it’s time to conduct an employment review. For example, does the typical scheduler in your office take 60 or 100 calls a day, and what is the average number of new patients she schedules in a week? Does the average biller have a 3 percent error ratio, or a 6 percent ratio?

When the needs of the practice change, reconfigure the description to reflect those changes so that you achieve optimal staff productivity.

Use internal, national benchmarks

Staff costs as a percentage of revenue is another benchmark to look at and compare.

“Costs remain a constant concern, but when you bring productivity up the cost goes down,” says Karen Wood, administrator for Marietta Eye Clinic in Marietta, Ga. It’s reasonable to continually focus on staffing costs. After all, it’s the biggest expense for operating the typical medical practice, accounting for close to 30 percent of the overhead for primary-care practices in some regions. At the same time, paying for good staff can be a wise investment.

“We pay more and expect more, and it works,” says Cliff Meyer, administrator for Allergy and Asthma Associates of Northern California in San Jose. “An allergy practice is very demanding and compromising patient service is not an option.”

It’s more than what you pay your staff. According to Anne McFarland, a healthcare consultant in Helena, Mont. “Wages are not the biggest issue. It’s the cost of providing benefits, especially healthcare insurance.

Medical practice workers are rated in a higher-than-average risk category when it comes to premiums.”

Benefits are an important ingredient for attracting and retaining skilled staff - and can provide a competitive advantage in a tight labor market.


Good employees don’t generally leave for a dollar more an hour. But just the same, you need to know if you are paying employees what they are worth. You can conduct your own survey of similar practices in your area, but national salary data is available through MGMA and the Professional Association of Health Care Office Management.

These sources are useful for general information, but remember, wages need to be attached to the skills and responsibilities specific to the positions in your own practice. Cross-training goes a long way in optimizing productivity. It helps staff understand how hard everyone works and how important their own job is. “Our business office staff is trained on the phones and scheduling appointments, and is expected to support
the front office with managing the phones,” says Meyer. “We are a team. We all work for a common goal - providing quality patient service and making sure new patients are not lost in the practice.”

There can be an added bonus to promoting teamwork. Centralizing phones and registration provides Allergy and Asthma Associates with a training ground for new employees to learn the ropes.

Delegation has great impact on your ability to get the most out of staff. If you aren’t delegating, it will be difficult to know if you are right-sized. “Staff for activity,” says Tim Boden, administrator for Northwest Mississippi Kidney Center in Greenville. “Each person should perform at his capacity. There are things that are his job, things that can be delegated, and things that no one should be doing.”

Other benchmarks can tip you off to staffing deficiencies, says Boden. “Overtime is a good indicator. If the nurses are putting in more than a couple of extra hours a week my antenna begins to quiver. It trickles to the front office and they can end up missing their lunch break.”

When overtime is inching up or people just aren’t getting the job done, it’s a sign that the workload has increased or production is slipping. Revenue is another important benchmark. After all, given the tight restraints on reimbursement, it’s a given that generating more revenue means you and your staff are working harder. Examining your number of both new and established patient visits, as well as the number of procedures in specialty practices, provides a source for checking out both growth and productivity demands.

Look at historical data and examine trends. “We know we see between 450 and 600 new patients a month. This number tells me what capacity our staff can handle,” says Meyer.

Now keep them happy

The key to reducing turnover is creating an environment in which people want to work and take pride in their contributions.

“Provide a workplace that values its employees,” says McFarland. “Offer rewards and incentives for exceeding job performance expectations.”

You can turn a negative into a positive. Meyer recalls a nurse the practice had hired that was critical of the way things were done, and the other nurses were complaining about her. Meyer changed their attitudes around by pointing out the new nurse’s critical look at the practice provided everyone with an objective opinion and insight on how they might improve operations by streamlining processes.

When your staff is motivated, their contributions are greater, they work better together, and turnover decreases. “I think motivation is self-driven,” says Boden. “It’s my job to engage personnel in the vision of what, together, we can be. It takes place through communication, encouragement, rewards, and accountability.”

Administrators and consultants across the country echo the importance of teamwork. “Creating an atmosphere of ‘the team’ working and accommodating each other’s needs will result in higher employee and patient satisfaction,” says McFarland.

“We spend a lot of time making our company a fun place to work, but one that focuses on teamwork, the patient, and the work that needs to be done,” Wood adds.

Feedback is important to understanding staff needs and giving staff a crash course on what you need from them. Employee needs are individual. For some, flexibility is at the top of the list. For others, it’s stability, security, or opportunity for upward mobility. Once you understand this, you can make the most of the situation and create a win-win.


“Employees like to know where they stand. The performance review should bring no surprises,” says Meyer. The practice needs to understand how it rates with employees, as well. Meyer conducts exit interviews to find out if the practice is meeting the employee’s needs, to re-examine the culture, and to determine what influence management has on creating a desirable place to work.

Performance can be further optimized and staff costs managed better when you implement advanced technology. Too few practices add time-saving automated features or maximize the systems they have.

Find out everything your systems can do for you and train staff to use those features. “You need to create the right climate for people to succeed. Support efforts to help each of them be the best they can be,” says Meyer.

“Hire for attitude, provide ongoing training and support, and develop clear, measurable goals,” McFarland adds.

Boden agrees. “Training, accountability, and a balance of motivation and job enrichment improves performance,” he says.

That also means holding your practice accountable to the staff goals you’ve set. When you’re comparing your practice to national data, look at your own numbers from year to year to examine trends, understand shifts, and recognize when things may be out of control.

I recall a four-physician primary-care practice I worked with; staffing costs and FTE numbers had jumped dramatically within an 18-month period, landing far above the national benchmarks. The practice had grown by one FTE support staff per physician. At the same time, the work environment seemed to be a pressure-cooker in which staff was stressed, overtime was mounting, and no one felt they had enough time to get their job done. Further investigation revealed some important facts.

Not only had the numbers increased, but there was a dramatic shift in the costs between clinical and administrative staff. Administrative staff costs declined while clinical staff costs jumped from 7 percent to nearly 11 percent during the prior year. With further research the explanation was clear: The physicians didn’t replace a manager who left.
This resulted in clinical staff taking on administrative functions, and more staff was needed to do it. This led to more overtime in the clinical department and increased frustration, as they were called to take on business tasks that fell outside their scope of expertise and they weren’t trained to handle. Accepting a void in your management team will result in a loss of control, reduced productivity, and increased staffing costs.

Judy Capko is the founder of the Thousand Oaks, Calif.-based healthcare consulting firm Capko & Company, and she is the author of the recently published Secrets of the Best-Run Practices. Judy has specialized in medical practice operations and marketing for more than 20 years, and she is a certified risk management specialist. She can be reached at JudyCapko@aol.com or via editor@physicianspractice.com.

This article originally appeared in the May 2006 issue of Physicians Practice.