More Staff=Better Return

February 1, 2009

One of your recent articles stated: “The best-run practices singled out in MGMA cost and performance reports are almost without exception those that are more heavily staffed. The reason it works is that it’s really hard to control expenses. You’re better off trying to find ways to maximize revenue.” Which cost and or performance ratios are you using to support this statement? How does the productivity of the overall organization (medical revenue/employee) stack up? Is this a relevant measure in healthcare?

Question: One of your recent articles stated: “The best-run practices singled out in MGMA cost and performance reports are almost without exception those that are more heavily staffed. The reason it works is that it’s really hard to control expenses. You’re better off trying to find ways to maximize revenue.”

Which cost and or performance ratios are you using to support this statement? How does the productivity of the overall organization (medical revenue/employee) stack up? Is this a relevant measure in healthcare?

Answer: The measurement should be relevant in healthcare, though many practices wouldn’t be able to measure it.

Here’s more specifically what the MGMA data shows:

As you add staff, within reason, you actually increase net revenue. That’s because there is a positive correlation between RVUs (productivity from the people who can actually bill for services) and higher staff. Presumably, having adequate support staff allows busy providers to be busy, to keep focused on office visits and procedures instead of answering the phones.

Of course, it’s also true that busy physicians need more staff to keep up with them - room more patients, process more claims, etc.

Now, all this is within reason. If non-billable staff aren’t working well, you clearly don’t want them around.