9.1. Finding the multi-factor productivity ratios and determination of productivity trends

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9.1. Finding the multi-factor productivity ratios and determinationof productivity trends

Measurement

Year 1

Year 2

Year 3

Price ($)

880

883

886

Volume

5,583

6,312

6,129

Total Output Value

4,913,040

5,573,496

5,430,294

Labor ($)

75,000

77,000

80,000

Materials ($)

2,750

2,900

3,100

Overhead ($)

6,500

6,700

7,000

Total Input value

84,250

86,600

90,100

Multifactor Productivity Index

58.32

64.36

60.27

Value of output = Volume x Price

Value of input: Labor + Material + Overhead

Productivity ratio:

Multifactor Productivity Ratio

In the first year the productivity ratio was 58.32, in the secondyear, the productivity ratio increased to by 6.04 to 64.36, which isequivalent to 11 percent increase. Nevertheless, in the third year,the productivity reduced to 60.27, a decrease of 4.09, whichtranslates to 6.4 percent decrease.

9.4. Calculating case mix index using the same patient classificationsystem

Case Mix Index (CMI) represents the relative cost or the resourcesrequired in treating a certain mix of patients. The process ofcalculating CMI uses Diagnosis Related Group (DRG) numbers andnumeric weights that reflect the average resource consumption. Belowtale presents the CMI for low level, medium level, high level andextreme care patients.

Patient classification

Direct care hours

&nbsp

Hospital 1

H1 Case Mix Index*

Hospital 2

H2 Case Mix Index*

Hospital 3

H3 Case Mix Index*

Hospital 4

H4 Case Mix Index*

Low level care

3

0.4

0.5

0.2

0.35

0.14

0.3

0.12

0.2

0.08

Medium level care

6

0.8

0.35

0.28

0.4

0.32

0.3

0.24

0.25

0.2

High level care

9

1.2

0.1

0.12

0.15

0.18

0.22

0.264

0.3

0.36

Extreme care

12

1.6

0.05

0.08

0.1

0.16

0.18

0.288

0.25

0.4

Average

7.5

&nbsp

&nbsp

0.680

&nbsp

0.800

&nbsp

0.912

&nbsp

1.040

9.7. Case Study of PERMORMSBETTER MEDICAL CENTRE’s productivitymonitoring

&nbsp

Location 1

&nbsp

Location 2

&nbsp

Location 3

Annual Visits

135,000

&nbsp

94,000

&nbsp

101000

Annual Paid Hours (Work Hours)

115000

&nbsp

112000

&nbsp

125000

Patient Classification (CPT)

Location 1 Distribution

Case Mix Index Location 1

Location 2 Distribution

Case Mix Index Location 2

Location 3 Distribution

Case Mix Index Location 3

Case-mix

&nbsp

0.82

&nbsp

1.09

&nbsp

1.14

Adjusted Visits

110,531

&nbsp

102,813

&nbsp

114,888

&nbsp

Adjusted Work Hours

94,156

&nbsp

122,500

&nbsp

142,188

&nbsp

Total Salary Expense

$ 8,426,984

&nbsp

$10,351,250

&nbsp

$14,574,219

Hours of Direct Care

72,398

&nbsp

89,961

&nbsp

104,548

Adjusted Work hours in direct care

59,275.84

&nbsp

98,394.78

&nbsp

118,922.92

&nbsp

&nbsp

Location 1

Location 2

Location 3

a. Work hours/visits

0.852

1.191

1.238

b. Adjusted work hours/visits

0.697

1.303

1.408

c. Work hours/adjusted visits

1.040

1.089

1.088

d. Adjusted work hours/adjusted visits

0.852

1.191

1.238

e. Total salary expense/visits

62.422

110.120

144.299

f. Total salary expense/adjusted visits

76.241

100.681

126.856

g. Percent of hours in direct patient care

27.1%

33.7%

39.2%

h. Percent of adjusted work hours in direct patient care*

21.4%

35.6%

43.0%

i. Total salary expense/hours of direct patient care*

142.166

105.201

122.552

j. The analysis above reveals that location 1 overpays its staff by42.166%, location 2 overpays its staff by 5.201%, while location 3overpays its staff by 22.552% per the number of hours worked. This isan indication that, either the healthcare professionals areovercharged in comparison to the number of hours worked, or, thenumber of hours allocated to each practitioner is relatively lowcompared to the amount of money paid. Nevertheless, for this case,since we are dealing with the adjusted hours, which are relativelylower than hours allocated initially, it can be concluded that thehealthcare practitoners are not working appropriately as per thehours allocated. Therefore, measures should be put into place toensure that all the healthcare practitioners work as per the hoursallocated, or the amount of salary per hour be reduced substantially.

Reference

Richards, T. (1987). Measuring case mix and quality of care: Ratertraining and reliability in the graduate medical education study.Santa Monica, CA: Rand.

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