Get a Grip on Overtime

Many physicians complain about their practices' high overhead costs but often overlook the variable that may be easiest to control -- staff overtime.

There are many wrong ways to reduce overtime costs. Attacking the problem by hiring more staff will definitely raise operating costs but not necessarily lead to more revenue. Taking a slash-and-burn approach, such as forbidding staff to work any overtime, could also be disastrous.

David Donnelly, administrator at Capital Cardiovascular Specialists in Austin, Texas, a practice of five physicians and 30 support employees, views overtime as a symptom of an inefficient practice.

The solution, says Donnelly, is to learn the root causes of your overtime problems. Applying the wrong solution could end up lowering physician productivity, alienating referring physicians, restricting patient access, and torpedoing staff morale.

Donnelly and other practice managers and consultants say most practices can find ways to cut their current overtime costs by up to 60 percent. The problem facing many medical groups is they might not even know they have an overtime problem.

How do you know if overtime, during which staff are typically paid time-and-a-half, is a big expense item in your practice? Deborah Walker, MBA, an affiliate consultant for the Medical Group Management Association (MGMA), suggests converting overtime hours into a staffing equivalent. Here's how:

Divide the staff's total average overtime hours per week by the average work shift for that period. Then, convert the product into a full time equivalent (FTE). For example, 10 hours of overtime in a 40-hour week equals 0.25 FTE staff.

"A quarter of an FTE on a regular basis is too much and it means you should look at your staffing model and scheduling practices," says Walker. "Don't forget, overtime is paying a premium -- 50 percent more -- to get the work done."

Find the three 'Cs'

While staff overtime may not be a large chunk of total operating expenses, it is one you can control. Rooting out its causes can point the way to new efficiencies that help lower other operating costs and potentially increase revenue.

To get a handle on overtime, Marshal Maglothin, executive director of Northeast Cardiology Associates in Bangor, Maine, suggests focusing on what he calls the "three Cs" behind most overtime problems: causes, controls, and coverage.

Maglothin says his 20-physician cardiology practice reduced its overtime costs during a time of rapid expansion. But he wouldn't have known what steps to take without first discovering the causes of staff overtime, a process that took several months. He found that overtime hours always spiked when hourly staff, especially those with technical skills, took vacations or when the practice had to replace a worker.

"I trended the overtime numbers and they tracked identically to the amount of paid time off," he says. "So when we see a spike in scheduled time off coming we know we'll have a spike in overtime. Knowing that allows me to manage it."

In addition to controlling the number of staff who could schedule vacations or leave at the same time, the practice began recruiting replacements for departing employees much earlier, hiring more part-time employees, experimenting with 10-hour, four-day workweeks, cross-training employees, and putting certain tasks or projects on hold when vacations or turnover lowered staffing levels.

Maglothin also required hourly workers to get their supervisor's approval before working extra hours. While getting a supervisor's signoff for overtime is a fact of life at most businesses, medical practices have tended to be more casual about the process. And it can cost dearly.

"One of our first targets was people who routinely worked 15 minutes over every day," says Mary Ellen Just, the administrator of New England Orthopedic Surgeons, where overtime costs for the more than 100 support staff have been chopped by 75 percent. "There was never a check at all on who used overtime or why."

The Springfield, Mass., practice budgets less than 1 percent of staff salaries for overtime annually, down from 5 percent four years ago. Although the practice still pays employees for their unauthorized overtime, those putting in extra time without a supervisor's OK will land in hot water. "We make it clear that such occurrences will result in disciplinary action," Just says.

Adjust to the volume

Slow, unproductive employees are not the sole cause of overtime. Often, clumsy work processes or outdated technology can hold back production. Physicians also can influence the amount of overtime in a practice. To figure out what's causing the problem, Walker suggests comparing patterns of employee overtime with the hours physicians work.

"If it's always [particular] physicians who seem to cause the overtime, then I'd look to see if their patients and types of appointments can be more evenly distributed through the day, the session, or the week," she says. "But if the physicians need to practice in very compact time slots or work later hours, then we need to look at whether we're giving them enough support and infrastructure to handle their volume."

Just noticed that her practice was not adjusting staffing levels to meet physician needs. "We might have six physicians in one day and 14 the next, but the staff levels did not fluctuate in response. Now we are more flexible about staffing," she says.

Besides doing a better job of matching staffing levels to physician volume, the practice implemented a four-day-a-week, 10-hour day for clinical staff and began cross-training some to help others when things got busy.

Your more experienced or technically unique staff should be the first candidates for cross-training because they can more easily fill short periods of slack time with other tasks than can lower-skilled workers, Maglothin says. At the same time, look for ways to delegate to less-skilled staff some lower-level tasks that your licensed professionals may now handle, such as using medical assistants instead of nurses to room patients and take vital signs.

Physicians contribute, too

Overtime problems frequently occur when a physician chronically runs late. Sometimes it happens when the practice's scheduling template tries to fit too many new patients or other lengthy visits into too few slots. But other times, a physician may just work slower than her partners.

Walker suggests that practices, especially those in which physicians share overhead equally, can tackle the slow physician problem by charging excess overtime costs to the physician whose tardiness causes it.

Or you can adjust your scheduling policies. The physicians of Primary Care Health Partners always seemed to fall behind schedule -- and run up overtime costs -- on Mondays. So the group, with nine clinics in New York and Vermont, started holding weekend and evening walk-in clinics.

"By opening walk-in clinics on weekends and evenings, they have reduced the number of walk-ins that were clogging the offices during regular hours," explains Robert Bycer, the practice's chief operating officer. He adds that the additional hours also opened up more flexible scheduling options that help attract nurses and other staff who want to work part-time schedules.

Another big cause of overtime: allowing the physicians to behave as though they are solo practitioners.

"You can't have each physician setting his own detailed scheduling rules, because no computer system can handle it and it will prevent you from spreading out the labor resources over the week," says Donnelly.

Allowing physicians to operate as solo practitioners under the umbrella of a group only leads to more tasks that eat up staff time, such as keeping track of separate sets of patient education materials and forms.

Donnelly warns against trying to wipe out all traces of overtime. Sometimes, special projects, illnesses, or rapid expansion make it inevitable.

"I don't consider overtime an evil to where you must have zero overtime or else," he says. "What you want is zero unnecessary overtime so you don't have to pay any more than you need to in order to get the work done."

Robert Redling, editor, practice management, for Physicians Practice, last wrote about how physicians are juggling the dual roles of physician and parent. He can be reached at
rredling@physicianspractice.com.

This article originally appeared in the June 2004 issue of Physicians Practice.