Individual Operational Effectiveness Scorecard


Workforce Prescriptions produces updated Operational Effectiveness Scorecards quarterly on 2940 acute facilities in the United States. The purpose of these reports is to provide an objective analysis of the impacts of operations on each individual institution.

Operational Effectiveness Scorecards are constructed of 4 distinct sections:

  • Overall Operational Landscape - a visual depiction of macro factors that frame your current operating position
  • Patterns Being Monitored - a quick assessment of risks based on the current landscape
  • Pay IQ ® Benchmark - a detailed comparison of your labor efficiency to similar facilities locally and nationally
  • Annual Recapture Estimate - a calculation of the amount of annual waste savings available to your organization without downsizing

Your Dynamic Operational Landscape

The Dynamic Operational Landscape is the accumulation of key macro measures that frame the unique environment of operations at a particular organization. They paint a picture of some of the more visible results of operations. These components however, only illustrate the current conditions of operations, they are the what of operations, but not the why.

The Dynamic Operational Landscape is constructed of 7 measures designed to provide a visual & intuitive view of the complex and often dynamically opposed forces that conspire to create labor expense outcomes. Those measures are:

  • Total Personnel Expense - Total Salaries + Contract Labor + Fringe Benefits
  • Total Operating Revenue - the net revenue received from the provision of care
  • Labor As A Percent Of Operating Revenue - the amount of net revenue consumed by labor expense
  • Average Daily Census - the gross inpatient volumes driving inpatient revenue and consuming inpatient labor
  • Percentage Of Volume from Medicare & Medicaid - the percentage of total occupancy consumed by a government payor base
  • Average Length Of Stay - the average duration that patients are staying at your facility (non-acuity adjusted)
  • Labor Cost Per Discharge - your labor cost per patient

Patterns Monitored In Your Data

Labor management is a complex and challenging function within healthcare. When you deliver your service to people, by people, using people . . . then beliefs, perceptions and incentives each play a pivotal role in producing outcomes. We call this phenomenon, "death by a thousand paper-cuts" because the majority of labor waste in healthcare is created at the department level, one decision at a time.

While publicly available data can provide only the barest of hints of the CAUSE of changes in labor, it is possible to highlight some of the more dangerous EFFECTS. As a part of the Pay IQ ® report, Workforce Prescriptions monitors 6 patterns known to represent risk to ongoing labor management. Those 6 patterns are:

Personnel Expense Rising Faster Or Declining Slower Than Revenue - When the percentage change in labor is greater than the percentage change in operating revenue, either the labor cost of operations is rising or it is falling. Falling is good, rising is dangerous.
Personnel Expense That Is Becoming A Larger Portion Of Revenue - Since Labor is a paid expense, changes in its proportion to operating revenue has a direct impact on bottom line financial performance. The greater percentage labor is of operating revenue, the lower the organization's profit.
A Falling Average Daily Census - Dropping volumes are never a good thing to a business. For a business as people centric as healthcare, they are doubly dangerous. As changes in volumes REQUIRE changes in staffing, long term volume drops - unless adjusted for - require long term changes to staffing.
The Intrusion Of Greater Medicare Or Medicaid Volumes - Unless you are one of those lucky few for whom government payor volumes are profitable volumes and not just "contributions to overhead", then growing these volumes represents a risk to your labor standing. When the amount of revenue per labor hour shrinks, labor naturally rises in proportion.
Rising Length Of Stay - As a majority of payors now reimburse on a DRG or "case rate" basis, revenue is no longer coupled with labor. Therefore, every extra hour a patient stays beyond what is medically necessary represents a FORCED USE OF LABOR that is not met with a corresponding increase in revenue. Thus . . . rising length of stay = rising labor costs per unit of revenue.
Rising Labor Cost Per Patient - The only true measure of global productivity is "cost per output". In acute healthcare, our output is discharged patients. Changes in labor-cost-per-patient indicate changes in one (or a combination of) the following areas:
  • Cost Per Hour Of Labor
  • Staff Productivity
  • Care Efficiency
  • Care Prioritization
  • Organizational Throughput

Patterns monitored in your data
Personnel Expense RISING Faster or DECLINING slower than Revenue   AT RISK
Personnel Expense becoming a LARGER PORTION of Revenue   AT RISK
A FALLING Average Daily Census   AT RISK
The intrusion of GREATER Medicare or Medicaid volumes   OK
RISING Length of Stay   OK
RISING Labor cost per Patient   AT RISK

If the data for your organization validates that any 2 of the above are '  AT RISK', then you may want to consider an Operational Effectiveness Audit to avoid escalating erosion of profitability. On the following page you will see your organization's Pay IQ ® and the amount of labor waste recoverable annually.

Labor Per Patient Day

The most accurate single indicator of labor efficiency is the measurement of labor costs per patient day. While acuity/work intensity does play a role in determining the labor expense associated with a given patient day, it's impact is meaningless when applied to a universe of large numbers.

Here's why . . .

Changes in acuity are nearly always reflected in both "Length of Stay" (sicker patients tend to stay longer) and "Labor per Discharge" (sicker patients require more labor per day). Therefore, dividing the "Labor per Discharge" by the "Length of Stay", produces a scalable measure that truly captures an organization's change in labor utilization (against volumes) over time. The measure is "automatically" acuity adjusted and tells a far more detailed story than any other single risk factor (See section above).

When "Labor per Patient Day" measures are analyzed side-by-side with the other risk factors a clear picture of "cause/correlation/effect" can be seen. This is often the first step utilized by senior leadership teams of a more detailed analytical process.

***All Data used was derived from self reported, publicly available sources***

PayIQ for holy cross hospital - jordan valley

About the Pay IQ ®

The Pay IQ ® is the measure of labor efficiency of a hospital. It is calculated using an algorithm that incorporates financial data from publicly available sources. The algorithm is designed to evaluate labor utilization in a manner that accounts for differences in reimbursement and cost of living for each distinct institution. Based upon the results derived from labor spending, the algorithm determines the "Labor intelligence" level of each hospital and assigns their personal Pay IQ ®. Pay IQ's range from 80 (challenged) to 140 (genius) and are a valid indicator of the effective use of labor spending.

If you cannot see the National or State Avg. lines on this graph it is because the average is higher than the graph limits.

Recoverable Waste

The recapture estimate is a calculation of annual recoverable waste spending for your institution.  It is based on a percentage of the variance between what the most efficient hospitals in a size cohort are spending as compared to your facility. 

Differences in payor mix, service lines, acuity, cost-of-living, reimbursement level and volume have been accounted for.  What cannot be addressed are differences in physical layout, workforce seniority, staffing schema utilized (ratio's, etc.), policy variance, level of automation or processes deployed.

The recapture values shown above are estimated from publicly available data and may not be recent enough to reflect your current financial situation. We offer a recapture calculator where you can enter your hospitals financial information and get a tailored recapture estimate customized to your facility.
To use the Recapture Calculator click here.
(Information entered into the calculator is considered confidential and private, it is only used to compile your tailored estimate)

Operational Effectiveness Audit (OEA)

Calculations of both the Pay IQ ® algorithm and recapture estimate have been validated through over 200 of WRx's Operational Effectiveness Audits.  The OEA is a service offering designed to allow an adult acute hospital to identify areas of waste/redundancy and ineffective processes that can be optimized without creating a derogatory impact on staff, physicians or patients.  The audit comes with a $1,000,000.00 annual recapture guarantee (to the bottom line) and has never required staff downsizing.

It is well known that profitability is the side effect of operations and processes.  The great challenge is knowing how to measure the impact and effectiveness those processes so an organization can gain a clear understanding of the root causes of noticed changes in outcomes.

For 7 years, and at over 200 health systems, we at WRx have been performing detailed operational audits that have resulted in the clear identification of sources of disruption to ideal outcomes.  Identifying and overcoming these disruptions has returned hundreds of millions of dollars to client's bottom lines (nearly $7,000,000 per year/client).  We do this inexpensively, guarantee results and implement all desired changes for free.  for more information see: