Alternative indicators for measuring hospital productivity.

This article explores the premise that the appropriateness and usefulness of typical hospital productivity measures have been affected by three changes in delivery: Organizational restructuring and other definition and data source changes that make full-time equivalent employee (FTE) measurements ambiguous. Transition to prospective payment (diagnosis-related groups). Increase in capitation (prepaid, at risk) programs. The effects of these changes on productivity management indicate the need for alternative productivity indicators. Several productivity measures that complement these changes in internal operations and the external hospital business environment are presented. These are based on an analysis of four hospitals within a multihospital system, and an illustration and interpretation of an array of measures, based on ten months of actual data, is provided. In conclusion, the recommendation is made for hospital management to collect an expanded set of productivity measures and review them in light of changing expense and revenue management schemes inherent in new payment modes.