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A new year has begun and it is time once again to anticipate what is in store for the clinic.

The use of the National Provider Identifier (NPI) numbers is scheduled to begin around the middle of the year. There is a push to implement performance reporting. And, although a stopgap measure has been enacted by Congress to freeze some of the Medicare fees at last year's rate, Medicare reimbursement may be less this year.

All these actions have the opportunity to reflect negatively on clinic income. There are two ways to counteract potential reductions in the net income to the clinic. The clinic must either increase income or reduce expenses. Now is an excellent time to review how much is spent and where the clinic is spending its money.

When reviewing clinic expenses, a frequently ignored expense is that associated with hiring and training new employees. What is your clinic's turnover experience? How often have you found your clinic in need of new employees? Too much turnover is expensive.

Unfortunately, physicians removed from the direct involvement in management activities usually do not understand the impact of having to recruit and train new employees. Therefore, issues associated with replacing employees are either ignored or not taken seriously. The clinic is more akin to a living organism than a machine. When a machine breaks down, replacing the defective part can correct the problem and have the machine running properly. Simply hiring a new employee will not correct a breakdown in the running of the clinic. The employee has to be trained and integrated into the clinic's operations. Also, relationships, which take time to develop, have to be established before things run smoothly.

The acquisition of a new employee brings with it both direct and indirect costs. Direct costs include those associated with advertising and recruiting as well as personnel time required to screen, interview, hire and orient a new employee.
Indirect costs include lost productivity by both the new employee and those that have to compensate while the new employee is in the learning phase. These costs also include the negative impact that may be suffered by patients or other outside organizations that work with the clinic because of a drop in performance by clinic personnel. Employee turnover may also reduce the ability of the clinic to collect all that is due from the services provided.

In training new employees, overlooking minor details can have a significant impact. For example, a clinic may recruit and hire a nurse with exceptional clinical skills. The emphasis in training is upon how to support the physician within the clinic's guidelines. However, if the clinic forgets to instruct the new nurse that he or she is to verify that all lab work run in the office is properly recorded on the encounter form, charges may now be lost that previously would have been submitted for payment. Once an employee is trained and becomes ingrained in the operation of the clinic, many activities are simply taken for granted.

Employee turnover can have intangible but significant impact upon the remaining staff. Turnover frequently occurs in multiples. The leaving of one employee can initiate similar activity with others. Secondly, the loss of an employee frequently produces lower morale and increased stress on those left to run the clinic.

A number of human resource organizations have evaluated the financial impact associated with hiring and training an employee. The estimated costs associated with replacing an $8-per-hour employee range from $3,500 to more than $16,000. The costs will vary based upon the skills required and the degree of difficulty in hiring a replacement. If the cost associated with acquiring a new employee is approximately $4,000, it would be roughly equivalent to adding $2 per hour to the existing employee's salary. If $2 per hour retains a good employee, the raise might ultimately prove to be very cost effective.

Turnover is not necessarily bad. In fact, no turnover could be an indication of problems within the organization. If employees are not leaving, salaries may be inflated, causing unhappy and poor performing employees to remain longer than they should.

However, too much turnover is costly. If the clinic is experiencing excessive turnover, it is important to identify the causes. Although there can be a myriad of reasons an employee chooses to leave, they generally fall into two categories. One is salary and benefits. The other is work environment.

If employees are leaving for better financial opportunities, the clinic must examine what the competition is doing. An exit interview with employees is critical in determining what action the clinic should take to reduce the turnover rate.

Some solutions are obvious. If employees appear to be leaving for higher salaries, the clinic may need to raise salaries. If it is determined that employees are leaving for improved benefits such as health and dental insurance, the clinic may need to review and upgrade its benefit package.

Problems with the environment in which the employees work are more difficult to identify. Frequently, employees do not feel comfortable in disclosing problems they encountered with supervisors or physicians when terminating their employment. In such cases, patterns need to be reviewed. Are the exiting employees casually mentioning the same concern but not espousing it as a primary reason for leaving? Do the employees who resign work in the same area or under the same supervisor or team leader? Examine the patterns. Although it may take some time, ultimately the patterns will lead to the source of the problem.
Running a practice successfully requires hiring and retaining good people. The clinic staff creates the image of the practice in the minds of the patients when they call. The staff creates the first impression when a patient visits the clinic. The staff processes the information from which revenue is generated. A professional clinic operation is not possible if the clinic is constantly hiring and training employees.

Reduce the turnover and improve job performance.


April 2007

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