Question

A Pediatrics Department became concerned about low morale and productivity of nursing staff after the chair of its General Pediatrics division left the organization due to retirement. After a nine-month search, the Pediatrics Department was able to hire a specialized pediatrician chair for the General Pediatrics division and would like to evaluate the effect of the new leadership on productivity. Measurements before and after the new leadership took over are displayed in table below.

Measurement Before New Leadership After New Leadership Total Worked Hours 16,062 14,813 Patient Visits 11,826 12,113 Reimbursement per Visit ($) 33| 30.87 Overhead Costs ($) 28,546 29,831 Materials Costs ($) 94,421 58,447 Skill Mix Distribution RN ($28.85/hour) 0.6 0.61 LPN ($17.60/hour) 0.21 0.26 Other ($11.8/hour) 0.19 0.13 Assume that 1 LPN = .6 RN and 1 other nursing staff = 0.4 RN.

Solve using excel

a) Calculate the total worked hours/unadjusted patient visits before and after the new leadership.

b) Calculate the skill-mix-adjusted hours/unadjusted patient visits Before and After  new leadership

c) Calculate the standardized labor costs of care/unadjusted patient visits before and after new leadership.

d) Calculate the multifactor productivity measure before and after new leadership.

Answer 1

a)	Particulars	Before New Leadership	After New Leadership
	Total Worked Hours	16,062	14,813
	Patient visits	11,826	12,113
	Total worked hours/ unadjusted patient visits	1.36	1.22
b)	Assumption to compute skill mix adjusted hours
	1 LPN = 0.6 RN
	1 Other = 0.4.RN
	Skill mix adjusted hours before new leadership
	1*(16062*0.60) + 0.6*(16062*0.21)+0.4*(16062*0.19)
=	1*9637.20 + 0.60*3373.02 + 0.40*3051.78
=	9637.20+2023.81+1220.71
=	12881.72
	Skill mix adjusted hours before new leadership
	1*(14813*0.61) + 0.6*(14813*0.26)+0.4*(14813*0.13)
=	(1*9035.93) + (0.6*3851.38) +0.4*(1925.69)
=	9035.93+1001.36+250.34
=	10287.63
	Skill mix adjusted hours/unadjusted patient visit
	Particulars	Before New Leadership	After New Leadership
	Skill mix adjustment hours(a)	12,881.72	10,287.63
	Unadjusted patient visits(b)	11,826.00	12,113.00
	(a)/(b)	1.09	0.85
c)	Standardized labor cost of care
=	(RN Wages * RN hours)+(LPN Wages * LPN hours)+(Other Wages*Other hours)
	Standardized labor cost of care before new leadership
=	$28.85*(16062*0.60)+$17.60*(16062*0.21) +$11.80*(16062*0.19)
=	($28.85*9637.20) +( $17.60*3373.02) + ($11.80*3051.78)
=	$ 278,033.22 + $ 59,365.15 + $ 36,011
=	$373,409.40
	Standardized labor cost of care before after leadership
=	$28.85*(14813*0.61) + $17.60*(14813*0.26)+$11.80*(14813*0.13)
=	($28.85*9035.93) +( $17.60*3851.38) + ($11.80*1925.69)
=	$ 260,686.58 + $ 67,784.29 + $ 22,723.14
=	$ 351194.01
	Particulars	Before New Leadership	After New Leadership
	Standardized labor cost of care(a)	373,409.40	351,194.01
	Unadjusted patient visits(b)	11,826.00	12,113.00
	(a)/(b)	31.58	28.99
d)	Multifactor productivity
=	(Patient visit * Reimbursement per visit)/(Labor+Material+Overhead)
	Particulars	Before New Leadership	After New Leadership
	Patient visit(a)	11,826.00	12,113.00
	Reimbursement per visit(b)	33.00	30.87
	Material Cost('c)	94,421.00	58,447.00
	Overhead Costs(d)	28,546.00	29,831.00
	Labor Cost ('e)	373,409.40	351,194.01
	Multifactor productivity (a*b)/(c+d+e)	0.79	0.85