In the healthcare industry, cost management is an essential aspect of delivering quality care. As such, key performance indicators (KPIs) are crucial metrics that healthcare providers must track to measure their financial and operational performance.
One of the most important KPIs in healthcare is staff costs per patient, which is the total cost of staff per patient visit or stay. This metric is critical in understanding the relationship between staffing levels, patient volume, and the cost of care.
In this blog, we will break down the concept of staff costs per patient, and why it is a critical KPI for healthcare providers to track. We will explore how this KPI impacts the financial health of healthcare organisations, patient outcomes, and the overall quality of care. Additionally, we will provide insights on how healthcare providers can optimise their staff costs per patient to achieve better financial performance and deliver higher-quality care.
"Metrics are essential for understanding how our healthcare organization is performing. Without tracking and analyzing data, we cannot identify areas where we can improve patient outcomes, reduce costs, and operate more efficiently. Metrics enable us to make data-driven decisions that lead to better care and outcomes for our patients."
- Dr. John Noseworthy, Former CEO of the Mayo Clinic
Staff costs per patient is a key performance indicator that healthcare providers use to measure the total cost of staff per patient visit or stay. It is calculated by dividing the total staff costs, including salaries, benefits, and other related expenses, by the number of patients treated during a specified period. The resulting figure provides insights into the average cost of staff per patient visit or stay, which is an important metric for understanding the relationship between staffing levels, patient volume, and the cost of care.
Staff costs per patient is a critical KPI for healthcare providers as it helps them evaluate the effectiveness of their staffing levels and identify opportunities to optimise their staff costs without compromising the quality of care. For instance, a high staff costs per patient figure could indicate overstaffing, which could lead to unnecessary expenses that could impact the financial performance of a healthcare organisation. Conversely, a low staff costs per patient figure could suggest understaffing, which could affect the quality of care delivered to patients. Therefore, by tracking and optimising this KPI, healthcare providers can achieve better financial performance and improve the quality of care delivered to their patients.
There are five key benefits to measuring this KPI in your business:
Improved cost management
By tracking staff costs per patient, healthcare practices can identify areas where they can reduce costs without compromising patient care. This can help them optimise their resources and improve their financial performance.
Better resource allocation
Tracking staff costs per patient can help medical centres identify areas where they need to allocate more resources to improve patient care. For example, if the staff costs per patient are high in a particular department, it may indicate that more staff are needed to provide better care.
Improved patient outcomes
By tracking staff costs per patient, healthcare organisations can ensure that they are providing high-quality care to their patients. This can lead to better patient outcomes, increased patient satisfaction, and improved reputation.
Healthcare companies can use staff costs per patient to identify areas where they can improve their processes and workflows to increase efficiency. This can help them provide better care to more patients with the same resources.
Tracking staff costs per patient can provide healthcare centres with valuable data that they can use to make informed decisions about resource allocation, staffing, and other important aspects of their operations. This can help them make better decisions that benefit both patients and the organisation as a whole.
To calculate staff costs per patient, you need to follow these steps:
For example, if the total staff costs during a specified period are $500,000, and the number of patients treated during the same period is 1,000, the staff costs would be $500 per patient ($500,000 divided by 1,000 patients).
The benchmark for staff costs per patient can vary depending on the type of healthcare facility and the level of care provided. However, in general, a good result would be a low staff cost per patient, indicating efficient use of resources and effective staffing levels. A bad result would be a high staff cost per patient, indicating inefficiencies in staffing or excessive costs. For example, in a hospital setting, a good benchmark for staff costs per patient might be $1,000 or less, while a bad benchmark might be $1,500 or more. In a primary care clinic, a good benchmark might be $100 or less per patient, while a bad benchmark might be $150 or more per patient. Ultimately, the goal is to provide high-quality care while minimising costs, so the ideal benchmark will depend on the specific context and goals of the healthcare organisation.
There are several common errors that can occur when calculating this metric:
Therefore, it's essential to ensure that accurate and consistent data is used when calculating staff costs per patient to avoid these common errors and ensure that this KPI provides meaningful insights.
Improving staff costs per patient is essential for healthcare providers to achieve better financial performance and deliver higher-quality care. Here are some strategies you can optimise:
Utilise data to improve efficiencies
Healthcare providers can use data analytics to identify inefficiencies in staffing levels and optimise their workforce accordingly. For instance, by analysing staffing patterns and patient volume, healthcare providers can determine the optimal number of staff required to provide quality care while minimising staff costs.
Implement workforce management strategies
Implementing workforce management strategies, such as flexible scheduling, cross-training, and staff sharing, can help healthcare providers optimise staffing levels and reduce staff costs without compromising the quality of care.
Healthcare providers can improve productivity by streamlining processes, reducing waste, and improving the utilisation of resources. For instance, implementing electronic medical records (EMRs) or other technological solutions can reduce paperwork, improve efficiency, and free up staff time for patient care.
Optimise patient care delivery
By optimising patient care delivery, healthcare providers can reduce the time and resources required to treat patients. For instance, implementing telehealth or virtual care solutions can reduce the need for in-person visits, thereby reducing staff costs.
Invest in staff training and development
Investing in staff training and development can improve staff productivity and reduce turnover rates. By providing staff with the necessary skills and knowledge, healthcare providers can optimise staff performance, reduce staffing costs, and improve the quality of care delivered to patients.
There are several variations of the KPI "staff costs per patient", including:
- Direct Staff Costs per Patient: This KPI measures the total cost of staff directly involved in patient care, such as nurses, doctors, and therapists, divided by the number of patients.
- Indirect Staff Costs per Patient: This KPI measures the total cost of staff indirectly involved in patient care, such as administrative staff, support staff, and maintenance staff, divided by the number of patients.
- Total Staff Costs per Patient: This KPI measures the total cost of all staff, both direct and indirect, involved in patient care, divided by the number of patients.
The main difference between these variations is the scope of staff costs included in the calculation. Direct staff costs only include those directly involved in patient care, while indirect staff costs include all staff involved in supporting patient care. Total staff costs include both direct and indirect staff costs. Depending on the organisation's goals and objectives, one variation may be more relevant than the others.
What is the staff costs per patient KPI?
Staff costs per patient is a key performance indicator (KPI) that measures the total cost of staff salaries and benefits divided by the number of patients served.
Why are staff costs per patient important?
Staff costs per patient are important because they help healthcare organisations understand the efficiency of their staffing levels. By tracking this KPI, organisations can identify areas where they may be overstaffed or understaffed and make adjustments to improve their financial performance.
How is the staff costs per patient KPI calculated?
To calculate staff costs per patient, healthcare organisations need to determine the total cost of staff salaries and benefits for a given period (such as a month or a year) and divide that by the number of patients served during that same period.
What factors can impact staff costs per patient?
Several factors can impact staff costs per patient, including the number of patients served, the level of staffing required to meet patient needs, the cost of salaries and benefits, and the efficiency of staffing practices.
How can healthcare organisations improve their staff costs per patient?
To improve staff costs per patient, healthcare organisations can focus on optimising their staffing levels, reducing the cost of salaries and benefits, and improving the efficiency of their staffing practices. This may involve implementing new technologies, streamlining workflows, and investing in staff training and development.