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The Development of a Fee Structure for Productivity Analysis and Program Management Marilyn Dennis, MPA, OTR Lana Ledet. OTR

SUMMARY. Occupational therapists are frequently promoted to management level positions without prior instruction in financial accounting. Accounting information can enhance rational decision making processes at both the middle management and supervisory levels. Although today's literature encourages health w e professionals to utilize accounting principles, the occupationd therapy manager is often uncertain as to how to apply these techniques to his own setting. 'Ibis paper describes how one multiclinic department revised its existing fee structure and utilized the generated data to analyze therMarilyn Dennis is Assistant Director in the Occuoational T h e w Deoartment at the ~hversityof Texas Medical Branch. ~alv&.ton, TX. ~ h y r e h i e dher Occupational Therapy Degree at the University of Kansas and her Masters Degree in Public Administration from the University of Missouri at Kansas City. Lana Ledet received her Occupational Therapy Degree from the University of Texas Medical Branch at Galveston, TX. She was responsible for the computer implementation of the charge system data and other computer applications within the Occupational Therapy Department at the University of Texas Medical Branch, Galveston, TX. She is currently in private practice at 624 Rosenberg, Galveston, TX. 77550. Acknowledgment is made to Lillian Hoyle Parent, MA, OTR, FAOTA for her support, encouragement, and sharing of information, time, and resources in developing this article. The authors would like to acknowledge the editorial assistance of Suzanne Peloquin. MA. OTR. This article appears jointly in The Occuparioml Thempy Momger's S-vol Handbwk [The Hawonh Press, Inc., 1988) and in Occupatioml Thempy in Health Core, Volume 5. Number 1 (1988). Q 1988 by The Haworth Press, Inc. All rights resewed. 33


The Occupational nternpy M a ~ g e r ' sSuwivaf Handbook

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apists' productivity and to effect decisions regarding program management.

A large occupational therapy department had a change of directors and other significant personal within a six month period. The director was confronted with the problem of reducing costs, while maintaining quality of care, enhancing productivity and developing a more judicious distribution of the 44 therapists and their assignments in a multiclinic department. This paper will describe the events related to the implementation of a relative value unit system for determining fees and staff productivity, an analysis of the data generated, and a description of how the outcomes of the productivity analyses were used for program decision making.

THE PARTICIPANTS The primary author had just joined the department to supervise the physical dysfunction section. Because of her graduate training in public administration, and some previous experience in evaluating productivity in a smaller department, she was asked to develop a comprehensive charge system. The second author, meanwhile, had begun to develop skills in computer use. The two therapists combined efforts to develop a new charge system and a computer program to analyze the data generated by 44 therapists.

THE ORGANIZATION The occupational therapy department is housed in a state medical university. The department director reports to an executive director for professional services of the university hospital. Occupational therapy is relatively autonomous in decision making. There are two assistant directors administering two distinct divisions: one in the physical dysfunction area, and the second in psychiatry and pediatrics. A leveling system provides recognition of staffs administrative and or clinical expertise; staff members may be designated as 1, 11, or 111's contingent upon responsibilities and qualifications.

Mamn Dennis and Lum Ledet


Twelve occupational therapy clinics are geographically scattered throughout the 64 acre campus.

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CHRONOWGY OF EVENTS In September of 1985, the director of occupational therapy expressed an interest in revising the existing fee structure and irnproving upon the means then available for therapists to document productivity. There were three essential functions involved in the process. The first consisted of revising the charge system based on data compilation, financial and staff accountability. The second function required data manipulation and analysis through the use of wmputer technology. The third and final function is an ongoing process requiring those in administration to make decisions based on the data which is wmpiled and analyzed monthly.

Upon reviewing the existing charge mechanism, it was intended that the new system address several issues:

1. Charge categories that more appropriately described services rendered were needed to improve the department's ability to recover costs. The existing system listed only five service categories in which to describe treatment given. Treatment time wuld be charged in one quarter hour up to one hour units but time in excess of that was not being charged (Figure 1). 2. No means existed to differentiate the charges for a simple versus a comolex treatment and/or evaluation. For examole. a treatment d reality orientation would be billed under ~ h i s k a l Medicine and Rehabilitaiion at the same charge per time unit as a neuromuscular treatment. Reality orientationcan often be performed by a COTA while a neuromuscular treatment may require the expertise of a therapist certified in NDT. 3. Uniform description of charge categories, adaptive equipment, and splints was also necessary to increase potential for third party payor reimbursement. 4. A procedure to allow therapists to charge for adaptive equip-

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The Occupatw~lTherapy Mamger's Survival H a d x w k

ment provided to patients was critical. The existing structure did not offer this and equipment items were given to patients with no means of recovering costs to the department. 5. Reimbursement for occupational therapy services offered in psychiatry was a primary concern. The existing system did not allow for patient charges to be generated from that sewice area although one third of the occupational therapy staff were employed in this clinical area. 6. Group treatment charges were unavailable with the existing charge structure. The majoriity of psychiatric treatments were conducted in groups and thus required a lower fee per patient. 7. A more accurate reporting system for individual therapists, teams, and divisions to assess billable time was essential. This specific information would assist in determining plans for program development and more efficient assignment of personnel to teams. It would also increase administration's awareness of frequency of services rendered according to type of treatment, i.e., homemaking, neuromuxular; and group versus individual treatment as it related to various OTRs, COTAs, teams, and divisions. Although the department is in a teaching hospital setting, and there are many demands on therapists beyond patient treatment (i.e., administrative tasks, clinic teaching, research and program development), therapists had not reached an adequate level of billable productivity (therapist time which can be charged to the patient, i.e., treatment preparation, direct patient care, documentation, travel time, and chart review). With the existing fee structure, departmental expenses were not being met. Also, the staff average daily treatment units did not match that of comparable departments elsewhere. An unfortunate clinical reality is that however important some functions might be, not all of the therapist's functions are billable In this particular department, nonbillable or indirect patient care tasks had consisted of: performance of administrative tasks, student supervision, nonchargeable patient related activities such as scheduling, ordering equipment for the patient, and discussing patient's status informally with other disciplines, developing new programs,

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0073 CAPO Pouch

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0028 K m Conionnu 0026 M.P. Block Ar~achmmt O O a Mouth W l n t

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The Occrcpltw~l%mpy M a ~ g e r ' Survival s Handbook

providing assistance to another therapist during patient treatment, and transportation of patients to and from clinics due to lack of an aide. It was apparent to administration that not only were these functions valid and deserving of recognition, but several tasks displayed reimbursement potential as well, i.e., ordering equipment for patients, and transportation of patients to and from the clinics. Thus, the challenge existed to create a vehicle for acknowledging their value. Changes were needed in both the fee structure and documenting procedures.

CHOICES After deciding that a revised charge system was needed, the literature was reviewed to obtain guidelines for charges in occupational therapy. In 1970, Mae Hightower-Vandamm suggested three philosophies for development of fees for service. First was the philosophy that encouraged the availability of occupational therapy for all who need it regardless of costs. Second was the proposal that occupational therapy charges should be in accordance with those in physical therapy. The third proposal encouraged the use of comparable rates charged in the community. Although the first is altruistic, it does not contain costs. With the second approach, the treatment modalities in physical therapy and occupational therapy vary extensively and no longer offer a practical means to develop fees. And although surveys of fee schedules of hospital departments within the community are necessary to assure a competitive market, such a technique does not assure that expenses will be met and/or that a profit margin will be achieved.' Laase describes two types of product costing approaches, macrocosting and micro-costing.' In macro-costing, costs are determined using the ratio of cost to charges. The example formula given is: Total department charges

= Ratio of cost to charges (RCC)

Charge of specific department procedure x RCC = Cost of specific department procedure Micro-costing determines costs by considering such items as standard output measures (such as relative value units recommended by

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Marilyn Dennis and L ~ MLedet


AOTA), fured and variable cost factors, engineering standards, and job order costing. Micro-costing is more complex and requires a greater financial and time commitment.* Specific formulas for fee structuring within the micro-costing and macrocosting realm were reviewed. One specific formula determined treatment cost based on "value of treatment." Labor, equipment, and overhead costs per hour were defined to determine the actual cost of a prescribed treatment session.' A "time unit system" was described based on the total cost of providing the service for a specified time period. Two separate types of fees were identified. One fee wvers the wst of direct patient treatment, e.g., one therapist to one patient ratio and the second fee covers facility use including the time spent in direct treatment with the therapist as well as time the patient works independently within the clinic setting. Formulas are as follows: Professional Staff Costs (FTE) + fringe benefits Time units for direct care Adjustable operating cost of the department Total direct time units + Total nondirect time units


Personnel time unit fee


Facility time unit fee

Elsewhere, Mansfield describes the use of a specific micro-costing technique. This Analysis generates information concerning the relative amount of labor used, projected annual volumes, costs for direct and indirect labor, overtime, direct and indirect supplies, allocated cost, and cost for each identified evaluation and/or treatment. Access to cost information enables the department manager to realistically establish charges and to assess efficient use of personnel and supplies.'.~." The American Occupational Therapy Association (AOTA) Product Output and Recording System and Uniform Terminology has also been made available to occupational therapists as a guideline for

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The Occupatio~lTherapy M a ~ g e r ' sSwvival Handbook

setting fee structures. This document was proposed for a national system of uniform reporting among occupational therapists with the potential of being adopted for Medicare and Medicaid reporting purposes as well as being used as a guideline by other third party payors. The system has been helpful in providing the occupational therapy profession with a uniform nationwide descriptive base which has been helpful in public relations, legislative and reimbursement activities and enhancement of a nationwide identity.' The system has assisted therapists in developing fee structures by designating billable services and assigning them relative value units. Relative value units (RW's) are most frequently described in 15 minute time units (7W's) and include 5 factors which affect cost and productivity levels of occupational therapy s e ~ i c e sThese . factors include: expertise necessary to perform the service, equipment needed, amount of interaction involved, facility where the service is performed, and interpretation and analysis required in documenting evaluation and treatment results. Expertise relates to whether the skill necessary to perform the service is entry level skill, or requires more expertise or experience. Equipment is factored in accordance with quantity and cost, and interaction is meant to differentiate between one to one, or group treatment. Faciliry relates to the space needed, such as a kitchen area or a room for daily living skills where an evaluation or treatment takes place. Interpretation and analysis refers to the level of documentation required for a specific treatment or evaluation. Documentation may be as simple as recording a patient's daily attendance or as complex as interpreting test results. In reviewing the various formulas and techniques available to determine fee structures, it was decided to implement AOTA's Product Output and Reporting System and Uniform Terminology for the following reasons: 1. The system is developing a nationwide identity for occupational therapy. 2. The system is familiar to Medicare and Medicaid. 3. The R W ' s assigned to service delivery categories take into account realistic wst and productivity factors allowing departments to offer an equitable fee schedule to patients.

Marifyn Dennis and LOM Ledet


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4. The first author had some prior experience with this format and use of the system had been facilitated by the author's attendance at an advanced continuing education workshop conducted by AOTA in Atlanta.

Setting Fees Based on AOTA's Relative Vdue Unit System

AOTA has provided therapists with an &step method for setting fees based on RW's (although this &step method may seem simplistic, the process required a year's time to execute for this 12 clinic department).

1. Determine the service categories which will be used in a facility. 2. Determine the number of TU's charged to each service category. 3. Determine the average group size for patient treatment and the relative value for each service category involved. 4. Establish the percentage of TU's within a specific category which will be charged to the specific service category. 5. Multiply the percentage of TU's within a specific category by the total projected yearly TU's by the relative value of the specific service category to get the total projected RW's for each specific service category for the year. 6. Add the total projected RW's in all specific categories to get the total projected yearly RW's. 7. Divide the total projected department expenses (direct plus indirect) plus profit margin by the total projected yearly RW's to find the fee per RW. 8. Determine the fee for each 15 minute service category by multiplying the fee per RW by the relative value for that service category.'


The O c c u p a f w ~Therapy l Manager's Survival Handbook

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Step I . Determining Sem'ce Categories

In reviewing AOTA's Occupational Therapy Service Categories (Figure 2), a decision was made to condense similar service categories with the same relative value unit. For example "functional motor" became the title for the AOTA Service Categories of fine and gross motor coordination, range of motion, and [email protected] and endurance. "Neuromuscular" became the service category for reflex integration. "Home program" replaced AOTA7s term prevention because it was felt that the latter term would discourage third party reimbursement. The final charge form adopted by the department is displayed in Figure 3. After retitling service categories, definitions for new or condensed service categories were formulated. For example, "sensory reeducation" and "developmental disabilities" were additional subcategories described under "functional motor." The process of ordering, purchasing and fitting patients with pressure garments was delineated under "orthotics." Step 2. Determining Time Units Per Sem'ce Category

Following an inservice session in which the revised uniform terminology was reviewed and the proposed process was described, staff tabulated daily treatment charges for two weeks according to the proposed system (Figure 3), while continuing to charge patients within the existing fee structure (Figure 1).The data compiled from the two week "mock-up" was then utilized to establish the number of TU's (15 minute periods) per service category for a two week period in order to estimate TU's for the year. Step 3. Determining Average G m p Size and Average Relative Value Units for Each Category

As noted in Figure 2, most of AOTA's service catagories denote R W ' s for individual patient treatment as well as patient groups of 2-4, 5-8, 9 + patients. The data from the two week mock-up suggested that the majority of group sizes recommended by AOTA were also appropriate for this program.' The RW's suggested by AOTA for each prescribed service cate-

OCCUPATIONAL THERAPY RELATIVE VALUE UNITS R W s p p r 1S mlnuta llme I n l a n d Pellmt-Thuedsl Rallo C.lworla8

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Figure 3


Manlyn Dennis and Lana Ledet

gory were utilized without modification because they were considered appropriate in this setting.

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Step 4. Determining Pemntage of ~ i m Units e Charged to EBch Service Category To estimate the percentage of TU's, the two week mock-up data was again utilized, with the formula being: Total number of TU's


Number of TU's for a specific service category

% of TU's within the specific service category

For example, out of 6115 TU's in a two week period, 856 were within the service category of functional motor for a patient group size of one. Using the formula then: 6115 total TU's

856 functional motor TU's (group size of one)



Step 5. Determining the Total Yearly Pmjected Relative Value Units and Setting St& hoductivi& Standanis One variable required in this formula is total number of TU's per year. When the total number of TU's for the two week mock-up period was divided among the total number of staff providing patient treatment, the number of units of patient treatment per day per therapist was quite low. If this low billable productivity level was to be the standard and the department was to meet expenses, the charge to the patient would be astronomical. The administrative staff concluded that a higher productivity measure would be set.

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Setting StaHhoductivify Standards

The standards for the first year were based on staff job descriptions, administrative responsibilities as well as years of experience and job skills (Figure 4). These productivity standards, although relatively low, permitted a reasonable fee structure and presented staff with an attainable goal. The estimated yearly total TU's was then calculated based on the level of productivity described in Figure 4. The number of working days was defined as working days minus vacation, sick and administrative leave. The formula then for projecting total R W s per service category is: % of TU's in a specific service category x total projected yearly TU's across all service categories x RW assigned to the specific service category = Total projected yearly RW's for the specific service category.

The total yearly TUs for this program was 191,352. As mentioned earlier, 14% of those treatments were estimated to be under W l C l P A T E D STPFF PRMUCTlVlTY STbNOAROS FISCAL Y E W 1985-86

# of S t a f f


Billable Averwe D a l l y I l l ' s


Dl rector



Asst O l r e c t o r s


3 12

5 10


6 44

OTR C l l n l s a l I l l ' s


OTR Yloerv l xlry 11 ' s


Cl l n l c a l 11'5


OTR 1 ' s


C l l n l c a l COTA 11'3


COTA 1 ' s


Marilyn Dennir and LAM Ledet


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the service category of functional motor treatment to a patient group size of one. The R W estab1ished.b~AOTA for this service is 14 (Figure 2). 14% of functional motor treatment (group size of 1) x 191,352 projected yearly total TU's x 13 RW = 348,257 projected yearly RW's for the functional motor service category (group size of 1). Step 6. Determining the Total Yearly Pmjected Relative Value Units for All Service Categories

After calculating each service category's projected yearly RVU's, a total of all sewice category RW's was tabulated. The total projected RW's for the year was calculated at 1,771,680. Figure 5 provides a portion of the summary of steps 1-6.

Screenlng/ot CmsultatlonS/pL D a l l y Llvlng 1 DL .2-4 DL Sen~orlmtor 1 DL 2-4 DL



cognitive I Dt 2-4 DL




DL Ther.AcL. 1 DL Dally Llvlng 1 DL




The Occuprrtional Thenam Manager's Swvival Handbook

Step 7. Determining the Fee Per Relative Value Unit

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The fee per R W ' s can be defined by use of the formula: Total projected department expenses (direct + indirect) + profit Total projected yearly RW's


fee per R W

In totalling department expenses, direct expenses (those costs directly related to the operation of a department) included salaries, services and contracts, supplies and equipment. Indirect expenses (those costs indirectly related to the operation of the department) were identified as building depreciation, employee perquisites, administrative services, physical plant, laundry, and housekeeping. At this particular institution, indirect expenses are pulled from the Medicare Cost Report. They are totalled and one average indirect mst rate is established for all ancillary departments. The rate for Fiscal 1985-86 was computed as 75% of the total projected direct expenses:

75% x Total projected direct expenses = Total projected indirect expenses A profit margin, monies made in excess of direct and indirect expenses, was not established for the first year. The department's intent was only to cover direct and indirect expenses during the first year. If the total departmental expenses were 1,771,680 and the total RW's were 1,771,680, the fee per RW would be $1.00:

$1,771,680 (Total projected direct + indirect expenses) 1,771,680 (Total projected RW's)



Marifyn Dennis and Luna Ledet


Step 8. Detemining theeFee for Each 15 Minute SemMceCategory

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To calculate the fee of each service category the following formula is used: Fee per R W x R W = Charge per TU of the service of a specific service category category The charge of a functional motor group of one patient at a set fee of

$1.00 per R W would be $13.00:

$1 x 13 R W ' s = $13 per TU of functional motor treatment (group size of 1)

Once a fee structure was developed for therapists' time spent in billable productivity, a similar method was required for therapeutic adaptive equipment and splints provided to patients. Defiiitions were formulated to describe each piece of adaptive equipment and for common splints. Fees for each device and splint were developed according to unit costs of supplies with the addition of a mark up based on the approved Blue Cross-Biue Shield Mark-up Formula.

MARKET SURVEY Once the cost of each service category had been calculated, an informal market survey was conducted to assure a competitive market existed within the community. Although there was some variation in charges for specific service categories, overall fees were comparable. Designing a [email protected] Analysis System Once the charge structure was formulated, a format and procedure for documentation of staff non-billable activity to assure consistency among the therapists as they plotted their daily routines. Because the new system was based on units of time, therapists were expected to increase their awareness of time management as they tabulated their statistics on a productivity sheet (Figure 6). In addi-

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The Occupationnl %mpy Manager's Survival Handbook


Figure 6

Manlyn Dennis and LQM Ledet


tion to these functions, a few other purposes for the procedure were envisioned. The available data were also expected to assist administration in a number of decisions and tasks:

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1. As the Medical Center is a state institution serving a substan-

tial number of indigent patients, patient collections from occupational therapy charges will never be sufficient to recover actual expenses. However, if the department of occupational therapy could at least show the potential for rewvery of expenses, it would then be more accountable to Administration. The department could better justify additional staff, or in a time of funding difficulty, maintain its existing staff. 2. Another objective for the system was that its use might facilitate development of some productivity standards. By observing productivity over several months, standards could be developed for individual clinics. For example, in the rehabilitation clinic, which is adjacent to the patients' rooms, higher productivity might occur than in inpatient clinics where therapists have to deal with numerous interfering variables such as: (1)patient cancellations, (2) patients involved in diagnostic tests, or (3) therapists being responsible for patient treatment on numerous hospital wings. Standards could also be developed for particular staff levels dependent on whether a staff member were a I, 11, or 111. Should one expect individuals at I1 and 111 levels to be more productive due to their level of expertise or should they be so involved in supervision, program development, and clinical research that less direct patient contact should be expected from them? Or because of their level of expertise, many years of experience, and advanced time management skills (i.e., Jess time required to prepare patients for treatment interpretation of evaluations and write-ups) wuld this level of therapist be expected to treat a higher patient volume as well as perform the additional administrative duties? 3. Also, once standards were set for particular clinics, such data might facilitate more objective annual performance evaluations and assist in the distribution of merit raises to staff. 4, Implementation of the system could also yield data of significance to Administration in determining staffing patterns. The ,

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The OccypationaI &rapy Manager's Survival Handbook

data generated could specify the types of service categories that were being charged most frequently in each clinic. If for example, evaluations or treatments that required specific expertise were performed frequently in a clinic, then assigning a new graduate or COTA to that particular clinic would be illadvised. Likewise, if a particular clinic's patient care consisted of large group treatment for deficits in orientation and daily living skills, a COTA would be a suitable candidate to conduct such a program. 5. Information gathered could give indications of whether a particular clinic had become under- or over-staffed depending on data showing significant change in the hours of individual productivity. Such data might also assist in determining whether an expensive equipment item were feasible. For example, if few homemaking treatments were occurring, then renovation of a kitchen might not be warranted. COUECTINC DATA

The new charge structure would yield more data than previously available The data would not be helpful unless it could be manipulated quickly to obtain information. A system needed to be developed to make the collection of data as easy as possible and the entry of data into the computer as efficient as possible. A form was developed for the therapist to use to tabulate daily statistics for billable time units in evaluation and treatment and nonbillable productivity, also identified in time units (Figure 6). This form was turned in weekly. Using Multiplan, a spreadsheet program on an Apple Ile, a secretary entered this data into the computer on a weekly basis. A spreadsheet template was designed to yield the following information: 1. Number of TU's by specific service category for each individ-

ual, team, division, and department. 2. Percentage of TU's spent in evaluation versus treatment for each individual, team, division, and department. 3. Average daily billable time units for individual therapist, team, division, and department.

Marilyn Dennis and Lnw Ledet


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4. Average daily non-billable time units for individual therapists. The spreadsheet template was used to make a separate file for each therapist. Figure 7 is the evaluation portion of the actual individual therapist's spreadsheet utilized for data collection of the pediatric area's productivity. Similar spreadsheets were developed for each therapist in psychiatry and adult physical dysfunction. The individual therapist's spreadsheets contained additional sections on treatment and non-billable time units. For the end of the month totals, three additional spreadsheets were designed to obtain the following information: 1. Team totals for specific service categories

2. Division totals for specific categories 3. Revenue generated by teams and divisions Weekly data entry into the computer took 6 hours. The end of the month report took another 6 hours to enter. The use of the computer reduced secretarial time spent in dealing with productivity reports by 50%, or a minimum of one work-week monthly. Also, use of the TlEwl$l


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The O c c u p a t w ~Therapy l Manager's Smival Handbook

computer allowed administration to analyze data which had not been available before.

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ANALYSIS OF THE DATA Data analysis indicating low billable productivity raised concerns regarding potential loss of full time equivalents ( R E s ) and staff positions unless corrective measures could be taken. Specific results of the collected data regarding individual staff productivity indicated the following: The therapists in the rehabilitation unit were the most productive. Although administration anticipated that levels of I, 11, and 111 staff would have similar billable productivity time units (recall level I is least experienced personnel), it was found that there was great variability in productivity among staff:

1. Often the level I1 supervisors were spending more time in patient treatment than the level 1's. 2. Level 11 and III clinical staff were often involved in developing new programs, causing their productivity to be less than supervisory 11's or OT 1's. 3. OT 1's who were new graduates often fell below the productivity levels of their supervising OT I1 colleagues. 4. COTA 1's often involved in assisting in patient care, were not generating their own treatment units (Figure 8). Results concerning type of treatment rendered indicated that 54% of treatments performed were "functional motor" and "daily living skills." Only 20% of the evaluations were in "daily living skills" (Figure 9). These two categories are appropriately performed by COTAs. Yet, in general the productivity sf COTAs was less than that of OTRs; thus, a question arose as to whether COTAs were being used effectively, or as mentioned earlier, perhaps COTAs were assisting with treatment and not generating their own units. And although cognitive evaluationltreatment was an item on the charge form, the category was used infrequently in adult physical dysfunction except on the rehabilitation unit. After three months of collecting and analyzing data, recornmen-



OT 11(5) OT l i I OT Ii(C) OT I COTA I 1 COTA I TEIW AVEPAtE OULpaL l e n t Ortho P l a s t i c s Surgery

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Pcuce I n p a t i C n t T e x a s Deor C o r r e c t i o n s Yespita1

Rehabilitatim Physical Oyst'urt ion Average ::(S)


Supervisor ::(C)








Eva l u a t i o n Sensorimcor Dally Livlng S k i l l s Consultation



11% (60%) (20%)


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The Occupatwnal Therapy Manager's Survival Handbook

dations were made. First, it was necessary to collect data on the non-billable tasks (recall that activities such as time spent ordering and purchasing equipment for patients and travel time to patient's room had initially been viewed by staff as non-billable time) to determine if individual or collective billable productivity was actually as low as it appeared. Could any of those tasks be charged or could some activities be performed by support staff? Could clinics be centralized to provide better back up among the teams thus decreasing the number of supervisory staff required? Next, by reviewing the distribution of "functional motor" and "daily living skills" treatments, assignments of COTAs could be modified. Another goal that emerged was to explore ways to increase overall billable productivity, specifically of OTR level I's, and COTA level 1's and 11's. At the same time, billable productivity standards for each therapist needed to be considered by reviewing their assignments as well as their classification. As productivity analysis had suggested and as review of assignments confirmed, each level I1 and I11 staff OTR could not be expected to attain the same performance levels for billable productivity. Those level I1 and 111 OTRs involved in major program development, for example work evaluationiwork hardening or were responsible for supervising a larger team, needed to be assigned a lower standard of direct patient contact time than those level 11's and 111's whose main responsibility was direct patient care. Discussions with staff were also indicated to see why "cognitive evaluation" and "cognitive treatment" charges were low. Did the patient assessment not demand such evaluations or did staff not feel competent to perform such evaluations? If the latter were true, inservice training and continuing education opportunities would be indicated to increase competence levels in that particular function. OUTCOMES

Since the initial analysis of the data, several recommendations have been implemented with positive results. Examples of those implemented results will be taken from the division of Adult Physical Dysfunction although similar success has occurred from program modifications in Psychiatry and Pediatrics as well.

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1. Prior to September 1985, the Adult Physical Dysfunction Program had six teams: three acute care teams were assigned to (1) neurology/neurosurgery, (2) general medicine, and (3) orthopedics and plastic surgery including burns. The other three teams included clinics in the (1) outpatient, (2) rehabilitation, and (3) correctional health facilities. Concerns emerged during the first three months of using the new system regarding the low billable productivity levels recorded by the acute care teams and the correctional health facility team. None of these teams were recording more than 12 units of treatment daily. Because staff of two teams were housed in the same clinic, the teams were combined, reducing staff from six to five members and the work was redistributed. Results indicate staff productivity has increased for each team member with the average being 16 units daily (Figure 10). Following an eight month period of using the new system, the correctional health facility team and mULT PHYSICAL DYSFUNCTION AREA BILIABLE PRCIX)CTIVITY ASSOCIATED WITH CCMOINIffi T W S AVERAGE DAILY TIME W I T S

N e d l c l n e Te.m Acute InpaLlenL OTR 1 1 ::(5) OTR I


T e r n Average

Neuralqy/Eleurosurgery Acute l n p e t l enr OTR 11 ::(S) ::(C) OTR I I Y C ) OTR I COT4 1 T e r n Average

Ccnbined T e r n Average



I5 13

16 14

16 18







I4 16 19









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The Occupatio~lTherapy Manager's Survival Handbook

orthopedicslplastic surgery teams were combined and the team size was reduced from five to four members. Presently threc staff are averaging 18 units daily with some help required from the Assistant Director (Figure 11). Although these levels remain low, they are considered acceptable levels of improvement considering an acute care caseload presents many problems (patients too ill for treatment, scheduling difficulties, patients' need for a variety of disciplines) and considering staff productivity of a year ago. Also contributing to higher productivity is the use of group treatments whenever possible, frequently conducted by COTA team member. 2. There are four COTAs employed, one on each existing team. In all cases, due to changes in kinds of assignments, COTAs have increased their average billable productivity levels from an average of 10 units to 18 units daily (Figure 12). For example, the COTA in the outpatient clinic now assists an OTR in a.m. care and group treatment on a newly developed inpatient geriatric unit, while spending afternoons assisting with outpatient hand and arthritis clinics. She is now averaging 16-18 treatment units daily. 3. Because therapists have been able to increase their productivity due to changes in assignment and team structure, no real loss of revenue has occurred (Figure 13). With staff positions gained by team consolidations, the department of occupational therapy now offers staffing on a new inpatient geriatric unit and an adult day hospital. 4. Attempts have been made to increase therapists' knowledge in the area of cognitive treatment to correct and address lack of service in this area. Two therapists received special training at another facility and conducted an inservice session to staff regarding that particular facility's use of cognitive evaluation and retraining. The use of cognitive modalitiesuin the treatment of adult cognitive deficits has also been reviewed. Computer software9has been purchased for use in cognitive rehabilitation and staff training sessions have been held on computer use. A "cognitive self-care eval~ation"'~has been purchased with kits available for each team. As a result of these actions, cognitive evaluations have increased from 10 units per month to 17 units per month over the last 6 months. Cognitive1 conceptualization treatments have increased from 75 to 165 units over the same period of time.

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Marilyn Dennis and Lonn Ledel


5. To assist in meeting the continuing goal of increased productivity, each therapist is to be involved in writing hisher own job descriptions for the next fiscal year in which personaVprofessiona1 goals for the year will be established. This will enable both supervisor and staff member to agree upon an individual productivity standard. 6. Time spent in documentation is in the process of being streamlined to decrease papework and assist both in better time management among staff and in producing uniform documentation for use in quality assurance research. 7. Although data show that COTAs have increased participation in "functional motor" and "daily living skills" services, there continues to be little involvement in any aspect of the ADL evaluation. It has been decided that emphasis will be placed on providing training to COTAs in assisting with ADL evaluations once a standard evaluation form and process has been agreed upon. 8. A need to review staff time spent in "other related activities" (non-billable tasks) continues. With fewer team leaders, however, less time is being spent in meetings and administrative duties with no apparent detriment to overall sewice. Lastly, with the inclusion of psychiatric services as an area for reimbursement, the department has been able to meet expenses during the first year of implementation of this system (Figure 14).

RISKS AND CONSTRAINTS Although computer analysis of departmental data was seen as helpful in performing staff and clinic productivity studies, these studies need to address other significant issues as well. Analysis needs to consider the background of individual staff and the particular stressors present in each clinic (clinic location and size, personnel, environmental conditions, services offered, the patient populations treated, and other disciplines involved) which affect daily function. Also, problems existed both in obtaining staff acceptance of the system and in helping them to achieve a level of comfort with it. Was there an implied threat about the need to increase productivity? How would it affect periodic personnel evaluation, promotions,


& OccupafionalThempy h i a ~ g e r ' sSwival Handbook

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NlVLT PIIYSICAL UYSFUtICTION AREA P R i ~ I C T I V I l YA55C€lAl1711 WIT11 C I M I i I N I N n 1l:NI:i AVl.lWl>l. IBAII Y I I N \IN1 15

merit raises and other considerations? Repeated inservice sessions to review the established system were necessary to ensure the staff's understanding of how to use it effectively.

SUMMARY The decision to revise a departmental fee structure to one based on relative value units has resulted in the accumulation and analysis of much data. It has further provided a basis for restructuring programs within the department and making more efficient use of personnel. Guidelines for staff development and more accurate planning for employing new personnel has also resulted. Computerization of data has made the analysis of this vast amount of information possible. It has also encouraged staff to undertake

e and~Lnnn Ledet

Marilyn D


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the analysis of non-billable time to learn if economies are possible in such activities or if such losses are inherent in medical centers I with extensive educational programs. The development of the charge and productivity system, although requiring major adaptation by all staff, has been considered worthwhile. It has improved data collection and increased expectal U U L T PHlSICAL DYSFUNCTION A K I n BILLABLE PROOUCTIVIIY COTA S AVERAGE DAILY TIME UNITS


COTA I 1 (XIioat i o n 1

COTA I I t ( u m s i O r L l a l P 1 a s l i c s Surgery rcxas DepL. Correctlcns l l o s p i l o l COTA I Acute lnpalient COTA I Reh~billrotlon


'1 u

b 1:












COTA Avcraye Oallv Unlts



87, Ib2



Tie Occupatio~iIhempy hiamger's Survival Handbook DEPARTMENT OF CCCUPATIOWL THERAPY F I W I C I A L REVIEW 1984-85, 1985-86 FISCAL YEARS


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(Dlrect + I n d l r e c r )



- 694,640




tions in both billable and nonbillable productivity. Lastly, with the inclusion of psychiatric services as a chargeable area, the revised charge system has increased the amount of collectible reimbursement for the department.

QUESTIONS One of the major concerns that has evolved with the development of this established charge structure is the high potential cost of health care as it relates to occupational therapy care. Staff who have been with the facility remember the days when no charge existed for occupational therapy treatment and the cost to patients seems high. Several questions come to mind: 1, Is it feasible for a teaching, research institution to be finan-

cially solvent or to achieve a profit margin? What will happen to the institutions if they are not financially solvent? Who will subsidize them? 2. Should/can occupational therapists develop more innovative means for group treatment in the area of physical dysfunction to decrease the costltreatment but still obtain quality outcomes? What outcome measures need to be developed to compare quaIity/cost? 3. Can occupational therapy departments hire a higher ratio of

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Manlyn Dennis and Lam Ledet


COTAs/OTRs to assist in lowering departmental costs and thus a lower cost per treatment? In other words, are OTRs often doing the work of COTAs and COTAs the work of aides or volunteers? 4. What therapist functions can be truly justified as billable productivity? Is any function which benefits a patient billable? 5. Will the use of uniform terminology and uniform reporting systems enhance occupational therapists' attempts at third party payor reimbursement? Do these terms and definitions clearly define the role of the occupational therapist? REFERENCES 1. Hightower MD: Fee and charge concepts for the occupalional therapist. AM J Occup Ther 243, 1970, p 481-483 2. Lasse SM: Fiscal Mamgemenl in the Occupational Therapy Mamger. edited by Bair J, Gray M. Rockville, MD: The Occupational Therapy Association, 1985 3. Liebler JG. k i n e RE, Dervitz HL: Management Principles for Health P r o f e s s w ~ k Rockville, , MD: Aspen Systems Corporation, 1984 4. Mansfield M: Micro costing analysis-a measure of accountability. Am 1 &cup Ther 37: 1983, p 239-246 5. Occupational Therapy Association, Inc: Occuparioml Therapy Producr Ourput Reporting System and Uniform Terminologyfor Reporting Occuptioml Therapy Services. Rockville, MD: The American Therapy Association, 1978 6. Bair J, Gwin CH: Institute C , Management and Administration: Justification Through Productivity, AOTA Conference, April 14-15, 1985 7. Bair J, Gwin CH:A Productivify System S Guide for Occupatioml Therapy. Rockville, MD: American Occupational Therapy Association. Inc., 1985 8. Discovery Toys Catalogue. Pleasant Hall. CA. 1986 Soft Tool Series '83, '84, '85, Indianapolis Indiana, 1983,1984, 9. Bracy 0. 1985. Discovery Toys Catalogue, Pleasant Hill, CA 1986 10. Clark N, Peters M: Scorable Self Care Evaluation. Thorofare, New Jersey: Slack Inc., 1984

The development of a fee structure for productivity analysis and program management.

Occupational therapists are frequently promoted to management level positions without prior instruction in financial accounting. Accounting informatio...
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