“Conflict in groups stems from trying to use one measurement system to meet all practice goals. This is the pitfall to avoid.” —Dennis Padget
CEO SUMMARY: Productivity measurement systems are widely used outside the healthcare industry to better manage operations and to incentivize staff. Many pathology groups have a gnawing feeling that they should be looking at performance in ways beyond accounting numbers alone. In Part Two and Part Three of our series on measuring pathologist productivity, THE DARK REPORT interviews Dennis Padget of DLPadget Enterprises, Inc., based in Simpsonville, Kentucky. Padget, recently retired, is a pathology practice consultant. His advice and insights on the “do’s and don’ts” about establishing a measurement system to evaluate the productivity of pathologists are rooted in four decades of experience. Editor Robert L. Michel conducted the interview.
PART TWO OF A SERIES
EDITOR: If we are going to discuss pathologist productivity, it would be good to establish a definition of productivity for our readers.
PADGET: Let’s start with the classic definition used in management. “Productivity” is the measurement of the amount of time taken to perform a given job or task compared to the required amount of time. The “required” amount of time is determined by some objective method. Examples would be a stopwatch “time and motion study” or statistical analysis of time and workload data for a broad sample of equally-skilled people performing the same task. The principles underlying “productivity” are the same for all products and services.
EDITOR: This definition implies, then, that there is some recognized “ideal time” required to properly accomplish a task. Productivity is the measurement of actual performance against this “ideal.”
PADGET: Correct. We express productivity as a percentage. Somebody working at 100% of standard is exactly on par with his or her peers. A productivity rating of 110% means you’re getting the job done a bit faster than average, without cutting corners that affect the quality of the job or product. Numbers much below 100% mean there’s a problem that should be investigated and corrected.
EDITOR: When measuring the productivity of pathologists, what makes them unique from other medical specialists?
PADGET: Internal medicine provides a good comparison. Internists primarily work with patients and do few other tasks. The major variables when measuring the productivity of an internist are the severity and complexity of each patient’s presenting complaint. Medicare’s RBRVS relative value units take severity and complexity into account by CPT code. Internists have to CPT code each patient visit. Voilà! You have a ready-made productivity measurement system that accurately covers 90% or so of an internist’s workday.
EDITOR: By contrast, the varied types of cases handled daily by the typical
pathologist makes controlling for complexity and severity more challenging.
PADGET: Correct. On any given day, one measurement standard cannot capture the varied duties and tasks performed by a typical community hospital-based pathologist. For example, in one ten-hour period, a pathologist might perform five frozen sections, examine the slides and dictate the reports on ten large inpatient cases and 20 straightforward outpatient endoscopic biopsies, interpret and report five peripheral blood smears and ten protein electrophoresis tests, investigate and report on a patient’s transfusion reaction, QC several Pap tests, prepare a performance review on the lab manager, prepare for and attend a meeting of the hospital’s infection control committee, and participate in a planning session preparatory to the upcoming hospital contract negotiations.
EDITOR: That is a diverse range of activities! That is why a different “ideal” or “standard” time is required to accurately measure each different group of activities. A pathologist has more than the one or two types of primary activities—unlike the internist.
PADGET: Yes. Each specific activity grouping has a different productivity time allotment. You also have to carefully account for the factors that influence time requirements within a particular grouping.
EDITOR: What primary variables must be considered when developing a system to measure pathologist productivity?
PADGET: Over several years I developed a mathematical model to evaluate productivity and physician staffing for pathology groups. A key variable in the model is practice setting: independent lab versus teaching hospital versus community hospital. Another very important variable is the measurement of surgical case complexity. This can be closely approximated by separating the count of inpatient, day surgery, and biopsies referred by office-based physicians. Of course, other medical work done by the pathologists must also be considered.
EDITOR: You mean like cytopathology and laboratory medicine?
PADGET: Yes, precisely. My model takes into account these added variables: 1) whether or not a pathologist performs the surgical procedure associated with bone marrow and fine needle cases; 2) cytopathology caseload, broken down among non-gynecological, fine needle, and Pap test; 3) medical autopsy count; and 4) the average number of clinical lab and Pap test interpretations rendered per year. For teaching hospitals, the number of specialty cases like outside consults, in-house neuropathology and in-house renal pathology specimens must also be considered.
EDITOR: I know different models work in different ways. Is a workload count for each variable you’ve enumerated all that’s needed for your model, or is more information required?
PADGET: These variables reflect a particular group’s verifiable workload and general practice environment. To get an accurate representation of a group’s expected worked-hour requirements, several factors beyond workload count alone must also be considered . For example, do pathologists gross the tissue specimens? Or is this done by pathology assistants or residents? Is a detailed microscopic description regularly dictated? Or is this done only when indicated? How up-to-date is the report dictation/transcription system? Do pathologists still write their diagnoses in longhand, or is a voice- recognition system in place? Of course, more factors need to be considered, but these show the level of detail required to establish an accurate system for measuring productivity.
EDITOR: Continue, please. This is important to our readers.
PADGET: Is the percentage of cases requiring frozen section consult, special stains, immunohistochemistry, or flow cytometry at, above, or below the norm? Is there a physical plant or other exogenous issue that directly impacts pathologist productivity? Two examples would be a frozen section room located far from pathology or a radiology work flow so disorganized that pathologists are often forced to wait to begin immediate studies of fine needle specimens.
EDITOR: What other categories of variables affect productivity measurement systems?
PADGET: To this point, I’ve only discussed variables that involve a pathologist’s “hands-on” work, meaning specimen exams and test interpretations. There’s another major dimension to a pathologist’s professional life.
EDITOR: Administration and teaching?
PADGET: Yes. Often a significant part of each day is spent on medical direction and oversight of the laboratory. In academic settings, there is also education and training of residents and fellows.
EDITOR: Does practice setting or hospital size play a role in how much management work is expected?
PADGET: For a pathologist whose practice is limited to an independent lab setting, the amount of so-called “Part A” time is negligible. But if it’s a larger community hospital, “Part A” time will typically account for 35% to 45% of the total workday. For a teaching physician, the commitment can easily reach 60%. I commonly approach this side of a pathologist’s overall job duties using a physician- completed time diary and lab-to-lab peer group comparison. This is necessary because, when it comes to “Part A” activities, reliable productivity standards are unavailable.
EDITOR: Wow! Given what you’ve described, if a pathology group wants to develop its own productivity measuring system, that television line “don’t try this at home!” is probably good advice.
PADGET: It can be complicated. When a pathology group initiates a productivity measurement process, it is useful to enlist the guidance and assistance of someone with experience in such systems. However, the process, analysis, and data interpretation steps are not difficult to learn and apply. During the learning curve, an experienced consultant can help the pathology group avoid land mines and get it right from the start. It also helps to understand that productivity measurement involves some “art” as well as “science.”
EDITOR: Is the mathematical model you mentioned earlier something you’d be willing to share today, at least enough to give our readers a better understanding of how it works?
PADGET: I’ll happily show you meaningful, illustrative pieces of the model. But this isn’t a “plug-and-play” worksheet. I’ve only discussed a few of the key things someone needs to know about properly using the model. I don’t want anyone getting hurt by using the model in a way not intended or appropriate, so I’ll only give you part of the whole thing.
EDITOR: Are you saying that “a little knowledge is a dangerous thing?”
PADGET: Yes. A prime example of altruism backfiring big time is what happened to Dr. Seth Haber several years ago. He published a concise little article in which he enumerated the productivity standards he and his pathology associates at a Kaiser Permanente facility in California had developed for use in monitoring their own performance. His aim was to encourage other pathologists to manage their time via some type of objective, numbers-oriented approach. The article was clear in its warning: no one should just glom on to his numbers. Rather it stressed the need to follow the process, adopt the approach, but ignore the specific figures relevant only to the Kaiser experience.
EDITOR: Let me guess: Haber’s advice was ignored by certain individuals. As a result, some pathologists got “burned.”
PADGET: You guessed right. At least two consultants I’ve run into over the years obviously just grabbed Haber’s numbers as “gospel.” They used them without consideration for intent, comparability, compatibility, or anything else. In my opinion, this mindless practice by these consultants was at least unethical, if not outright malpractice. And yes, more than a few pathologists were harmed in the past due to numbers misrepresented or misused.
EDITOR: Your point is well made and taken: you are not providing a turnkey model, and no one should apply it that way. The portion of your productivity model that you are sharing is reproduced in the sidebar on page 12. Please walk us through the key things to understand about your worksheet.
And yes, more than a few pathologists were harmed in the past due to [productivity] numbers misrepresented or misused.
PADGET: The two main columns show the expected average workload for a full-time pathologist in a teaching versus a non-teaching setting. The non- teaching column applies to both hospital-based and independent lab practices. However, for a laboratory that doesn’t station pathologists on-site at a hospital, the inpatient and outpatient lines don’t apply. In those situations, it’s unlikely there will be much, if any, “Part A” time for that laboratory.
EDITOR: Walk us through a line of numbers to help us understand how the model works.
PADGET: Okay. Assume it’s a pathology group at a large non-teaching hospital with a busy surgical staff. The pathology department is state-of-the- art. It includes two or three pathology assistants to gross tissue specimens and there is voice-recognition report dictation software. Our pathologists don’t regularly dictate a detailed microscopic description and special stains/studies are used sparingly. We’ll say the group’s inpatient surgical pathology caseload—the only line in the work- sheet of interest at this moment—is 13,250 cases per year.
EDITOR: What comes next?
PADGET: Given these assumptions, this model predicts that the group will need 2.5 pathologists working full-time (2,080 worked hours per year) on nothing but inpatient cases. That’s 13,250 cases divided by 5,300 cases per year per full-time physician. In my example, I used the high end of the productivity range because all the assumed subjective factors point to maximum workload ability. The model takes into account all the frozen sections to be done, special stains, all the “curbside” consults the surgeons will demand, and most everything else commonly associated with signing out an inpatient case. It does not, however, take into account any “Part A” duties; that time must be added at the end.
EDITOR: You have a way to incorporate “Part A” time into this formula?
PADGET: The most accurate way to add “Part A” time to the worksheet is to have each pathologist in the group do a two-week time analysis, then add the total at the end. A quick, ballpark way is to estimate the percentage that workload-based time bears to total group time, then calculate what the grand total and the “Part A” portion must be. For example, let’s say when you plug in all your workload statistics and do the math called for in the worksheet, you determine you need six full-time-equivalent pathologists just to handle the specifically-listed medical activities. That is 12,480 worked hours a year. Assume, on average, you and your associates spend 40% of your time on unlisted “Part A” duties. That means 12,480 is 60% of your total time. Divide 12,480 by 60% to get 20,800 total worked hours per year. Then subtract 12,480 to get 8,320 (4 FTE) as the unlisted “Part A” duty portion.
EDITOR: In your example, does this say the group needs ten full-time pathologists to handle all the patient care, lab direction and oversight, and other work at the hospital?
PADGET: Not exactly. Again, the model predicts how many worked hours are needed, not paid hours. In my example the group needs ten bodies present and working eight hours a day, five days a week, 52 weeks a year. The members of the group have to decide how much leisure time they want, because that is on top of the worked-hour requirement. The more leisure time, the more bodies needed—and the less income per member.
EDITOR: That reflects reality. The group can hire more physicians so each one doesn’t have to work too many hours. Or, pathologists can work more hours and keep a bigger share of the same income pie. Okay. Let’s now focus on the teaching/non-teaching numbers. Why such a big difference in the workload standards?
PADGET: The biggest factor is resident education. From my work with teaching pathologists, I know that each resident consumes, on average, nearly one quarter of a full-time pathologist’s time—about 450 hours per year. That obviously has a big impact on the teaching pathologist’s ’scope-time. He or she simply can’t churn out the same number of cases per time period as a pathologist who isn’t simultaneously teaching residents.
EDITOR: What other differences are relevant between these two settings?
PADGET: A teaching hospital will generally have a higher proportion of major surgery cases, such as radical necks, colectomies, Whipple procedures, and mastectomies. It will also make greater use of frozen sections, special stains, and other special studies. Its pathologists will do more “curbside” consults with surgeons and surgery residents.
The more leisure time, the more bodies needed — and the less income per member.
EDITOR: That’s why you stress that someone must take these differences into account to reach an appropriate conclusion about the number of pathologists needed at a particular teaching hospital, compared to other practice settings.
PADGET: Absolutely! Remember the NASA space probe mission that flopped because someone plugged inches instead of centimeters into the navigation software? That same “garbage in/garbage out” principle applies to productivity systems. Such mistakes can lead a pathology group to disaster, just like at NASA.
EDITOR: I’ll bet you have an example of such a disaster affecting pathologists.
PADGET: Several years ago a teaching medical center with a very heavy oncology load hired a new VP of lab and pathology. The VP’s background was with a national clinical lab. He soon convinced the med center’s CEO and CFO that his “numbers” showed only half the pathologists on staff were actually needed! His “numbers” were straight out of the commercial lab’s guide book.
EDITOR: Surely he adjusted his prior employer’s workload standards for resident education, case complexity, Ph.D. versus M.D. in the commercial clinical lab setting, and such! That’s common sense.
PADGET: Maybe to you and me, but not to the VP. His logic was: if the pathologists at the commercial lab could sign out 75-90 surgical cases a day, there’s no reason the docs at the teaching medical center couldn’t too! We ultimately were able to rebut the VP’s contentions and convince the CEO and CFO that such draconian measures would kill the pathology department. However, morale had fallen so low by then that 50% of the pathologists left for much greener pastures!
EDITOR: How can the productivity measurement model you’ve developed be used? For example, could it be used to monitor the productivity of Pathologist A versus B? Could it be used as the basis for compensation allocation?
PADGET: No, because the model presented here is designed to measure and monitor pathologist staffing and productivity at the group level. This serves several needs for the typical pathology practice. For example, hospital officials sometimes claim the pathology group is overstaffed, and that’s why “Part A” money needs to be cut. My model meets the challenge of having to prove that you’re appropriately staffed, possibly even understaffed. Either way, it’s credible evidence the group isn’t padding its “Part A” hours.
EDITOR: It sounds like there may be strategic planning uses for the model too.
PADGET: It is useful in strategic planning. If a group expects its surgical volume to increase 30% over the next three years, this model predicts how many more pathologists will be needed to handle the extra work. It also determines, for example, what level of case volume would be needed to justify a full-time, dedicated hematopathologist, cytopathologist, or dermatopathologist.
EDITOR: Is it useful for determining needs in operations and infrastructure?
PADGET: Yes. For example, it can identify the volume at which you’d be better off hiring a pathology assistant instead of another physician. It can also help evaluate whether an investment in a state-of-the-art anatomic pathology reporting system will pay for itself by freeing-up the leisure time the pathologists are demanding.
…the model presented here is designed to measure and monitor pathologist staffing and productivity at the group level.
EDITOR: Can it be used to monitor the ongoing productivity within a group, for general management purposes?
PADGET: Certainly. That’s an important and frequent use of such a system: to identify trends in the group’s productivity. This gives the physician group leader and practice administrator a chance to get ahead of the curves and to act decisively to promote positive change and avert problems.
EDITOR: It can tip you off to either good trends or bad trends, right?
PADGET: That’s correct. If productivity is improving, it may be due to something the group wants to encourage, like cutting fewer tissue sections that weren’t all that necessary in the first place, or instituting clinical protocols that reduce the number of special stains that must be reviewed. On the other hand, declining productivity at the group level may be caused by a problem that needs to be nipped in the bud: examples would be an under-trained histotechnologist or a malfunctioning slide stainer that generates too many poor-quality slides.
EDITOR: Let me play devil’s advocate for a moment. Certainly some pathology groups will be tempted to take your productivity numbers—designed for use at the group level—and apply them to individual pathologist performance. What advice would you give those groups?
PADGET: I can see where the model might be used to compare one pathologist’s productivity to another, but I’ve never used it that way. I’d advise caution. It would be necessary to conduct several trial runs to confirm that it performs accurately in that group’s particular environment for that alternative purpose.
EDITOR: Your advice is consistent, because a trial run means factoring in all the variables which affect the outcomes—and means these numbers should not be used “as-is.”
PADGET: If I were advising a pathology group, I’d have them look into a different type of productivity model before committing to this one as a way to monitor and compare individual physicians within the group. For example, a model based on blocks or slides may be more apropos for micromanagement purposes. This is really what is involved when looking at individual doctors instead of the group as a whole.
EDITOR: We’ve not yet discussed how compensation should be linked to any model of pathologist productivity.
PADGET: My model is entirely inappropriate for use in allocating pathologist compensation. To repeat, it’s designed to facilitate strategic planning and macro-management functions. There are too many additional factors which must be included for any productivity measurement system to be used as a basis for the important and politically sensitive decisions which determine how much one physician is to be paid versus another.
EDITOR: Do you have any recommendations on a particular productivity measurement system which is accurate, objective, and appropriate for use in allocating pathologist compensation?
PADGET: I must say I haven’t encountered a compensation system based 100% on productivity that consistently produces fair and equitable results over the long-term. But that doesn’t mean productivity is inherently incompatible with compensation. In fact, we know that’s not true at all. You must, however, have a clear objective in mind when marrying the two. Further, the integration has to be done in a thoughtful way to avoid unintended adverse consequences.
EDITOR: Dennis, you provided a wealth of information on the subject of designing a system to accurately and objectively measure pathologist productivity. However, we have run out of time and space. Would you be willing to share your experience in the design of compensation systems for pathology groups in a future conversation?
PADGET: Yes. Linking compensation to productivity in inappropriate ways is one of the most common sources of conflict within a pathology group practice. I’d be willing to share what experience has taught me about the right way to approach this topic.
UPCOMING: PART THREE
Building upon the discussion of pathology productivity measurement systems presented here in Part Two, Part Three moves to the next step in the process: different approaches to appropriately link pathologist productivity with compensation.