Jun 1998 Table of Contents

OFFICE SUITE

STAFF MANAGEMENT

Promoting Your Staff Makes Good Financial Sense

Fam Pract Manag. 1998 Jun;5(6):64-67.

Of the choices you make for your practice, hiring decisions are among the biggest. As you know, a great staff can help you succeed, and a poor one can shut you down. And with patient satisfaction increasingly becoming the primary yardstick health plans use to measure practices, the quality of your staff will become an even more important success factor.

But you also have a budget to think about. You need to control staff-related overhead, both the cost of the hiring process and the salaries you pay. How can you find good people and keep your costs in check? Just look around. Your best candidates to fill a vacancy probably already work for you. If you promote your own staff before you hire people from outside, you can expect to save time, save money and boost morale.

To illustrate, consider a hypothetical six-physician family practice with 30 nonphysician employees. The billing coordinator decides to retire, leaving the practice with two options: search for outside candidates or promote existing staff (in effect, hire from within). Let's compare the processes and the likely results.

Case 1: An external search

To search for outside candidates, the office manager first reviews the practice's job descriptions to ensure that they reflect current needs. Assuming that the descriptions were updated after the last round of performance evaluations, this takes one hour of the office manager's time.

Next, the practice advertises the position in newspapers and trade publications. These display ads, designed to attract higher-caliber applicants with more experience, cost $600.

The practice receives 150 résumés, which take an average of six minutes each to skim. The office manager spends 15 hours skimming résumés then rereads the top 20 and selects the best eight, which takes another four hours.

Over the next two weeks, the office manager interviews the eight candidates. The interviews and related downtime average 30 minutes each, or four more hours. The office manager also checks references (six hours).

The office manager invites the top two candidates for second interviews and tours of the practice, which take a total of 10 office-manager hours. One candidate is from another state; the airfare and hotel charges total $725.

Finally, the six physicians meet with the office manager to make their recommendations (a total of two physician hours and 20 minutes of the office manager's time). This step could take place over lunch or during a staff meeting, but when considering an outsider, the decision makers may want to compare notes and refer to résumés and test results. This probably will require a more formal setting.

Twenty-three days after the billing coordinator resigned, a new coordinator is hired. The first day of the new coordinator's employment is devoted to administrative matters consuming six office-manager hours and eight billing-coordinator hours.

Now let's look at the bottom line. The average hourly rate for the practice's physicians is $175, and they spent a combined two hours in the search. The office manager, who earns $52,000 a year, works 40 hours a week (2,080 hours a year) for an hourly rate of $25; the search took 46.33 hours of the office manager's time.

The former billing coordinator, who had been with the practice six years, earned $18.20 per hour. The new coordinator, who has 12 years' experience, earns $21.75 per hour and gets a $2,000 signing bonus. Of course, the practice could choose to hire someone with the same or even less experience than the retiring billing coordinator. Each practice must determine which trade-off it prefers — more experience, a shorter period of adjustment and a higher salary or less experience, a longer period of adjustment and a lower salary.

It takes the new billing coordinator three weeks on the job to get up to speed. In that time, the practice incurs expenses related to teaching the coordinator the office's procedures and systems, correcting errors, interruptions in work flow and temporary reductions in patient satisfaction (a rough estimate of these costs would be $1,000 in the first week, $500 in the second week and $250 in the third week).

For a breakdown of the cost of this hiring process, see “Dollar costs of an external search.”

Dollar costs of an external search

Here are the itemized costs that a six-physician family practice could expect from conducting an external search for a new billing coordinator.

Expense Cost

Office manager's time revising job descriptions, reviewing résumés, checking references, interviewing, discussing candidates, making final recommendations and taking care of first-day administrative issues (46.33 hours at $25 per hour)

$1,158.25

Physicians' time meeting with office manager and making recommendations (two hours at $175 per hour)

$350

Advertising

$600

Airfare and hotel for out-of-town candidate

$725

Signing bonus for new billing coordinator

$2,000

New billing coordinator's time for first-day administrative issues (eight hours at $21.75 per hour)

$174

Expenses related to getting the new billing coordinator up to speed over three weeks

$1,750

TOTAL

$6,757.25

Expense Cost

Office manager's time revising job descriptions, reviewing résumés, checking references, interviewing, discussing candidates, making final recommendations and taking care of first-day administrative issues (46.33 hours at $25 per hour)

$1,158.25

Physicians' time meeting with office manager and making recommendations (two hours at $175 per hour)

$350

Advertising

$600

Airfare and hotel for out-of-town candidate

$725

Signing bonus for new billing coordinator

$2,000

New billing coordinator's time for first-day administrative issues (eight hours at $21.75 per hour)

$174

Expenses related to getting the new billing coordinator up to speed over three weeks

$1,750

TOTAL

$6,757.25

Case 2: A series of promotions

In our second scenario, the practice conducts an internal search. Two billing clerks apply for the coordinator's position. The office manager spends seven hours reviewing and updating job descriptions, reviewing the candidates' qualifications, conducting interviews and making a selection. The physicians and other key staff discuss the matter over lunch and accept the recommendation of the office manager with little debate.

As a billing clerk for four years, the new coordinator had been earning $12.60 an hour. For the promotion, the new coordinator accepts $15.80 an hour and a bonus of $1,000. Having worked closely with the former billing coordinator, the new coordinator steps into the position without a hitch. The transition is smooth because the new coordinator knows the practice well and helped design its billing system.

To replace the clerk who has been promoted, the practice now must hire a new billing clerk. This does involve an outside job search, but it's comparatively inexpensive. Chances are good that someone in the practice will be able to recommend a candidate for this entry-level position. If the practice does need to place an ad in the local newspaper, it should cost only about $20. If the ad generates a number of responses, reviewing them may take the office manager three hours. A quick check of the top candidates' credentials and references should take the manager half an hour, and interviewing the finalists might consume another two hours. Finally, the office manager selects a new clerk fresh out of business school with an associate's degree and pays the clerk $9.45 an hour.

Although the other billing clerk who applied for the promotion (and who has been with the practice only 16 months) doesn't receive a pay increase, the clerk does get a $500 bonus for agreeing to mentor the incoming clerk. The new senior billing clerk assumes the position with relish and delights in mentoring a new colleague.

About half of the new clerk's first day is taken up by administrative issues (four hours each for the clerk and the office manager). In the clerk's first three weeks, the billing coordinator spends an average of 30 minutes a day orienting the clerk to the job and monitoring the clerk's progress.

Almost no time is lost to administrative issues on the “new” billing coordinator's first day. And having observed, worked with and covered for the former coordinator, the new coordinator needs only one day to get up to speed.

For a breakdown of the cost of filling the position this way, see “Dollar costs of an internal search.”

Dollar costs of an internal search

Here are the itemized costs that a six-physician family practice could expect from promoting a billing clerk into the position of billing coordinator and hiring a new billing clerk.

Expense Cost

Office manager's time spent in internal search for billing coordinator: reviewing and revising job descriptions, reviewing candidates' qualifications, interviewing and making a selection (seven hours at $25 per hour)

$175

Office manager's time spent in search for billing clerk: reviewing résumés, checking references, interviewing, making a selection and taking care of first-day administrative issues (9.5 hours at $25 per hour)

$237.50

Advertising to recruit billing clerk candidates

$20

Bonus for new billing coordinator

$1,000

Bonus for billing clerk who mentors new clerk

$500

New billing clerk's time for first-day administrative

$37.80

issues (four hours at $9.45 per hour)

Expenses related to getting the new billing coordinator up to speed (eight hours at $15.80 per hour)

$126.40

Expenses related to getting the new billing clerk up to speed (7.5 hours at $15.80 per hour for the billing coordinator and 7.5 hours at $9.45 for the billing clerk)

$189.38

TOTAL

$2,286.08

Expense Cost

Office manager's time spent in internal search for billing coordinator: reviewing and revising job descriptions, reviewing candidates' qualifications, interviewing and making a selection (seven hours at $25 per hour)

$175

Office manager's time spent in search for billing clerk: reviewing résumés, checking references, interviewing, making a selection and taking care of first-day administrative issues (9.5 hours at $25 per hour)

$237.50

Advertising to recruit billing clerk candidates

$20

Bonus for new billing coordinator

$1,000

Bonus for billing clerk who mentors new clerk

$500

New billing clerk's time for first-day administrative

$37.80

issues (four hours at $9.45 per hour)

Expenses related to getting the new billing coordinator up to speed (eight hours at $15.80 per hour)

$126.40

Expenses related to getting the new billing clerk up to speed (7.5 hours at $15.80 per hour for the billing coordinator and 7.5 hours at $9.45 for the billing clerk)

$189.38

TOTAL

$2,286.08

Familiarity saves time

You don't need an MBA to see which scenario will cost your practice less, but saving money isn't the only reason it pays to promote your staff. People you promote know your practice; know its systems, routines and culture; and know the people who make it work. Someone from outside has none of this background.

You also can encounter steep learning curves when you bring in people who haven't worked in family practice. Someone with experience in a cardiology, ob/gyn or ophthalmology practice knows a highly specific system of terminology, codes and office operations. That new hire will need time to adjust to the wide-ranging nature of family practice.

Other benefits

Further, filling openings through promotions shows emphatically that you're loyal to your employees. Loyalty is never given; it's always earned, and the best way you can earn their loyalty is with your loyalty.

Promoting your staff also shows that you expect the best from your employees and that you reward them for expanding their abilities. As a result, staff tend to cover for each other more readily and accept challenges more eagerly — because they expect to be challenged at work.

Finally, filling vacancies through promotions can save you money because the person you bring in from the outside fills one of your least expensive positions. For example, if you need an office manager, you might promote your billing coordinator into that position, promote a billing clerk to be the billing coordinator, move a filing clerk into the billing department and promote a part-time receptionist to be a filing clerk. This would leave you needing to hire a part-time receptionist, at a few pennies more than minimum wage. Although a number of people would be taking on new roles at once, your practice would experience comparatively little disruption because those being promoted would know your systems and culture and would at least be familiar with the responsibilities of their new jobs.

In contrast, hiring an office manager from outside means looking for a high-earner with experience who is looking for advancement — all of which means a higher salary. Promotions probably would cost you less, especially if there is even moderately intense competition for skilled employees in your area.

Of course, this approach doesn't work equally well for all practices. The bigger your practice, the deeper your personnel pool for promotions. For example, if you're in solo practice, your spouse is the office manager and you have four other employees, your promotion prospects are limited. And you should conduct an external search if you feel that your practice needs new blood. But assuming that the depth of your staff gives you the option, a series of promotions can be an excellent way to fill a position quickly and inexpensively.

Robert Connelly is a consultant with The Health Care Group, a national medical practice consultation firm based in Plymouth Meeting, Pa., and Greenville, S.C.

Copyright © 1998 by the American Academy of Family Physicians.
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