AAOS Bulletin - February, 2006

Business practices that promote employee productivity

Six steps for effective personnel management

By James J. Hamilton, MD

Medical offices—both large and small—commonly fail to manage the practice’s employees in a businesslike manner. As a result, offices face decreased staff productivity and lower practice receipts, as well as misunderstandings and disagreements that can lead to costly legal problems. However, implementing the following six suggestions can go a long way to increasing productivity and practice receipts while reducing your risk of being sued by a disgruntled employee.

Employee handbook

Every office should develop and distribute an employee handbook, also known as a personnel manual. Typically, employee handbooks have three major sections: office policies, employee benefits and operational procedures.

Office policies cover issues such as attendance standards (including accruals for paid time off such as vacation and/or sick leave); prohibitions regarding harassment (particularly sexual harassment); dress codes; the use of tobacco, drugs and alcohol at work; personal use of office equipment and phones; and the absolute requirement to adhere to government-imposed regulations such as the Health Insurance Portability and Accountability Act. This section should also include protocols for performance evaluations, standards for maintenance of personnel files (and employees’ access to them) and grievance procedures.

Benefit structures vary by office as well as by employee classification (i.e., full-time or part-time; regular or temporary). Benefits may include life, health and dental insurance, educational assistance, vacation and sick pay (generally related to tenure and position), pension and 401(k) plans, and reimbursement for professional development activities (seminars, meetings, memberships and subscriptions).

Day-to-day operational procedures include, but are not limited to: protocols for answering the telephone and taking messages, standards for documenting charges and payments (from patients and payers), accounting protocols and the schedule for outside reviews of the practice’s books.

In addition, you should outline standards for medical record maintenance (and disclosure to third parties), and procedures to follow in the event of an office-specific, local or regional emergency. Finally, data entry, transmission, and backup protocols for office information systems should be thoroughly covered.

Your handbook should be specific, but you can word policies to allow some flexibility whenever possible. You might say, for example, “Employees may need to make or receive personal telephone calls during business hours. However, employees should keep the number and length of any personal calls to a minimum.”

State your bottom-line performance expectations clearly. For example, indicate which behaviors may result in immediate termination. Commonly prohibited activities include embezzlement, failure to follow banking policies, sexual or other harassment (of staff as well as patients), inappropriate personal use of office equipment/computers (particularly for transmission, receipt or viewing of sexual or violent materials), disruptive behavior and on-site use of alcohol and drugs.

Update the handbook regularly to ensure that it reflects actual office practices. Every employee should receive a copy of the manual and sign a form indicating that receipt and his or her agreement to abide by the policies. Although developing the handbook may seem daunting, it will save much time and avoid many problems in the long run.

Some states are considered “employment at will” states. In these states, there is no implicit contract on the part of the employer and the employees. The employer/employee relationship is of an indefinite duration, and the employee may quit or be terminated at any time with or without notice. If your practice is located in an “employment at will” state, make this clear at the beginning of the handbook.

Employee relationships

Maintaining an appropriate business relationship with employees is critical. Supervisors must be objective and impartial. Although a friendly office atmosphere is important, managers must guard against letting personal friendships affect their management decisions.

Friendships may interfere with objectivity and critical evaluations. It is hard to tell friends they are not performing to expectations and even harder to fire them if their performance does not meet office standards. Additionally, preferential treatment frequently results in lawsuits by those who do not feel part of the “in-crowd.”

Although it may be tempting to employ your spouse as your office manager, human resources consultants tend to discourage this practice for two reasons. First, your spouse may or may not be trained in personnel management. Second, if your staff have concerns about you, they may not see your spouse as a “safe” person to talk to or may not feel comfortable talking to you about problems they’re having with your spouse.

Performance assessments

Periodic written evaluations and/or employee performance assessments should be conducted on a regular schedule. A “best practice” is to use a consistent, written performance appraisal form when evaluating employees. Be honest, fair and objective with yourself and the employee. Never provide a “satisfactory” or “good” evaluation if the performance does not genuinely rate it.

If the employee’s performance does not meet your standards, indicate the specific problem and outline the expected improvements. If the employee’s performance is very poor, include a specific time period for improvements to occur and the consequences of not meeting performance expectations within established time frames. Keep written documentation of every meeting with the employee; it can be critical if you end up terminating the individual and a lawsuit ensues.

In addition to a regular evaluation schedule, ongoing employee assessment—particularly if a performance problem arises—is helpful at all levels. Ongoing documentation helps identify a pattern of behavior that can be addressed before drastic measures, such as termination, are required.

Terminating employees

If poor performance continues after appropriate coaching, you may find it necessary to terminate an employee. Many managers are reluctant to take this step, but tolerating inappropriate behavior or poor performance does not help either the employee or other office personnel. Terminations, when handled properly, let other employees know that you are serious about performance and will respond accordingly.

If you must terminate an employee, arrange for his or her immediate departure. Prepare all the paperwork beforehand and do not allow the person to access his or her phone and computer. After the employee has left, inform other employees without providing too many details. Adhere closely to all federal and state regulations. Do not provide a “glowing recommendation” as a “payoff” for the employee’s resignation; this may come back to haunt you. Any reference letter you provide should simply be a verification of the facts of employment (such as dates in position, title and salary).

Bonuses and gifts

Bonuses should recognize outstanding or out-of-the-ordinary efforts; they should not be a substitute for inadequate pay. If employees expect a bonus as a regular payment, it no longer serves as a performance incentive.

Bonuses should be awarded only for a significant performance contribution over a period of time or for time spent on a project above and beyond regular working hours (such as when implementing a new practice management system). If that increased level of performance becomes the expected standard because of increased efficiency, then a bonus should be given only with further significant contributions.

Levels of performance needed to qualify for a bonus should be clearly stated and common knowledge (such as a 10 percent increase in accounts collected within 30 days). Make the bonus commensurate with the effort. If the employee’s work will translate into an increase of several thousand dollars in practice income, “rewarding” the employee with a $25 gift certificate is not adequate.

Bonuses should not be confused with gifts. If you distribute gifts for holidays or special events, make sure all staff are recognized. Gifts can be the same for everyone or vary by level of responsibility. Although the gift should be “nice,” it should not be excessive. Large gifts can become expected and regarded as part of the employees’ benefits.

Delegating responsibility

Although many physicians do not like to be directly involved in the business side of their practice, their oversight is vital. An employee may have responsibility to “do the billing,” but the physician should periodically review the work to verify that established office procedures are being followed. Random 15-minute visits to review the work processes will pay off handsomely.

You can also spot-check charge and billing arrangements with your patients. Many doctors find this difficult to do, but it can uncover financial mismanagement and outright fraud that might otherwise go undetected for years. Simply take time to talk with a few of your patients about their accounts—how your staff document their charges and what documentation they receive for payments made. Ask for their feedback on how their accounts are handled.

Your staff are a significant part of your practice and deserve the same respect that you show your partners. For more information, see the personnel management-related articles in the AAOS on-line Practice Management Center.

James J. Hamilton, MD, is chairman of the Academic Business and Practice Management Committee. He can be reached at James.Hamilton@tmcmed.org


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