BLUE MARSH HOLDINGS, LLC

Scientific Management Methods for PFS

Father of Scientific Management – Frederick Winslow Taylor Published “The Principles of Scientific Management” in 1911. Four Principles:

1. Replaced rule of thumb work methods with scientific study of tasks;

2. Scientifically select, train, teach and develop the employee vs. the employee choosing their own work and training methods;

3. Provide detailed instructions, supervision of performance, and cooperation with employees to ensure methods are followed;

4. Equal distribution of work between management and labor where management assumes the role of planning using scientific methods.

Taylorism

Typically based on survey data; 2500 accounts per FTE;

◦ 119 accounts per workday (21 day month); Variables effecting comparison:

◦ Outsourcing;◦ Payer mix;◦ Workflow model (level of specialization);◦ Level of automation.

Industry Standards

Average length of call = 4 minutes; Paid hours = 8; Productive hours = 7 (2 - 15 minute breaks

+ 30 min slack); Max capacity = 49 calls with no wait or hold

time; Contact rate = 20%; Assigned inventory = 245 accounts per day

or 5,145 accounts in linear model (predictive dialer, auto queuing, and hunt groups).

Example Call Center using Scientific Model

Data Gathering:◦ Management reports:

Telephony report tools Available System Data:

HIS EDI Billing Systems Other Ancillary Systems

◦ Observation Task Assessment Tools:

◦ Process Diagram◦ Matrix Analysis

Time and Motion Study

837 Download

Failed Claim Review

Research Required

Claim Correction Complete

Billing Edits

Applied

Claim File Transmitt

ed

Claim Reconciliaton

Research and Resolve Errors

Yes

No

Generic Billing Process Diagram

Task Description Min TimeMax Time

Total Elapsed

Time

# of Observations

Average Time

Daily Frequency

Required Minutes

Man Hours

FTE's

1 Download 837 20 45 300 10 30 1 30 0.50 0.062 Apply Edits 5 30 200 10 20 1 20 0.33 0.043 Failed Calim Review 5 20 100 10 10 100 1,000 16.67 2.084 Claim Research 5 45 300 10 30 5 150 2.50 0.315 Finalize corrected claims 2 10 50 10 5 1 5 0.08 0.016 Transmit Claim 5 10 50 10 5 1 5 0.08 0.017 Reconcile Transmission 5 60 200 10 20 1 20 0.33 0.04

Total 47 220 1,200 70 120 110 1,230 20.5 2.56

Task Matrix

Goal = Optimal Efficiency:◦ Frank & Lillian Gilbreth◦ Reduced bricklaying tasks from 18 to 5

Skill/knowledge based task grouping; Exception Management by Design; Specialization – deskilling the job; Measurement baselines and Reporting

Systems:◦ Productivity◦ Quality Control

Workflow Design

Identify critical criteria as core requirements:◦ Regulatory compliance;◦ Tolerances – accuracy rating;◦ System management and maintenance;◦ Workload management;◦ Adherence to P&P

Establish Methodology;◦ Frequency◦ Sampling vs. Data Mining

QA Baseline

Establish baseline using the minimum expected from a trained employee (FTE Model);

Consider the effect of indirect time/tasks; Establish measurement system and

methodologies.

Productivity Standards

Productivity Tracking

SAMPLE

  Number of Claims Amount Worked Direct Indirect Over Total Total Claims

Date Promise Rebilled Other Promise Rebilled Other Hours Hours Time Claims Dollars Per Hour

9/1/2009                   0 $ - -0-

9/2/2009                   0 $ - -0-

9/3/2009                   0 $ - -0-

9/4/2009 8 0 54 1,802 0 41,742 3 3.5   62 $ 43,544 20.7

9/5/2009 15 0 103 1,538 0 41,052 8     118 $ 42,589 14.8

9/6/2009 Saturday Saturday Saturday Saturday Saturday Saturday Saturday Saturday   Saturday Saturday Saturday

9/7/2009 Sunday Sunday Sunday Sunday Sunday Sunday Sunday Sunday   Sunday Sunday Sunday

9/8/2009 HOLIDAY             8   0 $ - -0-

9/9/2009 12 0 75 2,590 0 91,599 7.5 0.5   87 $ 94,189 11.6

9/10/2009 11 0 93 2,593 0 64,387 8     104 $ 66,980 13

9/11/2009 4 0 80 389 0 42,947 8     84 $ 43,336 10.5

9/12/2009 9 0 97 808 0 36,585 8     106 $ 37,393 13.3

Productivity AnalysisBase Rate 18.00$ Mark-up 20%Adjusted Hourly Rate 21.60$ Estimated Payroll 3,985.20$ Claims Per HourTotal Paid Hours 184.50$ 9.73Indirect Hours 32.50 Total Direct Hours 142.00 12.65

Work Days 21 HourlyTotal Claims Worked 1,796 12.65 Target Claim Volume 994 7.00 Variance 802.00

Cost per Claim 2.22$ Target Cost per Claim 4.01$ Variance 1.79$

Performance Based Job Description

Rating Performance Standard O AA C M U Comment

SECTION I PRODUCTIVITY

Works an average of 7 accounts per hour.

SECTION II QUALITY

Average quality score

SECTION III GENERAL COMPETNENCIES

1. Demonstrates detail knowledge of assigned payer claim adjudication and billing protocols.

2. Requires minimal supervision.

Performance Based Evaluation

RATING SUMMARY Section I Score 4 Section II Score 3 Section III Score

Outstanding 2 x 5 = 10

Above Average 5 x 4 = 20

Competent 12 x 3 = 36

Marginal 1 x 2 = 2

Unsatisfactory 0 x 1 = 0 Note: any rating of U is an automatic failure for the section (pass fail)

Total 68 20 (Number of Standards) = 3.4 Section III Score

OVERALL RATING = 3.46 (average of all sections)

Fear of job loss as a result of performance improvement;

Sandbagging – fear of increase expectations if employees work at full capacity;

Wasted time relying on rule-of-thumb methods.

Taylors Observations

Recognition Awards:◦ Luncheons◦ Plaques◦ Etc.

Pay for Performance:◦ Group◦ Individual◦ Goal = Align compensation with performance

Types of Incentives