Practice paper of the American Dietetic Association: A systems approach to measuring productivity in health care foodservice operations

Practice paper of the American Dietetic Association: A systems approach to measuring productivity in health care foodservice operations

J Am Diet Assoc. 2005;105:122-130

 

ADA practice papers

Practice papers are evaluative summaries of scientific and/or evidence-based topics. They are meant to provide key opportunities for critical reasoning on timely topics and quality improvement in dietetics practice and to include peer-reviewed perspectives from content practitioners and other experts.

How does a practice topic become a practice paper? Proposals may be generated by any member of the American Dietetic Association via submission of a topic identification proposal, which may be obtained by calling ADA headquarters at 800/899-4835 or by clicking on “Topic Identification Proposals” . The Association Positions Committee oversees the development of Practice Papers and welcomes proposals from members.

Foodservice managers are dealing with management and organizational problems every day and seldom believe that they have the time to document performance. The result is that very good “instinctive” managers are often woefully behind in showing what they have accomplished or in demonstrating what they propose to accomplish. An immediate supervisor or someone else in the organization looking for methods to document progress may question performance.

No one is surprised to hear that health care and its delivery of service continues to change and challenge the foodservice manager. It just confirms the old adage that “the only constant is change.” The foodservice manager’s ability to deal with current and predicable future changes/demands will determine the success or failure of the foodservice operation. Foodservice managers will need to develop and utilize the same methodologies to identify, measure, and report productivity levels as in similar foodservice departments.

The purpose of this paper is to provide background theory and history, which underlies the study of productivity, and suggest outcome measures to monitor productivity, methods of record keeping and reporting productivity, and a case study better to understand productivity. It also proposes a uniform methodology to document and measure productivity in foodservice systems management and to offer strategies to increase productivity in foodservice operations.


Historical background   

Productivity began to be studied and defined using scientific methods in the late 19th and early 20th century. Frederick Taylor (1865-1915), who is commonly accepted as the “father of scientific management” and a middle manager for Bethlehem Steel had a major concern for “what is a fair day’s wage for work.” His basic premise was that there was one best way to do a job and that way should be discovered and put into operation (1).

In 1920, Ludwig von Bertalanffy, a scientist who worked in biology and physics, was the first to state, “productivity could be measured using the system’s approach.” His premise was that to understand fully the operation of an entity, the entity must be reviewed as a system. This requires understanding the interdependence of its parts (2). A system refers to an interconnected set of elements that have orderly interactions that form a unitary whole that may interact with both the internal and the external environment (2).

In 1960, C. West Churchman, author and advocate of using scientific management methods such as the systems approach, stated that all systems have four basic characteristics. First, they operate within an environment, those things outside of and important to the organization but largely beyond its control (eg, unions, government, customers, and competition). Second, all systems are built of subsystems; subsystems are found within and outside the department. The subsystem may cut across departmental functions (eg, purchasing, accounting, production, and service within foodservice). Third, all systems have a central purpose against which the organization’s efforts and subsystems can be evaluated. Quality food and service that meets the customers’ needs are examples. Fourth is the focus on the interrelatedness among the subsystems. Interrelatedness emphasizes that changes in one subsystem have an effect on other subsystems (ie, the menu subsystem affects procurement, production, and service) (1).

The systems theory focuses on the processes involved in how “inputs” become transformed by the organization into “outputs.” Transformation is all the things that happen to inputs within the organization (3). Inputs are combined and modified by technology and managerial action to produce outputs, which are goods and service. Outputs give feedback to the system, which serves as additional inputs to improve and refine the transformation process. Outcomes are sometimes called efficiency and effectiveness. Efficiency is how well the inputs are converted to outputs: how well a task is performed using given resources. Effectiveness is the degree of achievement of the department’s objectives to stated goals or standards. How well is service provided?

The system must know the environment in which it exists. It has external and internal controls that must be followed. External controls include local, state, and federal rules and regulations. Internal controls include the organization’s polices and procedures, strategic plan, financial policies, goals, and other internal controls (4).

In 1980, A. G. Vaden, PhD, RD, former dean of the School of Home Economics and professor of institutional management, University of Southern Mississippi, Hattiesburg, described the system model for foodservice operations (5). This system was refined by M. Spears, PhD, RD, former professor and head of the Department of Dietetics, Restaurant, and Institutional Management, Kansas State University (6). The Figure is a simplified system theory. During the 20th century, researchers continued to develop theories and measurements for productivity, which are used today for quality, quantity, and outcome measures (5-7).

Figure. System theory applied to foodservice management. Adapted from Puckett (4), Vaden (5), and Spears (6).

 
Using the system approach to measure productivity   

Productivity has long been used as a key parameter of business performance. Measuring productivity across different business units within an organization enables executive management to understand better where additional resources or process improvements are needed. Productivity statistics are needed in making strategic and operational change decisions. Productivity measures can play a key role in business process redesign and optimization, assessing maximum sustainable outputs, lowering products or service unit cost, and exploring the feasibility of outsourcing (8).

Productivity is an important consideration in designing, evaluating, and improving modern production systems. Samual Certo, PhD, author and professor of management, Rollins College, Winter Park, FL, defines productivity as a “relationship between the total amount of goods or services being produced (outputs) and the organizational resources needed to produce them (inputs) (2).” This is a system that can be used to determine the relationships between inputs and outputs using both quantitative and qualitative measure (2). The system must also measure the effect of controls and feedback on the system and monitor the outcomes to determine whether work standards are met or there is a breech in the workflow. This relationship is usually expressed by the following equation:

Inputs are resources brought into the organization that include labor, machines/equipment, materials (food and supplies), space, money, time, and information. Outputs are the food and services produced by the operation, customer satisfaction, quality, and financial accountability. There must be a transformation of inputs to produce outputs. Transformation (or action) is the process within the department and organization working in harmony to produce the outputs. Therefore, the output is the result of the input and action working in harmony to produce a result or product. When measuring productivity using the system method, the resources used to produce the outcome must be considered. The output is the result of transforming inputs to achieve the operation’s goal. The primary goal in foodservice systems is the production of the desired quantity and quality of food to meet the customers’ needs (4,6). There must also be a system to ensure that there is feedback to inputs, outputs, and transformation and that there is a control on the system.

Control refers to the plans, mission, values, goals, and objectives of the organization, which lay the framework for transformation. Controls are also imposed from the outside in the form of external influences such as rules, regulations, and laws; they also come from within, such as budgets and standardized menus. Controls are necessary to ensure that managers and employees utilize the inputs in an efficient and effective manner while meeting quality standards (9).

Feedback is information needed to evaluate and control the systems, make changes to meet the customers’ needs, lower cost, improve morale, and increase productivity. Feedback is both internal and external (10). Some typical methods of obtaining feedback are customer focus groups, plate waste analysis, and customer satisfaction surveys.

Productivity can be increased by reducing inputs, by increasing outputs, or by doing both at the same time (6). The more outputs an organization can generate from given inputs, the more productive it is. Productivity measures how well an organization/department is using its resources (inputs) in producing goods and services (outputs).

Productivity can be measured quantitatively, qualitatively, or in terms of outcomes (3,4). Quantitative measurements are used to determine the quantity of products/work produced such as meals, meals per labor hour, and so forth. Qualitative measurements are used to determine the quality and accuracy of the food product such as temperature at the point of service, palpability, sensory quality of the served food, and correctness of items on tray. Outcome measurements determine whether the set goals were met and can be measured by customer surveys, plate waste analysis, and personal interviews. Stephen P. Robbins, PhD, a professor at San Diego State University and author of Managing Today! states, “productivity criteria are synonymous with measures of organizational efficiency” (11). Productivity and quality are the two most important issues in organizational management. A productivity measuring system can be simple or complex depending on the organization, its benchmarking comparison system, and the information/data the department and administration want to measure. A family of measurements needs to be used rather than depending on just one or two measurements.

The role of technology must also be considered when developing a productivity measuring system. Many new technologic advances in the workforce have substituted machinery for human labor in transforming inputs into outputs. Examples include computerized cooking equipment, convenience foods, and inventory and purchasing processes (4). Technology has been the primary focus of many managers’ efforts to improve productivity, and this means that employees need to be trained and educated to survive (2).


Measuring outputs   

Meals are frequently used as an output measurement; however, what constitutes a meal? Is there a difference in measuring patient and nonpatient meals (retail operation)? What should be included in the meal count? Should all outputs produced by the department be measured, and what criteria should be used? These questions have plagued foodservice operations for decades because there is no industry-wide acceptable method for measuring outputs. This lack of consistency has a direct effect on benchmark comparisons and each facility’s ability to evaluate their own productivity level as compared with others.

In the last several decades, foodservice operations have more closely monitored the production of patient and nonpatient meals because of the reduction in the number of personnel and money available for the operation of the department. This is important in that staffing and budget allocations are usually based on outputs of the department, such as the number of meals produced and the time it took to produce the meals (9).

Patient meals are somewhat easier to determine than nonpatient meals. One method that is commonly used is counting the number of trays served per meal/day and totaling the number of trays served at the end of the month. These trays/meals include hold, late, guest, outpatient clinic, emergency room, and other trays that are assembled before/during/after the meal period.

Some obvious questions complicate this process, such as the counting of double portions as two meals or does a liquid tray balance out for the double portions. There has also been a dilemma regarding the determination of meals or meal equivalents for between-meal nourishments, infant formulas, and tube feedings when the foodservice department purchases and/or makes alterations to the tube feedings and/or delivers them. Because foodservice labor hours and supplies are used, there is some effect on productivity. Can a meal equivalent be determined for these and other productivity activities, and should this be added to the total meal count (10)?

Patient meals

Because a variety of methods are used by foodservice managers, inconsistencies in measuring the patient meals (outputs) occur. A simpler and more objective method can be used to determine patient meals. The recommended method uses adjusted patient days. Adjusted patient days are based on a mathematical formula, used by finance and accounting, that corrects the number of occupied beds to include care given to patients who are officially admitted as inpatients for less than 24 hours. This may also be referred to as adjusted occupied beds. The adjustment is based on a number of variables and allows health care facilities to compare their staffing levels with those of other facilities that have different occupancy levels as well as outpatient levels (1,3,12). If foodservice practitioners continue to disagree on the definition of a patient meal, it would be best to use a more global measurements system for benchmarking purposes. Because the same formula for determining adjusted patient days is used in all health care facilities, it appears to be the most accurate and consistent measurement and would provide consistency in benchmarking with peers. Adjusted patient days are defined by the number of patients in house as recorded by the midnight census and represent the common denominator. Adjusted patient days include all “nothing by mouth” (NPOs) (those admitted but not eating, such as same-day surgery patients) but exclude newborn babies. The formula for determining meals per adjusted patient days using a factor of 2.5 to 2.7 patient meals (with 2.7 the most acceptable number; a departmental study is recommended to validate this factor) (9,12) is the following: meals per adjusted patient day=adjusted patients days×meals per patient days.

Nonpatient meals

Nonpatient meals are more difficult to measure accurately. There are a number of methods used by health care foodservice operations, but there is no consistent opinion on how to determine these measures. Because nonpatient services are so similar to commercial foodservice establishments, the best method to use is simply to calculate the profit margin in the same manner used in the restaurant industry and report these data separately.

In many organizations, the accounting department will generate a profit-and-loss statement for nonpatient meals. These documents show a net profit or losses for the business. Profit depends on volume and selling prices on the one hand and cost on the other (13). This means that the foodservice manager must also be able to separate out all nonpatient costs (including labor, food, and supplies) by establishing separate cost centers for all nonpatient services. A cost center details personnel, food, and other supply costs charged to that center and measures the revenue generated and the cost of generating these revenues (13,14). Cost centers provide a focused report for an individual service unit to determine success in budget management and performance; it also contrasts actual performance with expected performance. Cost centers may be established for cafeterias, catering, vending, and any other areas that deal with nonpatient meals.

The simplest method to determine the profit margin is as follows (13,14):

This ratio is also referred to as net sales, earning ratios, operating margin, or profit ratio. This ratio is the most important one used by foodservice operators because it shows the profitability of the operation compared with the amount of sales. The operating ratio may be used to compare different financial periods and to compare the operation’s performance with that of other operations (13).

Foodservice directors can determine what sales volume is required to show a profit as well as determining the level of costs and profits or loss at specific levels of sales. Facilities that choose to operate their nonpatient foodservice at a profit will naturally appear to be more productive, and those who wish to break even or operate at a loss (as a benefit to employees/visitors) will appear to be less profitable (14). This method also measures the output in all nonpatient areas.


Labor hour indicators   

Another quantitative measure used in determining productivity is labor hours. Labor hours normally include total paid hours, which reflect productive hours actually worked, plus nonproductive hours such as sick leave, vacation, and holidays. To determine accurately productivity, only hours worked should be used. In measuring foodservice productivity, it is important to separate out total hours dedicated to patient and nonpatient services. Using the employee roster, job schedule and job description determine what percentage of each employee’s productive time is devoted to nonpatient food service and what percentage to patient service: charge labor expenses back to the appropriate cost center. Some employees may spend only 25% on nonpatient foodservice, whereas others may spend 100%. For example, a nonpatient employee working in the cafeteria may be at 100% of time, and all labor hours and cost would be allocated to the nonpatient meal cost center. All administrative, clerical, technical support, and supervisory time should be determined using this same formula to determine what percentage of their time and cost should be allocated to nonpatient service. All the productive hours should then be charged to the nonpatient cost center to secure an accurate total number of labor hours worked. Other hours such as the medical nutrition dietitians would be allocated to clinical services cost centers (15).

There are a variety of formulas that are used to determine productivity by comparing meals in relation to labor hours. These formulas include the following (6):

Many individuals and organizations have developed average productivity levels for various foodservice organizations. In 1998, Puckett and Miller, in an American Hospital Association publication, Food Service Manual for Health Care Institutions, suggested that, for “a health care institution such as a hospital that provides three meals plus snacks, formulas, and supplements per day, 7 days a week, an average of 14 minutes per meal can be used” (16). A recommended target for labor hours/meal is 0.22 productive hours/meal. Below this figure, quality and employee satisfaction suffers (17). It must be remembered that these ratios have been based on a variety of different definitions of a meal. Once the industry adapts a more consistent way of measuring meals, the most appropriate guidelines can be identified.


Work standards and management systems engineers   

The most accurate method to determine productivity levels is to develop productivity work standards per individual and as a group (eg, cooks). Because labor represents 60% to 70% of the health care budget, administrators assign the foodservice director the responsibility to establish performance standards, cost and quality of service, productivity work measures, and work standards. A work standard is the amount of time required by a trained employee to complete a specific activity or process when working at a normal pace (18).

The purposes for developing work standards are as follows:
•

produce productivity statistics;

•

determine staffing needs;

•

balance work loads equitably; and

•

monitor actual performance against a budget (18).

Time and motion studies and work sampling are used to develop work standards.

Many institutions have established management systems engineering departments to assist not only the foodservice manager but also other departments within the facility in methods to measure productivity. Management engineers apply comprehensive analysis techniques, objectively identify underlying problems, and assist the departments in developing workable solutions to problems. These engineers develop and use such tools as standard times, time and motion studies, methods improvements, redesign systems, cost analysis, and a variety of methods to determine the productivity of individuals and groups. Management engineers can be the best friends of the foodservice manager (7).


Other measurement methods   

There are still other methods that can be used to measure productivity. These methods measure productivity in terms of time and transactions in the nonpatient area. They include the following:
•

labor minutes/per nonpatient meal/meal equivalent;

•

total nonpatient meals per productive hours;

•

number of nonpatient customers per minute;

•

number of nonpatient transactions per cashier;

•

amount of revenue produced per full-time equivalents in nonpatient operations; and

•

number of transactions performed per full-time equivalents in nonpatient operations (4,17).

A question that is frequently asked is, “Can labor hours be reduced if other resources are changed, such as the use of technological equipment, ready-prepared food items, or other time saving methods?” This concept is important as measured labor productivity because other resources are added but are not considered in the final productivity measure. Using one resource to replace another may reduce labor hours but will change various procedures and may increase total cost for food/supplies. Peter F. Drucker, professor emeritus of management at Claremont Graduate School, Claremont, CA, the first to advocate using management by objectives, and author of over 15 books on management states, “at least as important but unexplained is the increase in productivity achieved by replacing manual labor, whether skilled or unskilled, by educated, analytical, theoretical personnel—the replacement of labor by managers, technicians and professionals, the substitution of ‘planning’ for ‘working.’ Obviously, this substitution must take place before capital equipment is installed to replace man’s animal energy, for someone must plan and design the equipment—conceptual, theoretical, and analytical (19).”

In a 2003 study, researchers determined that the increased use of information technology plays a major role in boosting labor productivity. The study measured the outputs and productivity in the service industry and found that the service industry productivity remains a challenging issue, with many unresolved puzzles. Increased use of information technology plays a major role in increasing production (20).


Strategies to increase productivity  

It is important to understand factors that affect productivity before it can be improved. No organization is exactly the same in bed size, occupancy rate, services offered, purchasing, production systems, layout and design, use of technologic advances, competencies and skills of personnel, age and working conditions of equipment, meal assembly and tray delivery system, and location of facility. Factors that affect the operation need to be identified and a systemic performance improvement approach made to improve productivity.

Some approaches will help decrease labor cost by reducing current labor hours or by attrition. Always ensure that the performance improvement plan will not adversely impact customer satisfaction, health codes for safety and sanitation, ability to meet Joint Commission on the Accreditation of Healthcare Organizations requirements for staffing levels, and quality and desired outcomes. Some strategies for performance improvement may include the following:
•

increasing outputs without substantially adding labor and other cost, for example, preparing meals on wheels and/or satellite meals to other facilities;

•

replacing employees with labor-saving equipment such as automated food service preparation equipment, robots, computers, and other technologic advances;

•

completing evaluation and review of the menu subsystem for quality, selectivity, labor intense food items, use of ready-prepared foods, equipment, scheduling of skilled/unskilled personnel, and customer acceptance;

•

liberalizing menus and diets by reducing the number/kind of modified diets offered;

•

utilizing more self-service and vending for nonpatient service (evaluate hours of service and compare with cost, and use debit cards for meal purchases);

•

outsourcing retail operations for reduction in cost for personnel and supplies;

•

using techniques of reengineering, motivation, and training to improve worker efficiency;

•

allowing flexible schedules and job sharing using staffing patterns based on volume;

•

developing standardized processes to eliminate variances;

•

reducing the number of late trays and callbacks by working with nursing and other departments for scheduling of treatments;

•

evaluating the purchasing and inventory subsystem by researching various methods of purchasing such as group purchasing;

•

analyzing the department layout, equipment, and type of foodservice system to minimize cross contamination and maximize efficiency of flow of work and make subsequent improvement as feasible as possible;

•

increasing total revenue without increasing prices (do more meals/service with the same resources); and

•

sharing services with other departments such as housekeeping for cleaning, clerical for word processing and printing, shared purchasing and so forth (3,4,9).


Monitoring productivity   

Monitoring productivity is an ongoing, consistent process. Establishing standards and observing adherence is a major responsibility of management. There are numerous methods for monitoring productivity in the literature. One method is a review of current practices by collecting data from the largest foodservice benchmarking programs in the country. Include private programs such as the Volunteer Healthcare Association as well as Alliances, Heathcare Foodservice Management, and large foodservices contractors. Benchmarking programs for extended care facilities should be represented. Data should include the following:
•

the number and types of participants;

•

a description of the specific methods they currently use;

•

national results (averages), if available;

•

future plans for improving methods, if any; and

•

recommendations for standardizing productivity measurements in the field (3,21).

Other methods for monitoring productivity include the following:
•

patient foodservice—use the total department cost per adjusted day (with percentage for food, labor, and supplies) and labor minutes per meal served;

•

nonpatient food service percentage profit (with percentage for food, labor, and supplies); and

•

comparing facility results with facilities of similar size, type, and system characteristics.

Internal benchmarking should also occur by gathering monthly foodservice statistics (eg, labor hours, revenue, and expenses). Using the productivity software designed for this purpose, one should enter these data on a spreadsheet for comparison month by month and year to date.


Competitive benchmarking and contentious quality improvement  

Benchmarking is the practice of comparing, on some measurable scale, the performance of a key business operation in house vis-à-vis a similar operation (11). It is a continuous process of measuring products, services, and practices against the competition or those companies/departments recognized as health care leaders. It is also a set of work performances, which can be measured, such as the number of patient meals served. The basic objective is to select an organization with which to make comparisons and then make internal improvements based on these comparisons (11). A recent teleseminar held in conjunction with the American Dietetic Association and Healthcare Foodservice Management defined benchmarking as “a critical measurement tool that helps foodservice directors better understand and manage the financial and operational details of their departments. It is a tool that helps foodservice directors manage their operations more effectively (21).”

Benchmarking against a competitor is an excellent way to improve productivity by saying “if the competitor can do it, why can’t I?” This can be a strong motivator for the department to catch up or excel. It is important to determine whether the department’s patient and nonpatient foodservice systems are similar to the other facilities in the competitive benchmarking group. If the foodservice systems are similar to the others in the group and there is a need for improvement, a systemamatic process should be made to determine where improvement is needed. Competitive benchmarking is used to monitor the department’s performance with other like institutions and to monitor the department performance against itself.

When using external benchmarking programs, it is important to know that all members are using the same methods of collecting, calculating, and reporting their data. The company should clearly describe the characteristics of the facilities in each category to include variables. It is important to identify who delivers and retrieves the patient trays (nursing or foodservice) because this represents a considerable difference in labor cost. In evaluating benchmarking results, the comparison should be made on facility institutions against facility bed size and what other services are offered such as catering, education of students, meals on wheels, long-term acute care, and rehabilitation as a part of the overall facility (3).

Internal benchmarking is the most important comparison because it allows the foodservice director to evaluate constantly the cost and labor hours and to track fluctuations and to make adjustment as needed. These comparisons can differentiate a sentinel event to other variations (3).


Determination of outcome measures   

When considering total factor productivity, quantitative measures are most often the ones that are pursued because they are more objective and easier to measure because they focus on the quantity produced.Foodservice managers frequently do not realize the impact on quantitative productivity when meals that are made do not meet standards or customer expectations. Resources may be consumed, but no income is generated from the effort. Food produced but burned in the cooking process, over produced, or ruined because standardized recipes were not followed result in significantly lower production and increased cost because low quality may result in reprocessing or redoing work. A comparison between what is produced and what is sold (used) should be considered as an input to productivity measure. Other quantitative measures would include budgeted hours vs actual hours worked/paid, overtime usage, staff vacancy rate, staff turnover, and trays per labor minute (3,4).

Qualitative measurements analyze those factors that deal with accuracy/correctness of production and are integrally related to the quantitative measures. Quantitative measurements are meaningful only if the quality consistently meets the standards and desired outcomes that have been set for the product. Qualitative measurements measure the sensory characteristics of the food. Of equal importance is the measuring or monitoring of the production of food in a safe, secure, and sanitary environment to avoid foodborne illnesses (4). Qualitative measures for patient foodservice should include satisfaction with the foodservice as measured by an outside patient satisfaction survey audit. Other measures could include the number of patient/family/administration/physician complaints, sentinel events, and length of stay. For nonpatient services, qualitative measures include satisfaction surveys, customer complaints, and health inspection scores (3).

Outcome measures are used to determine whether what was planned was produced in an acceptable manner to the customer. They also determine whether the budget was met for food, labor, and supplies and effectiveness of how well the services were produced. Was the forecast for the number of customers met? Did the patient surveys represent acceptability of service as planned (3,4)?

Once collected, outcome data, both qualitative and quantitative, must be used to improve services. The information must be accurate and data used to respond better to the customer and administration. The satisfaction surveys should be analyzed for trends and for acceptance of food and service, with plans for improvement. For example, results of plate waste can be used to change menus and thereby reduce cost.

Employees and vendors also should be surveyed to ascertain whether productivity outcome measures are meeting their expectations and policies. For example, are vendors’ invoices paid promptly, is wait time at dock minimized, are emergency deliveries limited, and are specifications well written to avoid confusion concerning the product desired? Outcome measures for employees include number and kind of accidents and trends of accidents, use of sick leave, rate of turnover and reason for it, and employee satisfaction, which has direct impact on all the factors described thus far. One needs to remember that each facility is an integral part of a community and fulfills the role of providing jobs. Understanding the importance of employee satisfaction, especially during times of cutbacks, may affect how the facility is perceived (3).

Patients, retail customers, administration, board of directors, vendors, and employees have expectations of foodservice operations. Managers need to have clearly defined outcomes for each of these groups, which should be monitored and evaluated for acceptability. When the benchmark is not met, a systematic improvement process should be made. The foodservice director has an obligation to make adjustments to improve customer service and benchmark goals. This may mean using facts that are clear, rational, and appropriate to change jobs and, when necessary, increase the use of prepared foods and outsource some of the tasks such as housekeeping and bakery production. Sometimes, shifting employees and using technologic advances increases services (3,4).


Record keeping and reporting   

When developing records for productivity, first, the manager must determine what is to be measured. Record keeping should not become an overriding activity while the focus of productivity improvement is ignored. The reporting system should measure and report labor productivity and quality control systems, which measure the quality of service. Reports need to be made monthly, to at least administration and internally to staff to show the level of performance. The reports should detail trends, variances, sentinel events, results of customer surveys, and actual performance compared with goals. Some records that are suggested include the following:
•

number of meals served to patients and nonpatients;

•

labor hours;

•

cost of food and supplies;

•

adjusted patient days;

•

income;

•

profit/loss, profit ratios;

•

cost per adjusted patient day; and

•

other data needed/requested by the organization (9).

An effective productivity reporting system should generate a continuous, timely report on productivity and a comparison of productivity over time to show trends, for example, this month compared with last month, this month compared with the same month last year, or year to date compared with last year to date (7).


Conclusions  

Using qualitative and quantitative measures to determine productivity is a challenge to the foodservice manager. There is no question that productivity needs to be monitored and records maintained. A systematic process for measurement should be developed for all shareholders, with review and revision as needed.

Although measurement methods that are individualized for each facility may work well for internal benchmarking comparisons, there is a need for our profession to adopt universal productivity measures for external benchmarking purposes using a uniform methodology as we have proposed.


Productivity case study   

Jennifer Hayes is the Director of Food and Nutrition Services at Memorial Hospital in a midwestern city of 185,000 people. Memorial Hospital has 185 active beds; the average census is 90% of capacity, and J. Hayes estimates that 2.5 meals are served per patient day. The employee and guest-feeding program in the cafeteria is of high quality as is the catering program. The Food and Nutrition Department staff is well trained, believe that they are part of an important team at Memorial Hospital, and work hard. Memorial Hospital administration is asking that Jennifer be more cost effective and control labor hours to a greater degree. If these goals are not met, staffing reductions will be imposed. Staffing will be reduced because labor is the most expensive component of the department budget.

The internal benchmarking program the department uses places them below average compared with their reference hospital. The Table shows an annual financial analysis of their operation for the past year. Improvements in the operation are desirable. Indicators show that staffing levels are higher than justified by output numbers, the number of meals is low, minutes of labor per meal are high, and meals per labor hour are low.

Jennifer begins to analyze the situation in the department and assumes a global view of the problem. She begins by evaluating each reported indicator she submits each month for benchmarking to assure that she is following the standard method suggested. Jennifer is aware that her productivity is measured using output volume and labor as an input variable. She has been using productivity indicators for internal comparison month to month, but, now, she is concerned that maybe her output numbers may not be recording all output appropriately.

Industry averages of patient meals served per patient day range from 2.7 to 2.8 patient meals per patient day. This indicator is related to the acuity index of patients in the hospital. In large, teaching hospitals, this indicator can drop lower than 2.5; this is because many patients may be receiving enteral feedings rather than meals. At Memorial Hospital, Jennifer finds that not all patient meals are being counted. Accounting clerks have not been counting late trays served at breakfast and lunch meals. Jennifer instructs the clerks to add these trays to the total meal count. She verifies that the labor input is hours worked rather than hours paid. She can control the number of hours worked, but the number of hours paid is influenced by hospital policy and national holidays; therefore, the number of hours worked is the denominator in the productivity ratio. This value comes directly from payroll, so, by verifying that the hours worked value is being used consistently, she is assured of the accuracy of her productivity ratio.

The impact this change in reporting meals has on productivity is positive. Her meal output is now 2.78 patient meals per patient day. The output has increased without changing the number of labor hours. The productivity ratio has increased, and the cost per patient meal has decreased. This brings her productivity ratio into line with benchmark figures (see Table).


 

Table 1. Financial analysis and benchmarking in case study data before and after correcting meal count of foodservice operation in hospital setting
Food and Nutrition Services Financial Summary January-December
Budget YTDa Actual YTD Actual YTD (with added patient meals)

Expenses
Labor $401,894 $409,977 $409,977
Benefits $131,070 $128,908 $128,908
Food $337,062 $324,792 $324,792
Supplies $48,001 $56,250 $56,250
Other expenses $9,588 $8,543 $8,543
Printing $6,132 $7,119 $7,119
Continuing education $1,687 $1,283 $1,282
Depreciation $8,267 $10,556 $10,556
Total expense $943,701 $947,428 $947,428

Performance measures
Adjusted patient meals 84,896 81,736 89,548
Adjusted patient days 33,958 32,426 32,426
Adjusted discharges 11,410 11,370 11,370
Patient labor hours 44,861 44,861 44,861

Operating ratios
Labor cost per adjusted patient day $16.619 $16.619
Food cost per adjusted patient day $10.016 $10.016
Direct cpst per adjusted patient day $29.218 $29.218
Direct cost per patient meal $11.591 $10.580
Patient labor hours per adjusted patient day 1.321 1.383
Patient meals per adjusted patient day 2.500 2.762
Patient meals per labor hour 1.892 1.822

aYTD=year to date.

Jennifer now verifies the methods she uses in calculating outputs and inputs. She finds that her methodology is the same as other hospitals included in the benchmarking reports. Concern for quality is another aspect of her global approach to dealing with this problem. Meals produced must meet quality standards to be counted as output.

Jennifer is aware that she will always have a limiting input factor. This means that one input will limit output; there is a capacity issue here. Labor may be the limiting input, or equipment, or money, or space. Administration wants to control labor; therefore, labor will limit the number of meals that can be produced. She collects data from the past year of meals served per pay period and number of hours worked per pay period and statistically analyzes the relationship between these variables using regression techniques. The use of statistical analysis could result in greater consistency in use of staff each pay period throughout the budget year. If staffing levels are controlled or limited, staffing decisions could be consistent with meal output, giving a consistent level of productivity. For example, if the expected volume for the pay period is 4,000 meals, then the expected full-time equivalent staffing would be 27.8 full-time equivalents. This statistical analysis should help to bring greater consistency in staffing decisions.

Recognition is given to the following people for their contributions in developing this practice report.

Author/editor: Ruby P. Puckett, MA, RD (Foodservice Management Consultants, Gainesville, FL). Contributing authors/content practitioners: Bert C. Connell, PhD, RD, FADA (Loma Linda University, Loma Linda, CA); Marilyn K. Dahl, MBA, RD (Preferred Nutrition Services, Jacksonville Beach, FL); Rita Jackson, PhD, RD (Nutrition Consultant, Fernandina Beach, FL); Kathleen W. McClusky, MS, RD, FADA (Morrison Management Specialists, Atlanta, GA). Reviewers: American School Food Service Association (Ev Beliveau, RD, Alexandria, VA); Pat Bitker, DTR (City of Inglewood, Inglewood, CA); Food and Culinary Professionals (Stella Cash, MS, MEd, RD, Michigan State University, East Lansing, MI); Josie Klein, DTR (Mount Olivet Careview, Minneapolis, MN); National Food Service Management Institute (Jerry Cater, PhD; Deborah Carr, PhD, RD; University of Southern Mississippi, Hattiesburg, MS); Charnette Norton, MS, RD, FADA (Romano Gatland of Texas, Missouri City, TX); School Nutrition Services Dietetic Practice Group (Mary Kay Meyer, PhD, RD, National Food Service Management Institute, The University of Southern Mississippi, Hattiesburg, MS); Joyce Scott-Smith, MS, RD (UPMC Presbyterian Shadyside, Pittsburgh, PA). APC Workgroup: Shortie McKinney, PhD, RD, FADA (chair); Ethan Bergman, PhD, RD, FADA.


References