Automated payroll systems a must for outmoded hospitals

Healthcare Financial Management, March, 1992 by Bill Siwicki

The classic fable -The Tortoise and the Hare' teaches us that faster is not always better. However, in the case of automated time and attendance systems for payroll management, contemporary innovation has prevailed over conventional wisdom.

Hospitals increasingly use automated systems for some recordkeeping activities. Nevertheless, widespread automation of payroll has not materialized. A survey of 23 New York, N.Y., hospitals found that only one of these institutions was employing an automated payroll system. The dear majority of hospitals rely on time cards and sign-in sheets to measure one of the biggest hospital expenditures-the payroll.

Matrix Systems, Inc. offers one representative time and attendance system. Their process uses a standard high coercivity magnetic stripe identification badge which is issued to every person on a payroll. The card, similar to an automated teller machine (ATM) card, stores information about the particular employee: wage rate, position, lunch schedule-anything the employer would like to have permanently logged on the employee's card. That information on the card, also referred to as the badge, is processed along with the precise times the employee clocks in and out on the swipe reader, the time clock of the future. - This information is automatically updated and stored on a host computer where it can be reviewed or amended by a supervisor.

Two significant benefits of implementing an automated time and attendance system are accuracy and consistency.

A more accurate recording of the time worked is an obvious advantage. Time clocks are not always precise, while sign-in sheets, clearly, have greater faults. An automated system, though, holds every employee's working time to the same standard and the same scrutiny.

Hospital payroll functions rely on myriad variables, such as shift differences, pay, overtime, etc. The automated system takes all these variables into account. Whereas different department heads might have unique views as to what constitutes overtime or how to round off minutes on a time card, the automated system remains consistent.

Another major benefit of the automated time and attendance system is policy compliance, according to Robert E. Alcaro of Healthcare Information Systems Professionals, Inc., who studied automated payroll systems for the Northern Metropolitan New York Chapter of HFMA.

"One advantage of the whole automated process is that it forces individual departments to conform to hospital payroll policies,- Alcaro indicates. It is often found that a lot of the departments hadn't really understood the payroll policies. Automated systems provide a way for the hospital to redefine those policies and to ensure that they are consistently applied across all departments wherever possible."

Even in an automated system, the "human touch- is still needed. The automated payroll system is thorough, but the financial supervisor must still examine ongoing records for accuracy. Additionally, the automated system's turnaround document, a record that requires "human" updating, notifies the system of any type of supervisor override (for example, paying someone who was late a full day's wages because they are normally a consistent and dependable employee).

'Our automated payroll system has tremendously improved the payroll process, no question about it,' asserts Gregg Martin, director of MIS for Arnot Ogden Hospital in Elmira, N.Y. "The whole process takes much less time, accuracy has increased, and interpretation of all financial policies has become consistent.

"The employees were a bit uncertain at first, but it ultimately has made things easier for them. We brought it in in stages, starting with a pilot program using only our dietary department, and incrementally everyone got it. Overall, the system has become quite an advantage for our business.'

The benefits and advantages of an automated time and attendance system may very well be tremendous. But a common remark from financial officers with longstanding, traditional payroll methods in place may still arise: "If it ain't broke, don't fix it!"

"In some cases, the current system may work very well,' notes Alcaro, "and that's fine. But how much does it cost in manpower and effort? It might be a better run system if it were automated.

'Plus, how do you know 'it ain't broke'? A good place to start would be to review the payroll process. Hospitals tend to be very far behind in the field of automation.

Payroll can comprise anywhere from 60 to 70 percent of expenses. If something is that expensive, why, would it be treated so cavalierly as to rely on a simple sign-in sheet? If you were talking about a Fortune 500 company, these things would be long automated. I would like to see that happen more and more in the healthcare field."