Download The CIS Process - Compensation Integrity Solutions

Compensation Integrity Solutions
A Thorough Assessment of An Organization’s Pay Practices Leading
To Enhanced Pay Integrity, Lower Labor Costs & Optimization of
Timekeeping Systems
6996 Corazon Drive
Dublin, Ohio 43016
www.cisaudits.com
910-398-2089
614-205-4482
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Paying Employees Accurately And Timely Is A Complex Process For Health Care
Delivery Organizations
Thousands Of Employees/ Millions Of Transactions Every Year
Employees
> A breakdown in any of these
can produce inaccurate or
Time
inequitable
Accounting
pay
Mgt./
Controls
Data
Systems’
Support
Regulatory
> Organizations often err by
“permitting” employees to be
paid more, not less where
discretion exists
> Change is
everywhere –
regulations, related
benefits, systems,
people, labor
markets
Local Labor
Mkt.
Pay Policies
& Practices
> Small $ Transactions,
“Shared”
Ownership, Under The
Radar
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The Challenge
 Performance improvement efforts historically have focused on Revenue Cycle
Enhancements, Labor Benchmarking/Productivity Gains, Supply Cost Reductions and
intense management of Discretionary Spending
 However, Organizations’ often overlook a very basic hidden cost – the ever increasing
complexity of labor hours accounting, internal pay equity, special pay types and the
inter-relationships of hours and special pay types logic that can often lead to over and
under payment of employees – integrity is limited by:
 Responsibilities are often shared by Operations, Human Resources and
Finance
 Less than adequate management information and use of timekeeping
systems
The devils are in the complex details involving thousands of transactions and hundreds, if
not thousands of employees actively participating in pay processes
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CIS Pay Practice
Assessment
Opportunity
Health care organizations often have a 2% TO 3% (sometimes more) labor cost reduction opportunity as a result of
breakdowns in fundamental payroll processes, misinterpretation and incorrect implementation of pay rules, AND lack
of utilization of timekeeping system information/reporting tools, along with many other pay related process failures
that result in higher labor costs than necessary.
Results Arising From CIS’ Engagement
CIS is uniquely qualified to perform an assessment of pay practices focused on enhancing the integrity of pay
practices, identifying cost reduction opportunities, and documenting the opportunities at a transaction level. The depth
of CIS' analysis enhances our clients’ ability to actually realize the savings opportunities identified and the
timekeeping tools that will provide management with valued information and actionable data for managing labor costs
while adhering to regulatory requirements.
Key Success Factors
Strong sponsorship of senior leadership and a champion with a keen interest in paying employees accurately and
justly with a strong focus on not paying “more” than organizational policies (current, or new) support.
.
..
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What Is CIS’ Pay Practice Assessment?
A CIS Pay Practice Assessment is a low risk, minimally intrusive engagement that
typically extends over a 12 to 16 week period that identifies recommended changes
in pay practices and pay related system set-ups that result in:
> Enhanced pay integrity
> Reduced labor costs
> Optimization of the use of Time & Attendance System
> Enhanced internal controls
> Reduced regulatory risk
CIS provides a unique service - we believe we are the only
consultants to provide clients with an in-depth transaction
level analysis of the organization's actual pay!
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CIS’ Work
CIS evaluates, audits and tests the logic of pay systems, supporting policies or lack thereof,
manual and automated systems that track the multitude of hours, pay types, approvals and audit
processes. The process involves testing hundreds of thousands of pay related transactions even
for a moderate sized hospital.
Our work will also identify potential issues on certain regulatory matters involving Wage and
Hour laws, FLSA, FMLA and Tax issues.
The work product results in the identification of integrity shortfalls and savings in labor costs
that result from:
>Breakdowns in hours management
>Misinterpretations/incorrect implementations of policy
>Lack of adherence to appropriate procedures
>Pyramiding of premium pays
>Historical pay incentives that may no longer be needed
>Inaccurate system set-ups and mapping from ATK to Payroll systems
>Other issues that occur in a complex hours and pay management environment
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What CIS Does Not Do
CIS’ program does not involve work in areas
such as:
Productivity
Staffing models
Workforce reduction
Compensation strategy
Benefits strategy/design
IT system selection/deployment
Presumptive reasonableness of compensation
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The CIS Process

Phase 1-Data Collection
Critical data gathering on policies, roles,
procedures, technologies and systems
that drive/support/perform pay practices
and pay transactions.
Gain an understanding of compensation and
benefits philosophy and programs.
Gain an understanding of organizational
culture.

Phase 2-Data Analysis
Mine, analyze and audit actual pay and benefit
transactions.
Progress updates provided to client on their requested
time frame
Based on analysis, begin identifying performance
improvement opportunities.
This phase is done off-site and typically takes 10 to
12 weeks to complete.
This phase involves a 5 day on-site visit
to meet with critical stakeholders and subject
matter experts as well as data collection and
review.
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The CIS Process

Phase 3 - Check-In
CIS returns to the organization to share
early elements of our findings, verify accuracy
of our work and do additional subject
matter reviews as needed.
During this phase CIS also spends time
testing elements of the work flow that can
only be done on-site, such as termination
processing and use of scheduling system.
edits, timekeeper interactions.

Phase 4-Evaluation
Off site analysis and data mining continues.
Draft report and all supporting exhibits are
prepared for client review and comment.
This phase takes 3-4 weeks off-site.
This phase involves a 3 day on-site visit
to meet with key subject matter experts and
organizational sponsors.
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The CIS Process

Phase 5-Draft and Final Report
Review findings and realistic performance
improvement recommendations.
Incorporate any client changes into final report
Provide post engagement implementation
assistance if needed.
Provide best T&A usage guidelines and
recommended reports/additional modules for
consideration.
This phase involves on-site presentation and
discussion-typically 4-5 hours and then offsite completion of report.
The CIS program is low risk
and done with minimal onsite requirements allowing
the organization to have it's
pay practices assessed and
tested without significant
time and interruption to
staff
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Examples of Findings
ATK system not used to the fullest potential
>Lack of attention to sound basic timekeeping principles
>Support to proactively better manage employees’ time (reduce overtime)
>Eligibility setups for premium pays
>Employees accruing over “bank” caps
>Ability to support second positions and/or multiple sites
>Use of advanced system-wide scheduling
>Behind-the-scenes manual timekeeping
>High level management information
Wide variation within common core pay practices within organizations/systems
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Examples of Findings
>Unique classification and tracking of pay and earnings codes:
Codes not standardized
Codes not clearly mapped (e.g. call in time reported as regular time)
>Significant variation in treatment of meal deductions and no-meal-taken – impacts shift diffs
and other premium pays
>Pyramiding of premium pay on top of other premium pays and overtime
>FLSA overtime hours and rate not properly calculated, or calculated conservatively
>Lack of uniform clocking requirements (e.g., call back)
>Lack of ATK reporting to assist in operational management of labor costs
>Lack of knowledge of ATK system capabilities and optimal integration with HRIS
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A Detailed Example
Health System A operates an ATK. Since the original implementation of the system, changes
in pay practices have occurred with software changes to accommodate the new pay practices.
Certain software changes had the unintended effect of generating both on-call and call-in
pay for the same hours, which was not supported by policy. Over a 12 month period, 300 staff
members had been improperly paid and were either unaware they were not entitled to both
pays for the same hours or just did not make management aware.
The annualized overpayment for the 300 employees for 240 hours at $4.00/hour totaled
$96,000 plus a direct benefit cost of 12% or an annualized cost of $107,502.
Health System A , once advised of this defect, communicated with impacted employees,
changed the set up of the ATK and payroll systems to prevent this from occurring in the
future and undertook employee and supervisory education on policy and ATK entries.
System A did not seek recovery of previous improper payments.
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Typical Clients and Engagements
The CIS service has been used by multiple health care organizations including:
>Large medical centers
>Multi-hospital health care systems
>Mid to large size community hospitals
>Physician organizations
>Union and non-union environments
Selected engagements completed by CIS include:
*Pay Practice Assessments in regional, community, teaching and national multi-hospital
systems
*Assessment of human resources functions for large academic medical practice
*HRIS upgrade and implementation
*Medical practice valuation and due diligence
*Interim CHRO
The above engagements are indicative of the variety and scope of CIS' services. More importantly, CIS has
often been retained by the same client to provide additional services in Human Resources and Finance which
is indicative of the quality and service orientation of CIS.
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Why CIS ?
CIS’ pay practice assessment focuses on an aspect of labor cost management that many
health care organizations may not be aware of, have undertaken only a high level review,
or have not committed sufficient resources to address and improve results.
The CIS program is cost effective, can be structured to have low upfront costs, provides
assurance of pay/hour driven program integrity and will identify labor cost savings
realizable each year for years to come.
Savings can be realized quickly with many solutions actually having a minimal impact on
employees, staffing and culture.
CIS professionals have the experience, perspective and tools to deliver a quality result:
>Realizing cost savings is the call of the times
>Knowing hours and pay management are extraordinarily complex for health care
organizations
>Respecting the organizations need for employee satisfaction and engagement in
order to deliver high quality care
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The CIS Team
Kerry Garrigan
Kerry has more than 30 years experience
In all aspects of Human Resources and
Organizational Development in both health
care and industry.
Russ Gardner
Russ has more than 30 years experience in
accounting, auditing and financial management
principally serving the health care industry.
She has served in Senior HR positions for
health care systems and hospitals,
including academic institutions.
He has served as the Chief Financial Officer for large
health care systems.
Kerry has a Masters in Business and a Masters
Degree in Organizational Learning and Development.
Russ has a BBA in Accounting and an MBA in
Advanced Business Economics. He is a CPA
and a long time member of the Health Care
Financial Management Association.
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