Healthcare Performance Management


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Healthcare Performance Management

  1. 1. S N O I T U L O S Healthcare Performance Management Critical Pathways to Hospital Success By Robert G. Stephen & Sumner J. Schmiesing Visum Healthcare, Inc. September 2002 Confidential E-Paper
  2. 2. V ISUM Introduction H EALTHC AR E The healthcare market is faced with a number of critical issues — patient safety, staffing, declining reimbursement, the emergence of new competitors, access to capital, and an aging population. Succeeding, or even surviving, in today’s environment requires a new approach to hospital management where the organization is aligned and focused around the right actions. Hospitals are turning to a solution called Healthcare Performance Management (HPM). HPM is aimed at strengthening and formalizing processes in place in every hospital — performance measurement, strategy implementation, communication, and knowledge management. In order to ensure success and provide velocity to HPM we propose the use of Visum Healthcare’s PerformancePath, a comprehensive HPM tool developed explicitly for hospitals and delivered by experienced healthcare professionals. PerformancePath has helped hospitals manage more efficiently, execute strategy, increase market share and improve financial, customer and quality performance. S PerformancePath — Scorecard View HPM N What is HPM? HPM combines process, structure, and technology to create lasting and sustained change in an O organization. While formal HPM initiatives go by various names — Balanced Scorecard, Dashboards, Executive Information Systems, Performance Benchmarking — there are consistent characteristics I associated with an HPM tool. T HPM addresses three critical areas: U 1. Alignment and focus — Strategy and business requirements are translated to all levels of the hospital. 2. Measurement — HPM allows a hospital to track progress relative to all aspects of L strategy and goals. 3. Collaboration — HPM formalizes and streamlines communication around strategy, O performance, and best practices. S © 2002 Visum Healthcare 2 All Rights Reserved.
  3. 3. The HPM process involves three distinct phases — Build, Implement, and Evolve. V ISUM H EALTHC AR E • In the Build phase, the hospital validates its strategy and develops a clear link between this strategy and the operational requirements of the organization. • During the Implement phase, the hospital translates the work accomplished in the Build What if the hospital does not phase into an appropriate system. The system have a formal strategy? should create efficiencies while increasing A formal strategic plan, while helpful, is not access to crucial data and knowledge. necessary to implement PerformancePath. • The Evolve phase signals the on-going use of We begin with an assessment of the organization the solution. relative to four dimensions – Leadership and Strategy, Alignment and Expectations, Information Benefits and Measurement, and Organization Commitment. In assessing Leadership and Strategy, the implicit hospital strategy will be identified. This serves as The power and benefits of HPM development are a reference check for hospitals with formal plans, “In the majority intuitive. HPM aligns the organization around and creates a great starting point for all other consistent strategies and goals. Hospitals using organizations. of failures — HPM tools have experienced: we estimate 70% — • Greater management efficiency, as hospitals What about rural providers? are able to eliminate monthly activities the real problem isn’t While attention is typically focused on large urban associated with chasing down data and and suburban hospitals, rural providers may benefit (bad strategy)… information; most from adopting a sound Healthcare Perfor- • Balanced measurement across the mance Management solution. organization; it’s bad execution.” • Most of the issues facing the broader healthcare • Successful execution of organization strategy; market are intensified in the rural setting. • Financial improvement; • Rural hospitals must address their link to the “Why CEO’s Fail” • Improvement in key clinical quality and local economy, which results in increased June 1999 Fortune Magazine utilization outcomes; scrutiny and the need to communicate • Increased employee and customer performance broadly to the community. All of satisfaction; and this must be accomplished with fewer manage- • Increased market share. ment resources as compared to larger hospitals. • Some rural providers are also better positioned to achieve alignment around a common strategy The Challenge – strategic issues tend to be more focused and the management structure is typically flatter and more efficient. During the implementation of HPM, an • For rural hospitals, affordable and effective organization is bound to encounter obstacles that solutions are available. Options include pooling can limit or even doom the project. Most of resources across networks or exploring on-line these obstacles can be anticipated and addressed. solutions. Additionally for Critical Access S In our experience, the following challenges are Hospitals, these costs typically fall under the the most critical to avoid: cost reimbursement category. O • Poor definition of scope and expectation — HPM project goals and expectations must be clearly understood. • Absence of internal expertise and executive participation — When a knowledgeable, L dedicated resource is not driving the process, or sustained leadership involvement is not present, U the process will drift. • Failure to link measures to strategy — Context for measurement is critical, yet many T organizations opt to measure what is readily available rather than what drives the strategy. • Measurement confusion — — Inconsistent or missing definitions — Measures used in multiple levels of the I organization are not clearly and consistently defined. — Quest for results or perfection — In some cases, pressure for quick and visible results can O lead to developing an inferior solution containing “easy” and possibly sub-optimal measures. — Missing targets — The process of establishing targets presents issues related to the previous N two obstacles. S 3 © 2002 Visum Healthcare All Rights Reserved.
  4. 4. V ISUM — Focus on historical data rather than strategy drivers — Measures must reflect both results as well as drivers of results. A system based upon historical results provides little value. H EALTHC AR E — Measure overload — Finally, with the amount of data and information generated (and required) in healthcare, there is often a tendency to include every collected measure in the HPM process. • Sustainability and roll-out — Large amounts of time, energy and money are dedicated to figuring out a hospital’s strategic plan and linking measures. However, in many cases, this is just a snapshot in time and is not communicated throughout the organization. • Failure to institutionalize — When HPM fails to become part of the organization’s culture and individual employee’s everyday work experience, long term results are doubtful. • Perceived high cost — Finally, the perception of high cost associated with many HPM projects serve as a barrier to beginning or finishing implementation. Making HPM Work In addressing each of the above obstacles, a set of common critical success factors begins to emerge. • Scope and expectations are defined and understood — Outside expertise is helpful in guiding leadership through this process. While each hospital is unique, there is value in building from the experience of similar institutions. • On-going executive participation and access to expertise — Given that executive participation is critical to a successful HPM initiative, it is imperative to have a knowledgeable resource available to educate and drive commitment and involve senior leadership. • Measures explicitly tie to strategy and objectives — The HPM must be built around a framework linked to strategy. We advocate using the Balanced Scorecard (BSC), which is a proven framework used to link strategy to measures. • Sound measurement strategy exists — An Overview of The Balanced Scorecard • Consistent and clear definitions — The solution At Visum Healthcare, our approach is built around the Balanced must include an explicit Scorecard framework — this approach has proven to create value process to build a data or through the alignment of strategy, measurement, and measurement dictionary. communication. While the power of this approach is well • Appropriate balance documented among large corporations, results are equally between speed and impressive among healthcare organizations. quality — First, reasonable timelines and goals must be Using the balanced scorecard framework, in place. Second, a sound — An East Coast academic medical center improved its bottom data process and training line 500% going from an annual loss to a net profit will address the perfection S — A large community hospital utilized the framework to achieve issue. market share gains in target areas and reduce length of stay • Targets are established — A struggling community hospital used these tools to emerge N and clear — Targets should from the brink of closure – the hospital has focused its be part of the dictionary stakeholders on those critical strategies necessary for survival. O above, but the solution must also provide access to target What is the Balanced Scorecard? definitions and settings. I • Measures balance The Balanced Scorecard is an organizational framework for outcomes and drivers — A implementing and managing strategy at all levels of an enterprise T solution that is both based by linking objectives, initiatives, and measures to an on the Balanced Scorecard organization’s strategy. The same scorecard provides an U while being built around enterprise view of an organization’s overall performance by solid tools and process will integrating financial measures with other key performance L focus the selection of indicators around customer perspectives, internal business measures. O S © 2002 Visum Healthcare 4 All Rights Reserved.
  5. 5. • Concise measures — Measures must be categorized correctly and in some What is a Requirement V ISUM H EALTHC AR E instances may become part of a Monitor? “Requirement Monitor” — a component of With so many requirements for data collection – HPM that tracks required data that is accrediting organizations, payors, and government not strategic. agencies – information shortage is not an issue. But • Plan for roll-out and sustainability — an outside entity’s requirement of a particular data HPM needs to be sustainable and easy to roll- element does not make that element of strategic importance. Hospitals must be careful to separate its out. HPM should leverage technology to other data gathering requirements from the HPM provide automated links to measure data and development. These measures must be tracked store text items. appropriately. Using the Balanced Scorecard • HPM is Institutionalized — HPM must framework, it is possible to create a category called become part of the organization’s culture and Monitored Elements – while these elements can be employee’s work experience. An easy to tracked in the system, there is no direct tie to strategy. deploy and embrace web based system will allow for rapid institutionalization of HPM. • Cost in Line With Value — Well focused and designed HPM, which delivers tangible results and real ROI, can be delivered at a very reasonable cost. VISUM Visum Healthcare’s Approach to Performance PerformancePath PerformancePath — The Visum Healthcare HPM Tool efficiently delivers cutting-edge thoughtware and software to hospitals of all sizes. Behind our solution is extensive experience in healthcare strategy and performance management, a proven process covering each stage of the HPM processes, and organizational growth, learning, and innovation. process, and world class technology. Since the concept was introduced in 1992, Balanced Scorecards have been implemented at organizational, strategic business unit, PerformancePath helps hospitals: shared service functions, and even individual levels at hundreds of • Translate and focus strategy into organizations - in both the private and public sectors – real actionable issues using the worldwide. BSC framework; • Build process and structure — How is Balanced Scorecard applied to healthcare? measurement/data strategy, roles and responsibility, and As stated above, the Balanced Scorecard approach to Performance architecture; Management is as powerful for healthcare providers as it is for S • Implement the process using Fortune 1000 companies. Yet, there are important differences in cutting edge technology and the Balanced Scorecard process used in healthcare organizations. O expert advice focused on the needs of each individual Critical differences include: hospital; and L • Overall framework — The healthcare Balanced Scorecard is • Provide on-going support, aligned around strategy to achieve a mission and vision as assessment of progress and U opposed to meeting the requirements of shareholders. areas for improvement. • Customer complexity — The unique healthcare customer dynamics involving the role of patients, physicians, and payors T must be reflected in the process and measures. • Scope — The process must fit the resource availability of I providers. In other words, expensive, drawn-out consulting and information technology projects are not feasible. O Affordability and ease of implementation are critical. N S 5 © 2002 Visum Healthcare All Rights Reserved.
  6. 6. V ISUM Expertise H EALTHC AR E PerformancePath is developed and delivered by an organization with proven experience in healthcare strategy development, performance management, and technology. Our advisors have worked with over 300 healthcare organizations ranging from physician practices and small rural hospitals to large academic centers and multi-hospital systems; our advisors know the market and the need to move beyond strategic planning to achieving results. With broad industry experience, our technology and data advisors bring a unique understanding of healthcare, as well as performance management in leading organizations around the world. Comprehensive Process A full PerformancePath implementation includes eleven proven modules spanning the Build, Implement, and Evolve phases — these modules allow us to strike a balance between addressing the unique needs of each hospital while eliminating the need to “start PerformancePath — Key Process Steps Training & Assessment Strategy & Measurement Build & Refine Communication & Roll-Out Vision & Themes Technical Set-Up Launch START Introduction Confirm and clarify organization Install QPR ScoreCard and build first Introduce PerformancePath to stakeholders. Provide key concepts and process strategic vision and key themes. models. Begin three month demonstration period. overview. Mapping Pre-Wire Refine Establish cause and effect linkages for Begin education of key stakeholders At three month intervals, meet to verify Assessment each theme and the vision. regarding HPM and role within the hospital. effectiveness and make necessary changes. Measure organization readiness based on four key criteria. Objectives Training Cascade Build on map to establish draft Leaders and key users trained to use On-going support as solution and process measures and objectives. Follow-up the solution. is extended throughout the organization. to confirm data availability. Methodology: workbooks, computer-based Methodology: technical support, Methodology: launch guide, allocated tools, data collection, phone support, and Methodology: training, leadership coaching, communication guide, and user support, quarterly meetings, and ability to individual meetings sessions and follow-up training. acquire additional support. from scratch”. Behind our approach is an evolving set of value-added benefits. For example, PerformancePath enables hospitals to benchmark performance internally as well as with other Visum Healthcare customers. Interaction with other customers is supported through our user network which exists to share and promote best practices among similar healthcare segments. Technology The technology behind PerformancePath is QPR Software’s QPR ScoreCard. This S software is used by hospitals, leading corporations, non-profit organizations, and government agencies around the world. N One of the major challenges in implementing HPM is sustaining and institutionalizing it within your organization. Using a software product will make the performance O measurement or scorecard methodology structured, easy to embrace, and routine when it comes to achieving results. Visum Healthcare’s PerformancePath uses the QPR I ScoreCard to sustain, enable, automate and institutionalize the HPM deployment. T Easy to use: PerformancePath can have an unrestricted amount of simultaneous users in dispersed locations. This means that changes in a model are viewed by other users U immediately. User rights can be individually set and defined. Web-enabled: PerformancePath is completely web-enabled software that supports L information deployment via a browser and can therefore be used as an enterprise-wide system. O S © 2002 Visum Healthcare 6 All Rights Reserved.
  7. 7. Integrated solution: PerformancePath enables automation of your HPM system through file input or SQL queries. It can also leverage data from existing data warehouse and decision support tools. V ISUM H EALTHC AR E Certified solution: QPR ScoreCard, the software powering PeformancePath, is certified by the Balanced Scorecard Collaborative (BSCOL). BSCOL is an organization founded by the creators of the Balanced Scorecard methodology. Value While much of the PerformancePath description has focused on expertise, process, and technology, perhaps the most compelling benefit of the solution is the value generated for the required investment. PerformancePath — Measure View Investment is structured to allow hospitals to receive appropriate benefits at a cost point that is consistent with their needs. Flexibility exists in the ability to pursue the modules in separate phases, and in the unique option for hospitals to purchase technology or utilize internet access to the tools. The PerformancePath approach also supports activity pooling among networked hospitals or even through regional workshops aimed at delivering HPM tools to rural hospitals. Beyond initial investments, on-going support and maintenance is offered for an annual subscription. This subscription is based upon the number of PerformancePath components installed and is priced to encourage on-going participation. This financial investment is reasonable for even the smallest healthcare providers. Our complete package of proven methodologies, software, healthcare experience, and expert support is unparalleled at this price point. Conclusion With the healthcare market facing critical issues involving patient safety, staffing, declining S reimbursement, the emergence of new competitors, access to capital, and an aging population, a successful HPM implementation is vital to organizational success and survival. Organizational strategy must be developed, communicated and progress measured at every level of the O organization. That said, the introduction of a strategic performance management system into your organization is not a silver bullet. A proven framework designed for the healthcare industry — that addresses the unique challenges of each individual healthcare organization — L will dramatically increase the chances of realizing the benefits of HPM. U Visum Healthcare’s PerformancePath is an extensive HPM Tool specifically designed for the T healthcare industry. PerformancePath uses the proven Balanced Scorecard framework, a step by step process for strategy translation and measurement development and best of breed software tools for deployment and sustainability. The PerformancePath HPM Tool is implemented by healthcare I and technical experts. PerformancePath allows for rapid development and roll-out of HPM within your organization. Regardless of hospital size or stage of strategy development,Visum O Healthcare’s PerformancePath is an affordable solution that will make a lasting positive impact on your organization. N S 7 © 2002 Visum Healthcare All Rights Reserved.
  8. 8. S N O I T U L O S PerformancePath — Healthcare Performance Management VISUM HEALTHCARE, INC. 5001 West 80th Street, Suite 655 Bloomington, MN 55437 tel: 952.835.4131 fax: 952.835.5412