The document discusses a vision for using performance measurement to drive organizational change and improvement in healthcare. It summarizes several IOM reports calling for a national performance measurement system. The author argues that such a system needs to take an organizational perspective and account for contextual factors. An organizational model of performance is presented to illustrate how factors like strategy, structure, environment and resources interact. The author suggests organizational research can help by examining these contextual effects, providing implementation roadmaps and aiding assessment of different types of learning and change processes. Key research questions are proposed around how the local context influences implementation and effectiveness.

1. Performance Measurement in Organizational Change Ranga Ramanujam PhD Krannert School of Management Purdue University

2. Overview IOM’s vision of performance measurement and learning-driven transformation From an organizational perspective, what will it take to realize this vision? What is an example of a model of organizational performance that may be relevant? How can organizational research help?

3. Background: IOM Reports on Pathways to Quality Health Care Performance Measurement: Accelerating Improvement (2006) developing a standardized and comprehensive performance measurement system through a National Quality Control Board Medicare's Quality Improvement Organization Program: Maximizing Potential (2006) technical assistance to facilitate providers’ quality improvement efforts, expanding the QIO governance base and structure and improving data systems and evaluations Rewarding Provider Performance: Aligning Incentives in Medicare (2007) operational plan for introducing payment incentives in Medicare that encourage and reward quality care.

4. Rationale for proposed performance measurement system “ Congress and … have high expectations that public reporting, pay for performance, and quality improvement initiatives can help realize the transformational change envisioned in the Quality Chasm report…the full potential of these initiatives cannot be realized without a coherent, robust, and integrated performance measurement system that is purposeful, comprehensive, efficient, and transparent” “ However, the committee believes … (such a system) is unlikely to emerge from current voluntary, consensus-based efforts, which are often fragmented and lack a consistent connection to explicit overarching national goals for healthcare performance improvement. In short, while recent efforts offer some promise, the committee believes a bolder national initiative is required”

5. Vision of learning-driven transformational change Current approaches “learn too little and too late from successes and failures” (p 53) The proposed system will function as a “ learning system” that will “continually evaluate its own performance and advance knowledge about performance measurement… about forming effective care teams and, about the extent to which all quality efforts lead to improvements in the six quality aims” (p 169).

6. Thinking “organizationally” about performance Recognizing, understanding, and taking into account the effects of interdependencies in organizational life Specifying the underlying model of organization that drives problem formulation No one best model An illustrative model presented here

7. Nadler & Tushman (1989)’s congruence model of organizational performance and change INPUTS OUTPUTS Environment Resources History Strategy Informal Structure & Process Work Formal structure People System Level Unit/Group level Individual Level

8. Some implications of this model Specifying target outcome level is critical; measurement of performance, optimal configuration of components, and implementation strategies may vary across levels Effective performance is linked to “congruence” between strategy and other components, and among components Implementation of a major system may require a set of congruent changes in strategies and components i.e. transformational change

9. IOM report through the looking glass of this model Insufficient discussion of following questions: What is the target system level? How will the performance measurement system affect and be affected by the local organizational context? How will it be implemented? How will its effectiveness be assessed? (tendency to equate performance improvement with learning)

10. How can organizational research help? Provide means to examine the effects of context Tools for identifying, conceptualizing, measuring, and assessing impact of relevant contextual features (e.g., patient safety climate) Climate: “shared perceptions of the employees concerning the practices, procedures, and the kind of behaviors that get rewarded, supported, and expected in a setting” (Schneider, 1990) influences behaviors by influencing how people think and feel about certain aspects of their environment such as service, innovation, safety, or implementation (Klein & Sorra, 1996)

11. How can organizational research help? Draw an implementation roadmap Provide well-documented cases of successful transformations across organizations in different settings Specify the roles and responsibilities for system participants such as hospital top management, physicians, unit supervisors, and frontline care providers Draw attention to the need for a system of changes

12. How can organizational research help? Aid assessment Different kinds of learning e.g., by doing, through problem solving, from errors, and through transfer of knowledge Different learning behaviors e.g., information-seeking, information sharing, feedback seeking, feedback giving, problem solving, and experimentation Different facilitators of learning e.g., leader inclusiveness, psychological safety, and staff engagement in improvement projects Different measures of learning-related processes and outcomes

13. Research Agenda – Examples of questions What particular features of the local context influence implementation and effectiveness? What accounts for variations in extent to which healthcare organizations integrate the proposed measures with their strategic planning process? What particular learning processes help predict the success of the performance measurement in promoting learning? What will be the impact of the measurement system on human resource practices (e.g., training, leadership development, job redesign)?

14. Questions?