Healthcare Performance Management

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By Robert G. Stephen & Sumner J. Schmiesing Visum Healthcare, Inc. September 2002 Healthcare Performance Management Critical Pathways to Hospital Success Confidential E-Paper S O L U T I O N S

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Transcript of Healthcare Performance Management

Page 1: Healthcare Performance Management

By Robert G. Stephen &Sumner J. Schmiesing

Visum Healthcare, Inc.

September 2002

Healthcare Performance ManagementCritical Pathways to Hospital Success

ConfidentialE-Paper

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HPM

IntroductionThe healthcare market is faced with a number of critical issues — patient safety, staffing, decliningreimbursement, 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 hospitalmanagement where the organization is aligned and focused around the right actions. Hospitals areturning to a solution called Healthcare Performance Management (HPM). HPM is aimed atstrengthening 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’sPerformancePath, a comprehensive HPM tool developed explicitly for hospitalsand delivered by experienced healthcare professionals. PerformancePath has helped hospitalsmanage more efficiently, execute strategy, increase market share and improve financial, customerand quality performance.

What is HPM?

HPM combines process, structure, and technology to create lasting and sustained change in anorganization. While formal HPM initiatives go by various names — Balanced Scorecard, Dashboards,Executive Information Systems, Performance Benchmarking — there are consistent characteristicsassociated with an HPM tool.

HPM addresses three critical areas:

1. Alignment and focus — Strategy and business requirements are translated to all levelsof the hospital.

2. Measurement — HPM allows a hospital to track progress relative to all aspects ofstrategy and goals.

3. Collaboration — HPM formalizes and streamlines communication around strategy,performance, and best practices.

PerformancePath — Scorecard View

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“In the majority

of failures —

we estimate 70% —

the real problem isn’t

(bad strategy)…

it’s bad execution.”

“Why CEO’s Fail”June 1999 Fortune Magazine

The HPM process involves three distinct phases — Build, Implement, and Evolve.

• In the Build phase, the hospital validates its strategy and develops a clear link between thisstrategy and the operational requirements of the organization.

• During the Implement phase, the hospitaltranslates the work accomplished in the Buildphase into an appropriate system. The systemshould create efficiencies while increasingaccess to crucial data and knowledge.

• The Evolve phase signals the on-going use ofthe solution.

Benefits

The power and benefits of HPM development areintuitive. HPM aligns the organization aroundconsistent strategies and goals. Hospitals usingHPM tools have experienced:

• Greater management efficiency, as hospitalsare able to eliminate monthly activitiesassociated with chasing down data andinformation;

• Balanced measurement across theorganization;

• Successful execution of organization strategy;• Financial improvement;• Improvement in key clinical quality and

utilization outcomes;• Increased employee and customer

satisfaction; and• Increased market share.

The Challenge

During the implementation of HPM, anorganization is bound to encounter obstacles thatcan limit or even doom the project. Most ofthese obstacles can be anticipated and addressed.In our experience, the following challenges arethe most critical to avoid:

• Poor definition of scope and expectation — HPM project goals and expectations must beclearly understood.

• Absence of internal expertise and executive participation — When a knowledgeable,dedicated resource is not driving the process, or sustained leadership involvement is not present,the process will drift.

• Failure to link measures to strategy — Context for measurement is critical, yet manyorganizations 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

organization are not clearly and consistently defined.— Quest for results or perfection — In some cases, pressure for quick and visible results can

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

two obstacles.

What if the hospital does nothave a formal strategy?A formal strategic plan, while helpful, is notnecessary to implement PerformancePath.We begin with an assessment of the organizationrelative to four dimensions – Leadership andStrategy, Alignment and Expectations, Informationand Measurement, and Organization Commitment.In assessing Leadership and Strategy, the implicithospital strategy will be identified. This serves asa reference check for hospitals with formal plans,and creates a great starting point for all otherorganizations.

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What about rural providers?While attention is typically focused on large urbanand suburban hospitals, rural providers may benefitmost from adopting a sound Healthcare Perfor-mance Management solution.• Most of the issues facing the broader healthcare

market are intensified in the rural setting.• Rural hospitals must address their link to the

local economy, which results in increasedscrutiny and the need to communicateperformance broadly to the community. All ofthis must be accomplished with fewer manage-ment resources as compared to larger hospitals.

• Some rural providers are also better positionedto achieve alignment around a common strategy– strategic issues tend to be more focused andthe management structure is typically flatter andmore efficient.

• For rural hospitals, affordable and effectivesolutions are available. Options include poolingresources across networks or exploring on-linesolutions. Additionally for Critical AccessHospitals, these costs typically fall under thecost reimbursement category.

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S— 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.— 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 theHPM process.

• Sustainability and roll-out — Large amounts of time, energy and money are dedicated tofiguring out a hospital’s strategic plan and linking measures. However, in many cases, this is justa snapshot in time and is not communicated throughout the organization.

• Failure to institutionalize — When HPM fails to become part of the organization’s culture andindividual employee’s everyday work experience, long term results are doubtful.

• Perceived high cost — Finally, the perception of high cost associated with many HPM projectsserve 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 inguiding leadership through this process. While each hospital is unique, there is value in buildingfrom the experience of similar institutions.

• On-going executive participation and access to expertise — Given that executiveparticipation is critical to a successful HPM initiative, it is imperative to have a knowledgeableresource available to educate and drive commitment and involve senior leadership.

• Measures explicitly tie to strategy and objectives — The HPM must be built around aframework linked to strategy. We advocate using the Balanced Scorecard (BSC), which is aproven framework used to link strategy to measures.

• Sound measurementstrategy exists —• Consistent and clear

definitions — The solutionmust include an explicitprocess to build a data ormeasurement dictionary.

• Appropriate balancebetween speed andquality — First, reasonabletimelines and goals must bein place. Second, a sounddata process and trainingwill address the perfectionissue.

• Targets are establishedand clear — Targets shouldbe part of the dictionaryabove, but the solution mustalso provide access to targetdefinitions and settings.

• Measures balanceoutcomes and drivers — Asolution that is both basedon the Balanced Scorecardwhile being built aroundsolid tools and process willfocus the selection ofmeasures.

At Visum Healthcare, our approach is built around the BalancedScorecard framework — this approach has proven to create valuethrough the alignment of strategy, measurement, andcommunication. While the power of this approach is welldocumented among large corporations, results are equallyimpressive among healthcare organizations.

Using the balanced scorecard framework,— An East Coast academic medical center improved its bottom

line 500% going from an annual loss to a net profit— A large community hospital utilized the framework to achieve

market share gains in target areas and reduce length of stay— A struggling community hospital used these tools to emerge

from the brink of closure – the hospital has focused itsstakeholders on those critical strategies necessary for survival.

What is the Balanced Scorecard?The Balanced Scorecard is an organizational framework forimplementing and managing strategy at all levels of an enterpriseby linking objectives, initiatives, and measures to anorganization’s strategy. The same scorecard provides anenterprise view of an organization’s overall performance byintegrating financial measures with other key performanceindicators around customer perspectives, internal business

An Overview of The Balanced Scorecard

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VISUM

• Concise measures — Measures must becategorized correctly and in someinstances may become part of a“Requirement Monitor” — a component ofHPM that tracks required data that isnot strategic.

• Plan for roll-out and sustainability —HPM needs to be sustainable and easy to roll-out. HPM should leverage technology toprovide automated links to measure data andstore text items.

• HPM is Institutionalized — HPM mustbecome part of the organization’s culture andemployee’s work experience. An easy todeploy and embrace web based system willallow for rapid institutionalization of HPM.

• Cost in Line With Value — Well focused and designed HPM, which delivers tangible resultsand real ROI, can be delivered at a very reasonable cost.

Visum Healthcare’s Approach to Performance

PerformancePath

PerformancePath — The Visum Healthcare HPM Tool efficiently delivers cutting-edge thoughtwareand software to hospitals of all sizes. Behind our solution is extensive experience in healthcare

strategy and performancemanagement, a proven processcovering each stage of the HPMprocess, and world class technology.

PerformancePath helps hospitals:• Translate and focus strategy into

real actionable issues using theBSC framework;

• Build process and structure —measurement/data strategy, rolesand responsibility, andarchitecture;

• Implement the process usingcutting edge technology andexpert advice focused on theneeds of each individualhospital; and

• Provide on-going support,assessment of progress andareas for improvement.

What is a RequirementMonitor?With so many requirements for data collection –accrediting organizations, payors, and governmentagencies – information shortage is not an issue. Butan outside entity’s requirement of a particular dataelement does not make that element of strategicimportance. Hospitals must be careful to separate itsother data gathering requirements from the HPMdevelopment. These measures must be trackedappropriately. Using the Balanced Scorecardframework, it is possible to create a category calledMonitored Elements – while these elements can betracked in the system, there is no direct tie to strategy.

processes, and organizational growth, learning, and innovation.Since the concept was introduced in 1992, Balanced Scorecardshave been implemented at organizational, strategic business unit,shared service functions, and even individual levels at hundreds oforganizations - in both the private and public sectors –worldwide.

How is Balanced Scorecard applied to healthcare?As stated above, the Balanced Scorecard approach to PerformanceManagement is as powerful for healthcare providers as it is forFortune 1000 companies. Yet, there are important differences inthe Balanced Scorecard process used in healthcare organizations.

Critical differences include:• Overall framework — The healthcare Balanced Scorecard is

aligned around strategy to achieve a mission and vision asopposed to meeting the requirements of shareholders.

• Customer complexity — The unique healthcare customerdynamics involving the role of patients, physicians, and payorsmust be reflected in the process and measures.

• Scope — The process must fit the resource availability ofproviders. In other words, expensive, drawn-out consultingand information technology projects are not feasible.Affordability and ease of implementation are critical.

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SExpertise

PerformancePath is developed and delivered by an organization with proven experiencein healthcare strategy development, performance management, and technology. Ouradvisors have worked with over 300 healthcare organizations ranging from physicianpractices 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 toachieving results. With broad industry experience, our technology and data advisors bringa unique understanding of healthcare, as well as performance management in leadingorganizations around the world.

Comprehensive Process

A full PerformancePath implementation includes eleven proven modules spanning theBuild, Implement, and Evolve phases — these modules allow us to strike a balancebetween addressing the unique needs of each hospital while eliminating the need to “start

from scratch”. Behind our approach is an evolving set of value-added benefits. Forexample, PerformancePath enables hospitals to benchmark performance internally aswell as with other Visum Healthcare customers. Interaction with other customers issupported through our user network which exists to share and promote best practicesamong similar healthcare segments.

Technology

The technology behind PerformancePath is QPR Software’s QPR ScoreCard. Thissoftware is used by hospitals, leading corporations, non-profit organizations, andgovernment agencies around the world.

One of the major challenges in implementing HPM is sustaining and institutionalizing itwithin your organization. Using a software product will make the performancemeasurement or scorecard methodology structured, easy to embrace, and routine when itcomes to achieving results. Visum Healthcare’s PerformancePath uses the QPRScoreCard to sustain, enable, automate and institutionalize the HPM deployment.

Easy to use: PerformancePath can have an unrestricted amount of simultaneous usersin dispersed locations. This means that changes in a model are viewed by other usersimmediately. User rights can be individually set and defined.

Web-enabled: PerformancePath is completely web-enabled software that supportsinformation deployment via a browser and can therefore be used as anenterprise-wide system.

Methodology: training, leadershipsessions and follow-up

PerformancePath — Key Process Steps

Training & Assessment Strategy & Measurement Build & Refine Communication & Roll-Out

Methodology: workbooks, computer-basedtools, data collection, phone support, andindividual meetings

IntroductionProvide key concepts and processoverview.

START

AssessmentMeasure organization readinessbased on four key criteria.

Methodology: technical support,coaching, communication guide, and usertraining.

Vision & ThemesConfirm and clarify organizationstrategic vision and key themes.

MappingEstablish cause and effect linkages foreach theme and the vision.

ObjectivesBuild on map to establish draftmeasures and objectives. Follow-upto confirm data availability.

LaunchIntroduce PerformancePath to stakeholders.Begin three month demonstration period.

RefineAt three month intervals, meet to verifyeffectiveness and make necessary changes.

CascadeOn-going support as solution and processis extended throughout the organization.

Methodology: launch guide, allocatedsupport, quarterly meetings, and ability toacquire additional support.

Technical Set-UpInstall QPR ScoreCard and build firstmodels.

Pre-WireBegin education of key stakeholdersregarding HPM and role within the hospital.

TrainingLeaders and key users trained to usethe solution.

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Integrated solution: PerformancePath enables automation of your HPM system through fileinput or SQL queries. It can also leverage data from existing data warehouse and decision support tools.

Certified solution: QPR ScoreCard, thesoftware powering PeformancePath, is certifiedby the Balanced Scorecard Collaborative (BSCOL).BSCOL isan organizationfounded by thecreators of theBalanced Scorecardmethodology.

Value

While much of the PerformancePathdescription has focused on expertise, process,and technology, perhaps the most compellingbenefit of the solution is the value generated forthe required investment.

Investment is structured to allow hospitals to receive appropriate benefits at a cost point that isconsistent with their needs. Flexibility exists in the ability to pursue the modules in separatephases, and in the unique option for hospitals to purchase technology or utilize internet access tothe tools. The PerformancePath approach also supports activity pooling among networkedhospitals 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 ispriced to encourage on-going participation.

This financial investment is reasonable for even the smallest healthcare providers. Our completepackage of proven methodologies, software, healthcare experience, and expert support isunparalleled at this price point.

Conclusion

With the healthcare market facing critical issues involving patient safety, staffing, decliningreimbursement, the emergence of new competitors, access to capital, and an aging population, asuccessful HPM implementation is vital to organizational success and survival. Organizationalstrategy must be developed, communicated and progress measured at every level of theorganization. That said, the introduction of a strategic performance management system intoyour organization is not a silver bullet. A proven framework designed for the healthcareindustry — that addresses the unique challenges of each individual healthcare organization —will dramatically increase the chances of realizing the benefits of HPM.

Visum Healthcare’s PerformancePath is an extensive HPM Tool specifically designed for thehealthcare industry. PerformancePath uses the proven Balanced Scorecard framework, a step bystep process for strategy translation and measurement development and best of breed software toolsfor deployment and sustainability. The PerformancePath HPM Tool is implemented by healthcareand technical experts. PerformancePath allows for rapid development and roll-out of HPMwithin your organization. Regardless of hospital size or stage of strategy development, VisumHealthcare’s PerformancePath is an affordable solution that will make a lasting positive impact onyour organization.

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PerformancePath — Measure View

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VISUM HEALTHCARE, INC.5001 West 80th Street, Suite 655

Bloomington, MN 55437tel: 952.835.4131fax: 952.835.5412

[email protected]

www.visumhealthcare.com

PerformancePath — Healthcare Performance Management

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