balanced scorecard success: a rural perspective · 2015. 4. 20. · a rural perspective madison...

Balanced Scorecard Success:A Rural Perspective

Madison Area Quality Improvement NetworkNovember 16, 2004

Rural Wisconsin Health Cooperative

Marshfield

La CrosseOshkoshEau ClaireMadison

Milw aukee

Dubuque

St Paul

Superior

RWHC Member Zip List

Incorporated in 1979 for advocacy and shared services

Owned and operated by 29 rural hospitals with affiliated clinics

One of the country’s earliest and most successful models for networking

Integrated network of freestanding entities

Cooperation With A Bite

RWHC - Eye On Health

Before

After

The Falls Memorial Hospital Story

Management team on board four months Current Ratio 1.7 Average Age of Plant 18.0 Total Margin 0.5% Days Cash on Hand 7.3 3-Year Revenue Increase 1.9% Auditor’s last words…

“Less than a year viability”

More to the story……

OIG settlement Four pending lawsuits Poor employee relations – “Baird Report” Bad reputation in community Strained physician relations Outdated facility and failing equipment Cumbersome and ineffective QI process

Obstacles

Strategic plan collecting dust

Management focused on putting out fires

Board meetings filled with reports from the past; no time for future planning or monitoring strategy

Employees, departments, physicians, management and the board all in isolated

silos

Ineffective communication up and down the organization

Where they started … Invested in a marketing study to start

planning process Communicated!! Refocused on primary mission Provided education Researched dashboard reporting

What dashboard research showed:

Dashboard not linked to strategic plan Lots of data, but is it the right data? Potential to overload – too many

indicators Financial/historical data – not the whole

story – where are we going? Just the facts – passive vs. driving

The BSC Epiphany!!

Communicates strategic objectives Links process improvements to

strategic goals Broadens focus

Balanced Scorecard: What it is…

A set of financial and non-financial measures that help create, measure and improve integrated critical success factors

Tool that forms the core of a strategic management system

Common language to describe strategy Comprehensive communication tool/reporting

mechanism Translation of strategic goals that drives behavior

and performance Link to accountability

What It Is Not…

A project that can be delegated down in the organization

A separate quality initiative A top down micro-manage tool Another data report An “off the shelve” solution An information management system The strategic management system

Balances…

External Measures (stakeholders & customers) With

Internal Measures (critical business processes & learning and growth

Outcome Measures (results of past efforts)With

Driver Measures (indicators of future performance)

Four Perspectives (Balanced)

1. Financial2. Customer 3. Internal Business Processes4. Learning and Growth

Learning and Growth Directs attention to the basis of all future

success – the organization’s leadership, people and infrastructure

Includes strategic recruiting, retention, training, team development, knowledge and skill audits of employees

Information technology and performance improvement tools

Internal Business Process Perspective

Leadership identifies the critical internal processes necessary to achieve high quality with uncompromising focus on the customer with efficiency and innovation. The right services – matching services with needs Optimized service delivery Exceptional clinical outcomes Effective processes Continuous monitoring, improving and reinventing

Customer Perspective

Indicators such as service levels, satisfaction ranges, as well as market share for: patients, physicians, families, staff, community

Value propositions - what is needed to achieve high outcome measures: Service mix Access Price Satisfaction/experience Loyalty

Financial Perspective Typically relate to profitability outcomes

and customized to the competitive environment and business strategy: Total margin Days cash on hand Net days in AR

Attract and retain talent – train well, communicate effectively and provide right resources

Develop and monitor focused innovative and efficient processes

Continuous customer feedback process

improvements fostering patientand physician loyalty

PositiveFinancialResults

FINANCIAL 1st Qrt 2003 Trending

Net Revenue Increase over Prior Year 8.6%

GOAL - 7%: Net revenue gains continue to exceed goal with market share capture for new Urgent Care Clinic exceeding projections. Blue Cross and commercial insurance utilization increased 15% this qrt and average 95% reimbursement.

Total Margin 7.7%

GOAL - 6%; Expenses were over budget by 2.3% due to increased staffing for high inpatient utilization during the first quarter, however, high Medicare utilization covering costs and increased net revenue kept the operating margin on goal.

Net Days Receivable in AR 55.3

GOAL - 60.0; The process improvement project showed significant results during the 1st Qrt as AR days dropped below goal to pre-CAH levels under PIP. This decrease in AR has contributed and estimated $750,000 in cash from 1st Qrt 2002.

Operating Days Cash on Hand 103.6

GOAL - 100; AR improvements continue to improve the cash position. Medicare retro adjustment payment of $293,000 also contributed to the Days Cash.

CUSTOMER

Physician Satisfaction Score 92.3

GOAL - 91.5; Surveys for Health Information Management, Lab and ER were completed. Overall satisfaction exceeded the goal, however, MR information relayed promptly and ER results availability on inpatient records scored lower than goal and are being investigated for possible PI.

Loyalty - % Score of "5" on Patient Surveys 53.0%

GOAL - 70%; PI's for patient satisfaction are improving those indicators while loyalty scores continue to decline steadily. While very poor and poor scoring has decreased most patients are rating FMH only as fair or good. A PI team has been establish to investigate and recommend action.

Press Ganey Percentile Ranking - Inpatient Services 79%

GOAL - 80%; The PI for inpatient satisfaction continues to demonstrate effective improvement most notably in scoring related to patient communication. Management will continue to be monitored.

Patient Satisfaction Scores - All Services 87.7

GOAL - 88.5; Overall patient satisfaction scores continued to improve. This quarter Urgent Care scores show the most improvement credited to the revised fast track system implemented in January.

Page 1

0.0%5.0%

10.0%15.0%20.0%

1Qrt 01 2Qrt 01 3Qrt 01 4Qrt 01 1Qrt 02 2Qrt 02 3Qrt 02 4Qrt 02 1Qrt 03

0.0%

5.0%

10.0%

15.0%


4050607080


10.030.050.070.090.0

110.0


40%

50%

60%

70%

80%


85.086.087.088.089.0


1000

1250

1500

17501

80.0

85.0

90.0

95.0


On Target

Caution - Below Target Risk - Below Target

Exceeded Target

On Target

Investigating

Active Process Improvement

Variance Approved

65%70%75%80%85%


INTERNAL 1st Qrt 2003 Trending

Medication Errors 0.09%

GOAL - .05%; Details of the Med Error PI are monitored and reported thru the P & T committee. The new medication distribution system is scheduled for installation in 2nd Qrt.

Unplanned Returns to the ER 2.0% GOAL - 2.0%; No Comment

Unplanned Admit within 48 hours of OP Surgery 0.0%

GOAL - 1.0%; Targeted objects from the process improvement activities have been maintained for 3 quarters and moved to on target status.

Patient Falls 0.8%

GOAL - .3%;After an initial improvement falls increased thru the 3rd Qrt of 2002 with a slight decrease in the past two quarters and remains at risk. PI efforts include intensified focus with staff education on utilization of fall standards. Monitoring by senior management will be increased to monthly from quarterly.

LEARNING AND GROWTH

Percent of Staff Evaluations Completed on Time 100%

GOAL - 97%;The process improvement implemented by Human Resources in 2002 has demonstrated improvement in the timely completion of evals for 2 qrts. Will continue to monitor to evaluate process sustainability.

Percent of Staff Competencies Completed on Time

98%

GOAL - 90%; The process improvement effort for timely completion of competency evaluations has sustained goal for 3 consecutive quarters and has been moved to an on target status. Will continue to monitor to ensure continued compliance.

Training hours per FTE per Quarter 8.7

GOAL - 7.5; Training hours exceeded goal due to mandatory HIPAA training in the fist quarter and are projected to level off at goal for the year.

Employee Satisfaction Surveys 91.0 GOAL - 90% No Comment

Overall Score 6.2

Page 2 Risk - Below Target

Exceeded Target

1.5%

2.0%

2.5%

3.0%

3.5%1Qrt 01 2Qrt 01 3Qrt 01 4Qrt 01 1Qrt 02 2Qrt 02 3Qrt 02 4Qrt 02 1Qrt 03

0.000%

0.050%

0.100%


0.0%

0.5%

1.0%


40%

60%

80%

100%


0

5

10


65707580859095


40%

60%

80%

100%


On Target


On Target


Exceeded Target

On Target

Investigating


Variance Approved

0.0%

1.0%

2.0%

3.0%


Refer to Color Sample

FINANCIAL 1st Qrt 2003 Trending

Net Revenue Increase over Prior Year 8.6%

GOAL - 7%: Net revenue gains continue to exceed goal with market share capture for new Urgent Care Clinic exceeding projections. Blue Cross and commercial insurance utilization increased 15% this qrt and average 95% reimbursement.

Total Margin 7.7%

GOAL - 6%; Expenses were over budget by 2.3% due to increased staffing for high inpatient utilization during the first quarter, however, high Medicare utilization covering costs and increased net revenue kept the operating margin on goal.

Net Days Receivable in AR 55.3

GOAL - 60.0; The process improvement project showed significant results during the 1st Qrt as AR days dropped below goal to pre-CAH levels under PIP. This decrease in AR has contributed and estimated $750,000 in cash from 1st Qrt 2002.

Operating Days Cash on Hand 103.6

GOAL - 100; AR improvements continue to improve the cash position. Medicare retro adjustment payment of $293,000 also contributed to the Days Cash.

0.0%5.0%

10.0%15.0%20.0%


0.0%

5.0%

10.0%

15.0%


4050607080


10.030.050.070.090.0

110.0


1000

1250

1500

17501


CUSTOMER

Physician Satisfaction Score 92.3

GOAL - 91.5; Surveys for Health Information Management, Lab and ER were completed. Overall satisfaction exceeded the goal, however, MR information relayed promptly and ER results availability on inpatient records scored lower than goal and are being investigated for possible PI.

Loyalty - % Score of "5" on Patient Surveys 53.0%

GOAL - 70%; PI's for patient satisfaction are improving those indicators while loyalty scores continue to decline steadily. While very poor and poor scoring has decreased most patients are rating FMH only as fair or good. A PI team has been establish to investigate and recommend action.

Press Ganey Percentile Ranking - Inpatient Services 79%

GOAL - 80%; The PI for inpatient satisfaction continues to demonstrate effective improvement most notably in scoring related to patient communication. Management will continue to be monitored.

Patient Satisfaction Scores - All Services 87.7

GOAL - 88.5; Overall patient satisfaction scores continued to improve. This quarter Urgent Care scores show the most improvement credited to the revised fast track system implemented in January.

Page 1

40%

50%

60%

70%

80%


85.086.087.088.089.0


80.0

85.0

90.0

95.0


On Target


Exceeded Target

On Target

Investigating


Variance Approved

65%70%75%80%85%



00%

4% Employee Satisfaction Surveys

4% Training Hours per FTE (per Qrt)

4%Percent of Staff Competencies Completed on Time

4%Percent of Staff Evaluations Completed on Time

LEARNING AND GROWTH

10%Patient Falls

5%Unplanned Admit within 48 hours of OP Surgery

5%Unplanned Returns to ER

10%Medication Errors

INTERNAL

8%Patient Satisfaction Scores - All Services

5%Press Ganey Percentile Ranking - Inpatient Services

4%Loyalty- % Score of "5" on Patient Surveys

5%Physician Satisfaction Score

CUSTOMER

6%Operating Days Cash on Hand

10%Net Days Receivable in AR

10%Total Margin

6%Net Revenue Increase over Prior Year

Weight %FINANCIAL

6.2 100%

0.4 9.0 4% Employee Satisfaction Surveys

0.4 9.0 4% Training Hours per FTE (per Qrt)

0.4 10.0 4%Percent of Staff Competencies Completed on Time

0.4 10.0 4%Percent of Staff Evaluations Completed on Time

LEARNING AND GROWTH

- - 10%Patient Falls

0.5 10.0 5%Unplanned Admit within 48 hours of OP Surgery

0.4 7.0 5%Unplanned Returns to ER

0.3 3.0 10%Medication Errors

INTERNAL

0.3 4.0 8%Patient Satisfaction Scores - All Services

0.3 5.0 5%Press Ganey Percentile Ranking - Inpatient Services

- - 4%Loyalty- % Score of "5" on Patient Surveys

0.4 8.0 5%Physician Satisfaction Score

CUSTOMER

0.4 7.0 6%Operating Days Cash on Hand

0.9 9.0 10%Net Days Receivable in AR

0.8 8.0 10%Total Margin

0.5 8.0 6%Net Revenue Increase over Prior Year

Score Raw

Score Weight %FINANCIAL

Final

Spreading the Targets

Target goal: Level of performance needed?

Stretch targets: When do you celebrate?

Caution targets: Warning needed?

Risk targets: When do you call 911?

10 - Stretch 9 8 7 - Goal 6 5 4 3 2 1 0 Weight %

FINANCIALNet Revenue Increase over Prior Year 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% > 0% 6%Total Margin 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% > -1% 10%

Net Days Receivable in AR 54.0 56.0 58.0 60.0 62.0 64.0 66.0 68.0 70.0 72.0 < 74.0 10%

Operating Days Cash on Hand 115.0 110.0 105.0 100.0 95.0 90.0 85.0 80.0 75.0 70.0 > 65.0 6%

CUSTOMERPhysician Satisfaction Score 93.0 92.5 92.0 91.5 91.0 90.5 90.0 89.5 89.0 88.5 > 88.0 5%Loyalty- % Score of "5" on Patient Surveys 78% 74% 72% 70% 68% 66% 64% 62% 60% 58% > 56% 4%Press Ganey Perentile Ranking - Inpatient Services 83% 82% 81% 80% 79% 78% 77% 76% 75% 74% > 73% 5%Patient Satisfaction Scores - All Services 89.4 89.1 88.8 88.5 88.2 87.9 87.6 87.3 87.0 86.7 > 86.7 8%

INTERNAL

Medication Errors 0.02% 0.03% 0.04% 0.05% 0.06% 0.07% 0.08% 0.09% 0.10% 0.11% < .12% 10%

Unplanned Returns to ER 1.1% 1.4% 1.7% 2.0% 2.3% 2.6% 2.9% 3.2% 3.5% 3.8% < 4.1% 5%Unplanned Admit within 48 hours of OP Surgery 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% 1.6% 1.8% 2.0% 2.2% < 2.4% 5%

Patient Falls 0.15% 0.20% 0.25% 0.30% 0.35% 0.40% 0.45% 0.50% 0.55% 0.60% < .65% 10%

LEARNING AND GROWTHPercent of Staff Evaluations Completed on Time 100% 99% 98% 97% 96% 95% 94% 93% 92% 91% > 90% 4%Percent of Staff Competencies Completed on Time 96% 94% 92% 90% 88% 86% 84% 82% 80% 78% >78% 4%

Training Hours per FTE (per Qrt) 9.0 8.5 8.0 7.5 7.0 6.5 6.0 5.5 5.0 4.5 > 4.5 4% Employee Satifaction Surveys 91.5 91.0 90.5 90.0 89.5 89.0 88.5 88.0 87.5 87.0 > 86.5 4%

100%

Development of FMH’s Balanced Scorecard

Developed strategic plan Developed fiscal year initiatives Developed management action plan Cross-walked initiatives to specific objectives in

four scorecard sections Identified measurable indicators for each group of

objectives

Identified and defined role of “snoozing alligators”

Developed range of performance for each indicator (Stretch – Target – Caution – Risk)

Developed weights for each indicator Completed indicator control form for each

indicator Designed balanced scorecard

Development of FMH’s Balanced Scorecard

Incorporated into the Culture

Senior management develops annual FMH management action plan from the strategic plan

Board approves plan Plan presented to department

managers; hospital-wide budget assumptions developed by senior management

Action Plan Elements

IndicatorHow success will be measured and monitored

ObjectiveMeasurable goal statement for current year

Initiative Current year key action required to achieve strategic goal

Strategic GoalStatement of long-term strategy from strategic plan

Link to Departments

Department managers develop annual business plans based on FMH action plan Includes a departmental action plan Process improvement initiatives Indicators that will be monitored Departmental balanced scorecard

Develop Budget Assumptions Present to Senior Management for approval

Link to Annual Budget Process

Managers develop annual department FTE, revenue, expense and 5 year capital budgets

Budgets are presented to Senior Management

Key Factors in Development… Executive sponsor who owns the process and

ensures resources Stay focused on Strategic Goals Develop high level (organizational) scorecard first Brainstorm measures/indicators, then data sources Use existing data sources Identify measures for each goal (should include

targets as well as stretch performance) Communicate! Communicate! Communicate! Make

the balanced scorecard an organizational priority!

FMH Story – 5 years later

Current Ratio 4.4 Average Age of Plant 7.8 Total Margin 16.0% - 11.2% Days Cash on Hand 85.8 3-Year Revenue Increase 48.4% Auditor’s last words

“Never seen a 16% bottom line before”

The rest of the story…… Comprehensive compliance program Improved employee relations and satisfaction

ratings – active Labor Relations Committee Improved community image and loyalty Improved physician relations and satisfaction

ratings Up-to-date medical equipment and financially

positioned for facility building project User friendly process improvement link to

strategic goals

BSC vs. Obstacles Strategic Plan collecting dust

Plan monitored quarterly by all stakeholders Fully integrated into budgeting cycle and operations

management Management focused on putting out fires

Management focused on achieving strategy – leading the organization

Fewer fires – early warning systems Board meetings filled with reports from the past with

no time for future planning or monitoring strategy Lag measurement reporting streamlined Increase % of meeting time on strategy

Obstacles continued …. Employees, departments, physicians, management

and the Board all in isolated silo’s Goals and initiatives aligned throughout the organization Stakeholders working together toward common goals

Ineffective communication up and down the organization Increased trust between management and employees Few if any rumors Unions working with hospital toward Board driven strategic

goals Organization wide strategy awareness Ownership and accountability by stakeholders

Take Home Messages Invest in marketing studies and strategic planning Stay focused on strategic goals Communicate and educate at all levels (board, senior

leadership, management, front line staff) Pick a vital few indicators – “Less is Better” Control indicator reporting for constancy and

accuracy Don’t overlook the snoozing alligator indicators Put down what you want to measure, even if you

can’t measure it now

RWHC’s Role Acquired RWJ grant to study BSC-driven

strategic planning in rural settings (April ‘04) Co-sponsored BSC workshop (August ‘04) Offer a number of measurement tools to

members and non-members alike Provide ongoing resources, as needed (inc.

Strategic Planning/Balanced Scorecard Roundtable)

balanced scorecard success: a rural perspective · 2015. 4. 20. · a rural perspective madison...

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