operational benchmarking what, why, how? kevin sheeran; national director, operational improvement
TRANSCRIPT
Operational Benchmarking
What, Why, How?
Kevin Sheeran; National Director, Operational Improvement
Agenda
Benchmarking versus Benchmarks Why Benchmark What to Benchmark Sources of Benchmarks Key Ingredients of a Successful Benchmarking Program Q&A
Qu
ality
Ou
tcom
es
Clinical IntegrationPopulation Health
The Budget
IN A NUTSHELL……
Benchmarking and Benchmarks
BenchmarksTruven Health Analytics ActionOIMedian Operational Measures and Indicators; Twelve Months Ending September 30, 2013
Major Teaching Teaching
Large Community
Medium Community
Small Community
All Hospitals
State: WV; KY; MD; OH; PA;
VALabor Productivity
Total Worked Hours per CMI Weighted Adjusted Discharge 106.96 84.80 81.88 80.22 77.05 84.91 83.57Total Paid Hours per CMI Weighted Adjusted Discharge 119.95 94.05 90.40 88.63 86.59 94.05 93.34Total FTEs per CMI Weighted Adjusted Occupied Bed 3.85 3.66 3.51 3.70 4.27 3.78 3.60
Expense per Adjusted DischargeTotal Expense AWI Adj per CMI Weighted Adjusted Discharge $9,978 $7,759 $7,442 $6,856 $7,046 $7,660 $7,131 Total Labor AWI Adj per CMI Weighted Adjusted Discharge $4,890 $3,943 $3,624 $3,566 $3,619 $3,929 $3,746 Staff Salary AWI Adj per CMI Weighted Adjusted Discharge $3,212 $2,587 $2,574 $2,442 $2,351 $2,582 $2,574 Medical Supply (Excl Drugs) per CMI Weighted Adj Discharge $1,140 $864 $860 $705 $485 $779 $789 Drug Expense per CMI Weighted Adjusted Discharge $620 $328 $316 $287 $212 $335 $355 Non Medical Supply per CMI Weighted Adjusted Discharge $126 $105 $135 $113 $114 $116 $115
Expense as % of Total Operating ExpenseTotal Labor Expense as % of Total Operating Expense 50.41 50.75 50.3 51.03 52.17 50.92 50.41Benefits Expense as % of Total Operating Expense 9.96 10.22 10.11 10.37 10.77 10.32 9.88Total Supply Expense as % of Total Operating Expense 18.89 17.83 18.01 17.41 13.15 17.25 18.72Medical Supply Expense as % of Total Operating Expense 17.44 16.13 16.38 15.07 10.97 15.28 17.10Drug Expense as % of Total Operating Expense 5.88 4.33 4.31 4.56 3.11 4.43 5.22
Revenue/Margin/LiqiuidityOperating Margin Percent 4.88 5.72 5.64 5.31 6.02 5.40 5.30EBITDA Margin Percent 14.42 14.20 13.79 13.84 17.29 14.23 13.95EBIDA Margin Percent 12.59 13.50 14.23 14.22 15.17 13.73 13.73Net Operating Revenue per CMI Weighted Adjusted Discharge $10,331 $8,296 $8,181 $7,465 $7,698 $8,248 $7,258 Net Operating Revenue per FTE $175,575 $174,305 $197,316 $177,929 $177,933 $175,990 $163,906 Days Cash on Hand Short Term Sources 66.31 39.00 35.85 51.40 38.01 42.79 26.32
Indicator
Benchmarks versus Benchmarking
Benchmarking is a process Benchmarking is learning about and evaluating differences Benchmarking is searching for a better way Benchmarking is the starting point for solution development Benchmarking is not a set of answers
Benchmarking -“ Being humble enough to admit that someone else is better at something, and being wise enough to try to learn how to match or surpass them. ”
The American Productivity & Quality Center
The Value of Benchmarking
Provides a common framework for discussion and decision making Helps organizations to make better-informed decisions Exposes organizations to innovations and breakthroughs Helps organizations to see beyond the barriers, embrace change, and
think "outside the box" Provides organizations with a methodology and a plan for
accelerating, implementing, and managing change
The Benchmarking Process
Use a standard set of definitions/metrics Compare with similar organizations Identify the gap Perform the internal analysis Identify a process to improve Generate alternatives Communicate with peers where and when needed Implement change Monitor performance
Benchmarks and Budgeting
Use facility and department level comparative groups Set customized “targets” at the department level Assess the impact of structural differences Develop targets for:
Labor productivity Labor Expense Supply Expense Overtime Skill Mix
Retarget if/when conditions change Use targets in setting, monitoring and managing budget performance
YORK, PA
WellSpan Health
WellSpan Health
Senior leaders required department heads to work with the Finance Department to identify opportunities for improved performance
Customized Comparative Groups at the department level to identify realistic targets
This transparent, data-driven process helped achieve buy-in from department heads and set expectations from the beginning
WellSpan Health
Eliminated a future labor expenditure of $35 million Improved worked hours per adjusted discharge by 13 percent Reduced the use of temporary help by 84%
Benchmarking and Performance Improvement
Identify differences in process and responsibilities Identify opportunities in throughput, room utilization, and waste Use the metrics to focus in on process change opportunities Communicate with peers and others about specific opportunities or
action plans Trend internal data and external benchmarks to validate positive
change
CHICAGO, IL
Advocate Illinois Masonic Medical Center
Advocate Illinois Masonic Medical Center
100 Top Hospitals® National Benchmark Award winner Goal to reduce expenses without compromising high level of care Nursing focused on Premium Pay (Overtime, Contract Labor….)
Advocate Illinois Masonic Medical Center
Reduced overtime expense by $898,000 Reduced contract agency expense by $1.4 million - a 47% reduction in
contract agency expense
Nursing division improved turnover rate by 15% and their vacancy rate by 28%
Patient satisfaction improved by 17 percent The hospital realized $2.3 million in savings to the bottom line
Benchmarking and Management Development
Provide managers a view of how similar departments operate Support discussions regarding the “how to” of change Promote a questioning/learning environment Benchmarking is not a one time thing
Benchmarking becomes part of the culture
Facilitate Communication and Learning Opportunities
Internal versus External Comparisons
Internal Comparisons
Productivity Monitoring Budget versus Actual Cost Accounting
All important and all meaningful…..but only tell part of the story
“It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.“
Mark Twain
Why Benchmark?
Culture Change
Benchmarking Program
Identify Opportunities
Targets for Budget and
Internal Monitoring
Process Change
“Not everything that counts can be counted, and not everything that can be counted counts.”-Albert Einstein
What to Benchmark
Operating Expense and Performance Metrics
Total Operating Expense
Total Labor
Expense
Total Non Labor
Expense
Utilization or
Throughput
Labor ProductivitySkill MixOvertimeContract Labor
Average Length of StayProcedures per Room per DayWalk Out RateInpatient Procedures per Inpatient Discharge
Medical Supply Expense
Non Medical Supply Expense
Other Direct Expense
Equipment Repair & Maintenance
Vendors Truven Premier iVantage
GPO’s Consulting Companies Cost Reports HFMA
MAP Keys
State Hospital Associations Professional Organizations
ANA/NDNQI
Publications
Sources of Benchmarking & Benchmarks
Is the Information Actionable?TimelyConsistentReliableUnderstandableLevel of Granularity
Lead to Cultural Adoption?TransparentAccessiblePromote Learning
A Successful Benchmarking Program
Successful Benchmarking Strategies
Compare to similar not identical organizations Compare to “better” performers Compare to “future state” organizations
Consistent with Organizational Goals Recognize that the data is not going to be perfect Focus on areas of true opportunity Know yourself Focus on the process not the numbers Provide support – change is difficult Do not accept excuses…..”but I’m different”
Why? Is that an Opportunity to Change?
Learn and adapt – don’t copy Linked to Management and Accountability Processes
Benchmarking Pitfalls
Not linked to organizational goals Paralysis by analysis Data Denial “…but I’m different” Unwilling to change Lack of internal support and coaching
“Go ask your peers” Perceived as fad of the year Used as a hammer not a guiding tool
Unrealistic expectations (aka the xth percentile rule) Lack of accountability
Peer to Peer Communication
Not the first thing to do! Focus on process – not fishing Know yourself before asking someone else Provide detail on “how” you do things today Provide detail on “how” you are planning to do things Ask specific questions Don’t copy
How would that work in your organization?
Follow up after process change
Indications of Success
Senior Management is aligned and committed Department directors and managers are empowered to make decisions
supported by dependable data Data is utilized to broaden knowledge and identify opportunities for
improvement The discussions are about “how” not “why not” Managers know their performance metrics and how they are doing
Summary
High performing organizations align strategy, management and leadership in achievement of goals
Performance Improvement requires a change in the “way we do things”
Benchmarking can be an effective tactic to support PI and change PI requires unwavering leadership support and involvement The “best” today may be the “norm” tomorrow
