Rural Hospital Performance Improvement And the Balanced Scorecard : Rural Hospital Performance Improvement And the Balanced Scorecard Terry Hill Executive Director Rural Health Resource Center


Historical Challenges: Historical Challenges Crisis issues include: Reimbursement changes from BBA 1997 Out-migration for services/ Quality concerns High fixed costs & expenses Facility/Technology needs Workforce shortages Leaders often feel things are out of their control External environment is thought to be the only driver Operational factors may be overlooked


Institute of Medicine ReportThe Disturbing Reality: Institute of Medicine Report The Disturbing Reality “The stunning high rates of medical errors—resulting in deaths (44,000 to 98,000 annually), permanent disability, and unnecessary suffering—are simply unacceptable in a medical system that promises first to do no harm.” - William Richardson, IOM Committee Chair, November 1999


Institute of Medicine ReportAreas of Focus: Institute of Medicine Report Areas of Focus Safety Minimizes errors and injuries Efficacy Consistent with evidence based measures of over/under utilization Patient Centered Satisfying to users Timeliness Minimize unnecessary wait times and delays Efficiency Use of financial resources Minimize resource waste, maximize resource value Equity Access


Gaps: Gaps


Rural Health Performance Measurement: Performance & Quality Themes/Takeaways Rural Health Performance Measurement Lack of Transparency. Board members, department managers and executive management team should have timely access to critical information. Limited Collaboration. Front line managers and staff members should be viewed as colleagues who are in a unique position to provide tactical insight and strategic direction for the organization. Lack of Empowerment. Front line managers are a source of valuable business information but frequently are excluded from managerial decisions. Smokestack Mentality. Departments should function in an integrated environment where performance assessment is not isolated. Common Symptoms of Underperforming Small Rural Hospitals


Rural Health Performance Measurement: Performance & Quality Themes/Takeaways Rural Health Performance Measurement Lack of Transparency. Limited Collaboration. Lack of Empowerment. Smokestack Mentality. A properly aligned Performance Measurement System has the ability to alleviate these symptoms and provide a platform for building cooperation among all participating small rural hospitals Common Symptoms of Underperforming Small Rural Hospitals


Rural Health Performance Measurement: Rural Health Performance Measurement Data Evolution Data Collection Data Reporting Data Analysis Inform Strategy Typical Effort Desired Effort Hospitals make significant investments in collecting data for regulatory or accreditation purposes, which limits the value The goal is to push the Effort Curve to the right through increased staff competency, use of tools and automation of data collection Performance & Quality Themes/Takeaways


Performance Improvement : Performance Improvement A Common Understanding


Roundhouse Group – Purpose : Roundhouse Group – Purpose Develop the framework for a national agenda for quality and performance in rural hospitals Achieve consensus on nomenclature, concepts, and priorities Drive political support and visibility Drive funding to improve performance and survival of small rural hospitals


Performance Improvement – Approach : Performance Improvement – Approach The approach to performance improvement is holistic and collaborative It involves all levels of hospital staff, management, and professional providers as well as state (SORH) and national (FORHP, TASC) participants in a multidisciplinary collaboration It is not limited to clinical or operational elements


Criteria Defined by Roundhouse Group:: Criteria Defined by Roundhouse Group: The overriding consideration of performance improvement is that the process directly contributes to long-term sustainability and financial success


Roundhouse Group:Defining Performance Improvement: Roundhouse Group: Defining Performance Improvement The process is defined by: An understanding of needs in a systematic and quantitative fashion Targeting areas of need that are relevant and practical Achieving measurable results in a rapid time frame Restructuring operations and management for long-lasting success Application of an organizing framework customized to rural realities Focused technologic and intellectual investment


Performance Improvement Criteria: Performance Improvement Criteria Performance improvement is data driven. Systematic analysis is essential for: Baseline performance assessment Benchmarking against “best practices” and/or desired models Understanding the root causes


Performance Improvement Criteria: Performance Improvement Criteria Areas for improvement must be relevant and practical Considers resource limitations Business strategy and purposes Market and competitive realities Patient safety and risk avoidance Clinical and functional outcomes


Performance Improvement Criteria: Performance Improvement Criteria Defining goals in measurable terms in support of follow through: Setting targets Periodic monitoring Re-measurement to assess performance improvement Determine financial/quality “return on investment”


Performance Improvement Criteria: Performance Improvement Criteria Long-lasting business success is achieved through cultural transformation such as: Enabling managers to be successful Redesign of systems of care and operations Shifting from an acute care model to chronic illness management prevention and outpatient services Building internal motivation for success rather than responding to regulatory or compliance requirements


Performance Improvement Criteria: Performance Improvement Criteria Application of an organizing framework customized to rural realities Baldrige principles, CQI, and the IOM goals present attractive conceptual and operational frameworks but New standards that are relevant, credible, and practical for rural hospitals must be developed based, in part, on these principles


Performance Improvement Criteria: Performance Improvement Criteria Focused technologic and intellectual investment Infrastructure Education and skill building


Rural Hospital Performance Improvement (RHPI) : Rural Hospital Performance Improvement (RHPI) Balanced Scorecard


Slide22: CONCEPT BACKGROUND In the 1990’s two Harvard Business School professors, Robert Kaplan and David Norton, developed the concept of the Balanced Scorecard, and published two books entitled The Balanced Scorecard and The Strategy Focused Organization. The Balanced Scorecard is used by industries throughout the world.


Slide23: CONCEPT DEFINITION * 2003 Balanced Scorecard Collaborative, Inc. At the highest level, the Balanced Scorecard is a framework that helps organizations put strategy at the center of the organization by translating strategy into operational objectives that drive both behavior and performance.*


Slide24: CONCEPT DEFINITION: PERSPECTIVES Business and Development Focuses on financial factors related to revenue growth, expense reduction, operating ratios, billing office functionality and financial stability. Focuses on the treatment and care offered to the hospital’s patients, the ability of the hospital to meet community expectations, and the extent to which the hospital responds to physician needs. Patients and Healthcare Community


Slide25: CONCEPT DEFINITION: PERSPECTIVES Focuses on enterprise-wide performance related to the entire healthcare service “experience” at the hospital, including, but not limited to clinical care. Hospital-Wide Quality and Safety


Slide26: CONCEPT DEFINITION: CAUSE AND EFFECT Hospital’s Vision/Mission/Values How do I … Leads to…


Slide27: Even if you’re on the right track, you’ll get run over if you just sit there WILL ROGERS


Rural Health Performance Measurement: Rural Health Performance Measurement Falls Memorial Hospital was founded in the 1940s. The current 49 bed facility was built in the Fall of 1977 and is staffed with 112 employees. ADC = 7. Case Study: Falls Memorial Hospital, International Falls, MN


Rural Health Performance Measurement: Rural Health Performance Measurement Case Study: Falls Memorial Hospital, International Falls, MN


Slide30: Performance Measurement Framework – Balanced Scorecard Rural Health Performance Measurement


Slide31: 31 The Perfect Storm: Performance Measurement Frameworks – Balanced Scorecard % ER patient triaged within 15 minutes of arrival Unplanned admit rate after OP surgery/procedure Number of Falls as a % Patient Day % of ER patients receiving written discharge instructions Unplanned returns to OR # Evidence Based Best Clinical Practice Guidelines in use Time between transfer order and actual discharge:ER, OP, IP Hospital supports non-punitive medication error reporting program % of staff reporting all medication errors Medication errors per dose Average length of stay for specified DRG's (CHF, Pneumonia & AMI) Quality & Safety Staff satisfaction Physician satisfaction % staff with competency evaluation within last year Staff turnover Training $ per FTE Staff Productivity Hours of CME/CNE per FTE or Credentialed Provider Staff & Clinicians Claims denied as a % of gross charges Salary & Benefits as a % of Net Patient Revenue Average age of plant Average cost per adjusted discharge Days cash on hand Net revenue increase from prior period Net days in accounts receivable Payor mix (% Commercial) Total margin Debt/Equity ratio Bad debt as a % of net patient revenues Business & Development ER wait less than 30 minutes to see provider Patient satisfaction: ER Patient satisfaction: IP Patient satisfaction: OP % of patients understanding discharge instructions % of patients who perceive adequate access to core needed services % of bills understood by patients % of patients who feel hospital core services are up to date Patients & Community © Copyright PracticingSmarter & Stroudwater Associates Rural Health Performance Measurement


Slide32: Performance Measurement: Output - Example Rural Health Performance Measurement


Slide33: Case Study: Falls Memorial Hospital, International Falls, MN Performance Measures Status Indicators Narrative Data Trending Rural Health Performance Measurement


Slide34: Case Study: Falls Memorial Hospital, International Falls, MN Performance Measures Status Indicators Narrative Data Trending Rural Health Performance Measurement


Slide35: Case Study: Falls Memorial Hospital, International Falls, MN Performance Measures Status Indicators Narrative Data Trending Rural Health Performance Measurement


Slide36: Case Study: Falls Memorial Hospital, International Falls, MN Performance Measures Status Indicators Narrative Data Trending Rural Health Performance Measurement


Slide37: Case Study: Falls Memorial Hospital, International Falls, MN Rural Health Performance Measurement


Slide38: Case Study: Falls Memorial Hospital, International Falls, MN Rural Health Performance Measurement