Kevin Sheeran Operational Benchmarking

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Operational Benchmarking
What, Why, How?
Kevin Sheeran; National Director, Operational Improvement
Agenda
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Benchmarking versus Benchmarks
Why Benchmark
What to Benchmark
Sources of Benchmarks
Key Ingredients of a Successful Benchmarking Program
Q&A
The Budget
Clinical Integration
Population Health
Reimbursement
Quality Outcomes
IN A NUTSHELL……
Benchmarking and Benchmarks
Benchmarks
Truven Health Analytics ActionOI
Median Operational Measures and Indicators; Twelve Months Ending September 30, 2013
Indicator
Labor Productivity
Total Worked Hours per CMI Weighted Adjusted Discharge
Total Paid Hours per CMI Weighted Adjusted Discharge
Total FTEs per CMI Weighted Adjusted Occupied Bed
Expense per Adjusted Discharge
Total Expense AWI Adj per CMI Weighted Adjusted Discharge
Total Labor AWI Adj per CMI Weighted Adjusted Discharge
Staff Salary AWI Adj per CMI Weighted Adjusted Discharge
Medical Supply (Excl Drugs) per CMI Weighted Adj Discharge
Drug Expense per CMI Weighted Adjusted Discharge
Non Medical Supply per CMI Weighted Adjusted Discharge
Expense as % of Total Operating Expense
Total Labor Expense as % of Total Operating Expense
Benefits Expense as % of Total Operating Expense
Total Supply Expense as % of Total Operating Expense
Medical Supply Expense as % of Total Operating Expense
Drug Expense as % of Total Operating Expense
Revenue/Margin/Liqiuidity
Operating Margin Percent
EBITDA Margin Percent
EBIDA Margin Percent
Net Operating Revenue per CMI Weighted Adjusted Discharge
Net Operating Revenue per FTE
Days Cash on Hand Short Term Sources
Major
Teaching
Teaching
Large
Community
Medium
Community
Small
Community
All
Hospitals
State: WV; KY;
MD; OH; PA;
VA
106.96
119.95
3.85
84.80
94.05
3.66
81.88
90.40
3.51
80.22
88.63
3.70
77.05
86.59
4.27
84.91
94.05
3.78
83.57
93.34
3.60
$9,978
$4,890
$3,212
$1,140
$620
$126
$7,759
$3,943
$2,587
$864
$328
$105
$7,442
$3,624
$2,574
$860
$316
$135
$6,856
$3,566
$2,442
$705
$287
$113
$7,046
$3,619
$2,351
$485
$212
$114
$7,660
$3,929
$2,582
$779
$335
$116
$7,131
$3,746
$2,574
$789
$355
$115
50.41
9.96
18.89
17.44
5.88
50.75
10.22
17.83
16.13
4.33
50.3
10.11
18.01
16.38
4.31
51.03
10.37
17.41
15.07
4.56
52.17
10.77
13.15
10.97
3.11
50.92
10.32
17.25
15.28
4.43
50.41
9.88
18.72
17.10
5.22
4.88
14.42
12.59
$10,331
$175,575
66.31
5.72
14.20
13.50
$8,296
$174,305
39.00
5.64
13.79
14.23
$8,181
$197,316
35.85
5.31
13.84
14.22
$7,465
$177,929
51.40
6.02
17.29
15.17
$7,698
$177,933
38.01
5.40
14.23
13.73
$8,248
$175,990
42.79
5.30
13.95
13.73
$7,258
$163,906
26.32
Benchmarks versus Benchmarking
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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
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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
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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
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Use facility and department level comparative groups
Set customized “targets” at the department level
Assess the impact of structural differences
Develop targets for:
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Labor productivity
Labor Expense
Supply Expense
Overtime
Skill Mix
 Retarget if/when conditions change
 Use targets in setting, monitoring and managing budget performance
WellSpan Health
YORK, PA
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
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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
Advocate Illinois Masonic
Medical Center
CHICAGO, IL
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
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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
Why Benchmark?
“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
Culture Change
Identify Opportunities
Benchmarking
Program
What to Benchmark
“Not everything that
counts can be counted,
and not everything that
can be counted
counts.”
-Albert Einstein
Operating Expense and Performance
Metrics
Total Labor
Expense
Total
Operating
Expense
Utilization
or
Throughput
Labor Productivity
Skill Mix
Overtime
Contract Labor
Average Length of Stay
Procedures per Room per Day
Walk Out Rate
Inpatient Procedures per
Inpatient Discharge
Medical Supply Expense
Total Non
Labor
Expense
Non Medical Supply Expense
Other Direct Expense
Equipment Repair &
Maintenance
Sources of Benchmarking & Benchmarks
 Vendors
 Truven
 Premier
 iVantage
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GPO’s
Consulting Companies
Cost Reports
HFMA
 MAP Keys
 State Hospital Associations
 Professional Organizations
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ANA/NDNQI
 Publications
Is the Information Actionable?
Timely
Consistent
Reliable
Understandable
Level of Granularity
Lead to Cultural Adoption?
Transparent
Accessible
Promote Learning
A Successful Benchmarking Program
Successful Benchmarking Strategies
 Compare to similar not identical organizations
 Compare to “better” performers
 Compare to “future state” organizations
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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
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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
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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
Thank You
Kevin Sheeran
[email protected]
724-865-2811
31
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