Board Development and
Leadership:
The Road to Performance
Management
Terry Hill, Executive Director
Rural Health Resource Center
Duluth, Minnesota

Technical Assistance &
Services Center (TASC)
• Federally designated resource center
• Funded by HRSA’s ORHP
• Supports Flex Program/CAH implementation in 45 states
• Located in Duluth, Minnesota

Current Federal Contracts
• Technical Assistance & Services Center
(TASC)
• Small Hospital Improvement Program
(SHIP)
• Delta Rural Hospital Performance
Improvement (RHPI)
• Rural HIT Project
• Rural Hospital Education

Developing Performance
Improvement Projects
• Medicare Flex Program emphasis on Quality
& Performance Improvement
• Performance improvement/BSC initiatives underway in most states
• Supported by state offices, QIOs and hospital associations

State CAH
Performance Improvement Projects
Mississippi Delta Rural Hospital
Performance Improvement Project
• 120 hospitals in 8 state region
• Components
- Comprehensive performance assessment
- Targeted performance and strategic planning initiatives
- Balanced Scorecard initiatives

State CAH
Performance Improvement Projects
Nebraska P.I. Initiative
• 32 hospitals in BSC initiative
• CAH Executive Leadership initiative
State Balanced Scorecard Initiatives
- Alaska - Hawaii
- Pennsylvania - Oklahoma
- North Dakota
- Montana
- Missouri
- Arkansas
- Illinois
- Kansas

What We’ve Learned
• Hospitals often operate in a crisis management mode and don’t think strategically
• Strategic planning is done but strategy execution is not maximized
• Most rural hospitals lack ongoing board leadership and management education
• CAHs are already collecting much information

CAH Data Collection
Strategic Purpose
Data -------------Information
Data
Collection
Data
Reporting
Data
Analysis
Action
Steps
Typical
Effort
Desired
Effort
•
Hospitals make significant investments in collecting data for regulatory or accreditation purposes, which limits the value.
•
The goals are to push the Effort Curve to the right.

“Even small health care institutions are complex, barely manageable places…large health care organizations may be the most complex organizations in human history.”
~ Peter Drucker

In the years ahead…
• Rural health organizations will undergo profound change:
– To meet new consumer and payer demands
– To implement HIT
– To be successful in P4P and new insurance models
• This profound change and increasing complexity will require performance management systems

Performance Management
Definition
“A set of processes that help organizations optimize their overall performance. It is a framework for organizing, automating and analyzing methodologies metrics, processes and systems that drive business performance…
Performance management is seen as the next generation of business intelligence, and helps businesses make efficient use of their financial, human, material and other resources.”
- Wikipedia.org

Performance
Management
Definition
“ A framework for getting people, processes and resources aligned and moving in the same direction to achieve strategies that benefit the customer and the bottom line and result in organizational excellence.”
- RHRC

Performance
Management
Systems
1.
Strategies - Make strategy the central organizational agenda
2.
Focus and AlignmentHave resources and activities aligned with strategies
3.
OrganizationProvide the logic and architecture to link all departments and employees behind strategies.
Kaplan and Norton
Harvard Business School

The Journey to Performance
Management
•
•
•
•

System for Managing Performance and Change in Rural Hospitals
Performance Management Framework a) Studor Pillars b) Balanced Scorecard
“ It is rare to find companies without some form of balanced Scorecard. The difference is that more organizations now understand that the balanced
Scorecard is a strategic management system, not just measurement. Strategy maps are the catalyst for that shift.”
--James Creelman, Senior Research advisor, the
Hackett Group

Understanding the Balanced Scorecard
“A successful Balanced Scorecard program starts with a recognition that it is not a metrics project…
IT’S A CHANGE PROCESS”
Robert Kaplan
Balanced Scorecard Collaborative’s
Government Summit. Sept. 2004

"OK. I understand a lot is going to change.
But how do I stay the same?"

The Power of the Balanced Scorecard

Understanding the Balanced
Scorecard
• It’s more than most people realize
- Not just a measurement system
Not primarily about the four “quadrants”
- Not primarily a benchmarking tool
• Proven Best Practice for achieving strategies and breakthrough results
• Successfully adapted for Rural
Hospitals

Definition of the Balanced
Scorecard
“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”
The Balanced Scorecard Collaborative, 2004

Top 5 Reasons to Implement the BSC
1. Provides Focus
2. Creates alignment of resources and strategy
3.
Makes strategy “real”
4. Facilitates organization-wide communication
5. Tells an organizational story

Harvard
Business
Review
Articles
Brief History of the BSC
Strategic Management

BSC Perspective
Perspective
Financial
Key Question
As financial stakeholders, how do we intend to meet the goals & objectives in our hospital mission statement?
Customer As customers of our hospital’s services, what do we want, need or expect?
Internal Business
As members of the hospital staff,
Processes what do we need to do to meet the needs of our various customers?
Learning &
Growth
What type of culture, skills, training and technology are we going to improve in order to support our key processes?

HIT Valley of Despair
Implemented and Supported
Implement EHR
Little or No HIT
Choices, Planning,
Execution
Determines extent of Slide
Leadership and
Management
Determines how long you’re in the valley of despair .
Possible Future
Good Choices and management determines level of productivity and satisfaction
Time

Finance
As financial
stakeholders, how do we intend to meet the goals and objectives in the hospital’s Mission
Statement?
Customers &
Community
As customers of the hospital’s services, what do we want, need or expect?
Patient safety outcomes
HIT Theme Strategy Map
Increased margin to fund mission
Increased revenue
Increased market share
Physician satisfaction
Patient satisfaction
Increased cost efficiency
Internal
Processes
As members of the
hospital staff, what do we need to do to meet the needs of the patients and healthcare community?
Clinical processes
Learning &
Growth
As an organization, what type of culture, skills, training and technology are we going to develop to support our processes?
Ensure a skilled workforce
Ongoing education
Acquire HIT expertise
Business processes
Leadership
Establish an empowering work culture
Instill change management
Community health outcomes
Operational processes
Acquire needed
HIT systems

System for Sustaining Performance and Change
2.
Empowering Culture a. Change oriented b. Customer Centered c. Collaborative d. Designed for retention
3.
Ongoing Education a. On site b. Online

Systems for Sustaining Performance and Change
4. Skilled Workforce a. Nurses and technicians b. Medical Staff c. IT expertise
5. Ongoing Process Improvement a. Clinical b. Business c. Operations
6. Leadership Development a. Board b. Executives c. Middle Management d. Physicians

Systems for Sustaining Performance and Change
7. Technology a. HIT b. Medical c. Management and Systems
8. Partnerships a. With physicians/clinicians b. With other hospitals and health providers c. With the Community d. With educational institutions
9.
Access to Capital a.
For improvements to plant b. For investment to infrastructure
10. Outside Technical Expertise

On-Track to Performance
Improvement

The Board’s Role in Performance
Management
-
-
-

Seven Deadly Sins of Ineffective
Governance
1. Lack of mission, vision, strategies and focus
2. Resisting change and failure to make strategic investments
3. Making do with irrelevant, useless information
4. Lack of hospital board and management alignment
5. Hiring unqualified or ineffective leaders
6. Failure to spend meeting time on strategic priorities
7. Inability to understand or relate to physicians

Board Member Selection
Start with a plan
• Recruit motivated people with needed skills
• Nominating search committee
• Develop selection criteria
• Consider conflict of interest

Effective Use of Consent Agenda
Consent Agenda:
– The process of grouping routine items into one agenda item for a single vote, aimed at saving valuable time for critical issues.
Pros:
- Frees time for focus on what is important strategically and operationally
- Much more rewarding experience for members

Effective Use of Consent Agenda
Cons:
- Places responsibility (and risk) on members doing their homework before meetings
- Nonboard members can perceive “railroad”
- Requires more work upfront
- Can be counterproductive if members are reading advanced materials during the meeting

Acceptable Consent Agenda Items
1. Committee minutes and reports
2. Board minutes
3. Financial statements
4. Operating statistics
5. Quality reports
6. Medical staff reports and minutes
7. Medical staff credentialing and appointments
8. Management/CEO reports
9. Resolutions (background information in advance)

Source: Jim Stokes

Source: Jim Stokes

Source: Jim Stokes

Source: Jim Stokes

Source: Jim Stokes

“Even if you’re on the right track, you’ll get run over if you just sit there.”
Will Rogers

Executive Director,
Rural Health Resource Center
600 E. Superior St., Suite 404
Duluth, MN 55802
218-727-9390, ext. 232 thill@ruralcenter.org