Don’t skip crucial benchmarking step: Develop critical success indicators

You must know where you’re headed and how to get there

If your hospital’s CEO were asked what eight or 10 factors are most critical to the hospital’s success, your executive could probably come up with a pretty good answer. But if that same question were put to a cleaning or maintenance person at your hospital, could he or she answer?

If the maintenance staff can’t, and if your CEO has to think about it for a minute, then your hospital is missing the boat on a crucial aspect of benchmarking: defining what to do to succeed. It’s not enough to define those factors; you also have to make sure that everyone on staff knows what the factors are and how their jobs relate to them.

"If you really don’t know what’s critical to the success of your organization, you spend a lot of time measuring things that aren’t terribly important to you," says Sharon Lau, a consultant with Medical Management Planning in Los Angeles. Her firm has been working on this issue with hospitals around the country that are members of the BENCHmarking Effort for Networking Children’s Hospitals, a group that identifies, investigates, and adapts best practices in pediatric care.

"What we found was that some of our hospitals didn’t have a clue what was important, what was truly critical to their success in their marketplace," Lau says. "And if they did know, that was knowledge that was kept at the executive level rather than being disseminated throughout the entire organization as something everybody should be working toward."

If you want benchmarking to succeed, you first need to develop a list of eight to 10 critical success indicators, or strategic monitors, that have their roots in your strategic plan and principles, according to a paper recently released by Medical Management Planning. Of course, you already should have a strategic plan from which to draw ideas. These indicators should meet the following criteria:

  • strategic;
  • macro in nature;
  • measurable;
  • meaningful to the success of your organization;
  • responsive or sensitive;
  • representative of cost, quality, or speed;
  • retrievable.

In other words, you can’t just stand up at your next staff meeting and say you want the hospital to cut costs and improve the quality of care. While those are worthy goals, you can’t measure them as such and they don’t provide a specific basis for action. You could, however, say that under the principle of financial strength, you’d like to look at cost per adjusted discharge as a critical success indicator. If you’re interested in service responsiveness, you could choose emergency department waiting time as an indicator.

Start by gathering all your key players for a brainstorming session. Using your strategic plan as a base, discuss what indicators would let you know whether you’re accomplishing the goals in the plan. Think about cost, quality, and speed, and look specifically at your market. "Most organizations have a strategic plan, but they aren’t measuring if they’re accomplishing it," Lau says.

Leaders at Miami Children’s Hospital found themselves in just such a position when they began work on critical success indicators through the BENCHmarking group. Barbara Duffy, executive vice president and chief operating officer, says the hospital had success factors, but they were difficult to quantify.

"Critical success indicators keep you focused on the goals you’re trying to achieve," she says. "Given the complexity of health care and the propensity for our calendars to get booked with meetings that go back to back, the primary objectives can get lost in the day-to-day activities of running a hospital."

The hospital also had not been sharing the results of its benchmarking efforts; now the critical success indicators will be reported quarterly to the board of directors and the financial committee, she says. Information also will appear in the employee newsletter.

Duffy and colleagues are still in the process of developing a way to present the data on one sheet in a user-friendly format that will be easily understood by people with and without extensive health care knowledge. No small task, but she says it will be worth it. "Unless it’s in front of your face, you’re not going to be looking at it. This makes us accountable to our board and shows them we really are watching our money."

Getting a handle on how to use results

At The Children’s Hospital in Denver, many indicators (for a list of Children’s indicators, see box, p. 51) were already being measured but leaders needed a better way to get a handle on the results, says Cheryl Niespodziani, director of quality performance and compliance officer. Now the hospital measures and reports most of the indicators monthly, and department managers are responsible for sharing the information with their staff as appropriate.

"We needed a measure to see how we are doing over time," Niespodziani explains. "Managers now have increased knowledge and skills in interpreting and using the data, which help them help the hospital achieve its goals. The critical success indicators keep us moving toward our strategic goals and are a critical link to our achievements."

Steve Cohn, president of Bainbridge Island, WA-based Medical Management Planning, says critical success indicators are a decision-support tool to help senior management stay on track. "Senior managers need a guidance system to help them look at long-term trends to see if anything is out of bounds," Cohn says. "It’s easy to micro-manage, but what we really need is leadership that macro-manages. Critical success indicators tend to make certain that senior managers leave the micro-managing to the departments."

The way to accomplish that is to choose critical success indicators for the entire hospital that are macro in nature — expense per adjusted discharge, for example — and let the departments set their own more specific indicators — such as lab cost per adjusted discharge. Limit the number of indicators to less than 10; otherwise, your senior managers will be spending all their time reading reports.

"Each function in a hospital should be run as a business," Lau says. "The manager should be given all the tools, authority, and responsibility to do the job. Leave the micro-managing to the function manager and hold him accountable."

If you want critical success indicators to work, you’ve got to continuously update them and make them a part of the hospital agenda, Cohn says. Come up with a graphical way to display your progress. Both Cohn and Lau suggest a "dashboard" approach that would tell you how you’re doing in the same fashion as your car’s dashboard tells you whether the engine’s running hot or the gas tank is empty. You should be able to take a quick glance at this dashboard and know where you’re headed. Behind the dashboard would be a detailed analysis in a report card fashion.

But don’t leave your dashboard in the executive car. Make sure every employee knows how the organization is doing. Post graphs near the cafeteria, feature an indicator of the month in the employee newsletter, or if you’re feeling particularly radical, use it in performance evaluations. "Make people accountable," Lau says. "You can make it part of a custodian’s evaluation. Does he contribute to this specific critical success indicator? Does he know that turning a room around quickly keeps waiting times down?"

At Group Health Cooperative in Seattle, the critical success indicators developed last year are tied to the employee goal setting, evaluation, and compensation program known as performance management, says Nancy Long, senior executive and director of strategy development. Eventually all 8,000 to 9,000 employees will have an employment agreement based on the goals and strategies in Group Health’s success indicators culled from its strategic plan.

Employees and their supervisors will work together to write specific goals for each job along with ways to measure progress.

"The business plan was at such a high level, and the individual job description was so specific, that we felt we needed something in between," Long says. "What people value most is being part of a successful organization and knowing how they can personally contribute to that success. Everyone is involved in some way in meeting our overall goals."

Decision making at Group Health, as in much of health care, often boils down to deciding between worthy projects that can’t all be financed, Long says. Having the critical success indicators makes those decisions easier. "An idea only has standing if it’s on the track laid out by the business plan," she says. "People would often throw out the hot idea of the moment, but there was no follow- up. We had strategies that weren’t specifically assigned to anybody. An idea shouldn’t be in the plan if there are no resources to carry it out. This business plan is not a work of fiction."

[For more information, contact:

Sharon Lau, Consultant, Medical Management Planning, 2049 Balmer Drive, Los Angeles, CA 90039. Telephone: (213) 644-0056.

Barbara Duffy, Executive Vice President and Chief Operating Officer, Miami Children’s Hospital, 3100 SW 62nd Ave., Miami, FL 33155-3009. Telephone: (305) 668-5567.

Cheryl Niespodziani, Director of Quality Perform ance and Compliance Officer, The Children’s Hospital, 1056 East 19th Ave., Box B400, Denver, CO 880218-1088. Telephone: (303) 861-6159.

Nancy Long, Director of Strategy Development, Group Health Cooperative, 521 Wall St., ACC3, Seattle, WA 98121. Telephone: (206) 448-6532.]