Healthcare Measures For Optimal Performance
Healthcare provider organizations have unique complexities that
benefit from the capabilities of business intelligence to measure,
manage and improve performance.
Good business decision allows good outcomes today, tomorrow and
in the future. But to make a good business decision require solid
performance measures that:
- Monitor what has already happened
- Help up make the right decisions today
- Guide transformation the organization
Healthcare providers measure a wide range of activities and results
from various perspectives to monitor, guide or transform
- Clinical quality and results
- Operational activities, costs and results
- Access and outreach efforts and results
- Marketing efforts and results
- Recruiting, staffing and development efforts and results
- Research efforts and results, just to name a few.
The role of the chief financial officer [CFO] is to ensure that
the organization can perform all of these activities with the desired
CFO's can benefit significantly from business intelligence applications
and capabilities. The sheer complexity analyzing and reporting organizational
results and continually transform the organization to meet the needs
of the future.
Key Challenges for Healthcare Provider CFOs
Healthcare provider organizations include hospitals, clinic and
physician groups, long-term care facilities, home care operations,
retail health clinics etc
Business Models -each unit is a separate business
unit with a unique business model, different organisational structure
and diverse objectives and operational processes. All of which must
be managed under one parent organisation such as a hospital.
Services - A hospital is a large business in itself,
managing many primary services and a vast range of ancillary services
such as laboratories, radiology, dieticians, physiotherapy, psychology
and other specialist services.
Performance Management - measuring and managing
any one of these individual business units and aggregating results
and processes results in a large integrated delivery network (IDNs)
connecting satellite facilities.
Ownership - is as diverse as operational aspects
- owned, non-owned, affiliate and parent-subsidiary relationships.
Profitability - some operate for-profit while
others are not-for-profit operations.
Engagement status - employed, contracted, associated,
Strategic plans - competing missions connecting
a mix of emotional, financial, public, private, scientific and social
strategic intentions. This makes decision making for the CFO of
such an organization much more complex.
Customer groups - patient, patient’s family,
payer, purchaser of healthcare services, government organizations,
charitable groups and so forth. Each has a different relationship
with the healthcare provider, placing revenues and profitability
at a much higher risk than other types of organizations.
Stakeholder Interests - every decision made by
healthcare providers has a public relations impact. Legitimate messages
can improve the quality, effectiveness, efficiency, equity and patient-centeredness
of the provider. Other messages, such as those concerning finance
have a negative impact. A complex stakeholder matrix makes management
and measurement of performance much more difficult for the CFO.
Together, these complex environmental components make measuring
success highly challenging, and business intelligence highly critical
to the CFO.
Healthcare measures include those required by or for:
- Financial accounting - such as cash on hand, days in accounts
receivable, debt service coverage ratio, collection rates, quick
ratios, long-term ratios, gross margin, EBITDA
- Government regulatory bodies
- Tax reporting requirements
- Quality management measures
- Resoure utilisation
- Service measures by line, by payer, by facility type and even
by patient and patient grouping.
The key in managing such a diverse set of measures is in the utilisatino
of data already collected by the organization for formal reporting
purposes, and apply data mining and analytics capabilities.
Unit Performance Measures
The majority of the decision makers in healthcare have control
over nonfinancial measures, such as patient volumes, admissions,
occupancy rates, staffing levels and staffing mix, process and procedure
timings, supplies purchases, practice and procedure variations,
Each non-financial measure can be translated into the dollar impact
on the organization.
Business intelligence capabilities offer the financial team the
- Forecast revenue based on patient volume trends and patterns
- Plan labor costs based on staffing level and mix requirements
[regulatory and nonregulatory]
- Identify problem areas such as service lines that are consuming
too much capital, but contribute little profitability.
- Transalate non-financial measures into dollars and counts
- Drill-down through performance data to identify sources of performance
and misalignment of performance targets and performance results
- Guide decisions up, down and across the organization that contribute
to the success of the entire organization
Most healthcare provider organizations use four pillars in their
- Patients - who the organization serves - are
measured using patient experience, patient-centeredness, patient
profitability and patient lifetime value.
- Practices - how the organization reaches and
serves its patients - are measured using patient reach, brand
equity, service quality, reputation, trust, etc
- Capabilities - hard and soft skills, technologies,
methods, facilities and climate that the organization brings to
the table to support the practices, which in turn serve the patient
populations. New measures supporting this pillar include engagement
of employees, partners and vendors, collaboration, productivity
and activity-based management. Each of these measures translates
into financial results such as better cost management, reduced
turnover, favorable trading terms, improved capital decisions
and greater efficiency in the use of labor, equipment and supplies.
- Growth - the innovation and new ideas needed
to prevent the organization from becoming stagnant. Measures include
not only overall growth [revenue growth, profit growth] as well
as growth of market segments, income growth, growth of practices,
growth of capabilities, and increased ability to grow. Sustainability
measures include agility, learning effectiveness, knowledge development
and use and readiness for new ideas and new situations. Each of
these measures translate into financial success through conversion
into increased revenue and profitability, leaner capital requirements
and improved return on resources [money, machines, people] deployed.
New measures such as strategic contribution link satellite units
to the rest of the organization and to the results of the organization
as a whole. These are measured along each pillar in the same way
as a balanced scorecard operates.
Each of these measures has a financial component as well as various
nonfinancial components [quantitative and qualitative]. Decisions
are needed around each measure to support contribution to each pillar
and succeed clinically, operationally and ultimately financially.
It is essential to the success of the organization that appropriate
measures link across the organization and from top to bottom.
In summary, the key to success of any healthcare organisation's
performance is to determine appropriate measures that connect to
strategic goals and can be applied to data across the entire organization.
Business intelligence aims to provide information information that
is relevant to and actionable by each person receiving it, whilst
ensuring it is also linked right along the value chains to the strategic
objectives of the organization.
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