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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.


Performance Measures

Good business decision allows good outcomes today, tomorrow and in the future. But to make a good business decision require solid performance measures that:

  1. Monitor what has already happened
  2. Help up make the right decisions today
  3. 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 results, profitably.

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, partners

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

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, etc.

Each non-financial measure can be translated into the dollar impact on the organization.

Business intelligence capabilities offer the financial team the ability to:

  • 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 measurements.
  • 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 strategic plans

  1. Patients - who the organization serves - are measured using patient experience, patient-centeredness, patient profitability and patient lifetime value.
  2. Practices - how the organization reaches and serves its patients - are measured using patient reach, brand equity, service quality, reputation, trust, etc
  3. 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.
  4. 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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