EVIDENCE-BASED MANAGEMENT AN OBJECTIVE VIEW OF LEADERSHIP IMPACT JEAN CHENOWETH, SR VICE PRESIDENT 100 TOP HOSPITALS PROGRAMS

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1 EVIDENCE-BASED MANAGEMENT AN OBJECTIVE VIEW OF LEADERSHIP IMPACT JEAN CHENOWETH, SR VICE PRESIDENT 00 TOP HOSPITALS PROGRAMS

2 EVIDENCE-BASED LEADERSHIP Leadership is a multi-dimensional and ever-changing phenomenon Porter-O Grady & Malloch, 200 Evidence-based leadership standards are few and far between. Books abound with strategies based on experiential knowledge or personal philosophy, but few studies have successfully linked leadership practices to measurable outcomes Lynham & Chermack, 2006 Evidence-based management is the systematic application of the best available evidence to business processes, strategic decisions and the evaluation of managerial practices Kovner, Fine & D Aquila,

3 THE BEGINNING OF EVIDENCE-BASED MANAGEMENT Evidence-based models should be designed to address specific three categories of management questions - Kovner & Rundall, 2006 Business transaction management Evidence-based medicine initiatives of JCAHO began in984 Operational management Evidence-based management engineering standards ( MAPS, 964) Strategic management Malcolm T. Baldrige Program (National Institute of Standards and Technology, 98) Measurement of leadership 00 Top Hospitals: National Benchmarks for Success. Wm. M. Mercer Provider Consulting, HCIA, 993 Economic Evaluation of the Baldrige Performance Excellence Program, A.N. Link, PhD, University of North Carolina at Greensboro, J.T. Scott, PhD., Dartmouth College, National Institute of Standards and Technology, US Department of Commerce, November 20 Comparison of Baldrige Award Applicants and Recipients with Peer Hospitals on a National Balanced Scorecard, D.A. Foster, PhD, J Chenoweth, Thomson Reuters, National Institute of Standards and Technology, US Department of Commerce, October, 20 3

4 DIFFERENCES IN SCORECARD OBJECTIVES MUST BE DIFFERENTIATED MORE EFFECTIVELY Hospital Compare

5 00 TOP HOSPITALS MEASUREMENT OF LEADERSHIP IMPACT AND VALUE: Goal to measure leadership s ability to drive the consistency and reliability of organization s performance versus peers Not a consumer tool for hospital selection 2 year development and field testing effort Balanced scorecard theory Norton and Kaplan, Harvard University Academic validation of hospital balanced scorecard Griffith & Alexander, ACHE Hayhow Award for Excellence in Research Measuring Comparative Hospital Performance, Journal of Healthcare Management 47:, January/February Relative performance on a set of Medicare-based measures (balanced scorecard) can be used by hospital governing boards to identify and rank improvement in achievement of mission. Objective statistical analysis of public data, updated annually Peer-reviewed risk and severity adjustment and methodologies 4

6 ECONOMIC VALUE OF BALDRIGE PROGRAM The Baldrige criteria represent R&D investments, sets of performance standards and calibrated bench standards to achieve predetermined levels of management performance An economically sound estimate of Baldrige program is Benefit-to-cost ratio of 820-to- The Baldrige Performance Excellence Program value could not be replicated by private sector actions alone. Source: Economic Evaluation of the Baldrige Performance Excellence Program, A.N. Link, University of North Carolina at Greensboro, J.T. Scott, Dartmouth College, National Institute of Standards and Technology, US Department of Commerce, November 20 7

7 MAJORITY USE BALDRIGE PROCESSES BUT HAVE NOT APPLIED FOR AWARD 8

8 BALDRIGE WINNER PERFORMANCE ON OBJECTIVE NATIONAL BALANCED SCORECARD NIST* REQUEST: COMPARE BALDRIGE WINNERS TO PEERS USING 00 TOP BALANCED SCORECARD Baldrige award winners 2 times more likely than peers to become 00 Top winners 3 years after award. Baldrige award winners improve more than times faster than peers as leadership processes take hold p = Study available at NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY, US DEPT. OF COMMERCE 6

9 LEADERSHIP CAN BE MEASURED The impact of leadership on organization s relative balanced performance CAN be measured Organization s life cycle can be identified and compared Information reflects leadership impact on organization Relative success or failure to improve Rates of improvement Resultant performance against national benchmarks Degree of alignment 9

10 LEADERSHIP S JOURNEY TO EXCELLENCE RATE OF IMPROVEMENT AND RESULTANT PERFORMANCE LOW performance HIGH improvement HIGH performance HIGH improvement Early Success Journey Not Begun Mature Culture Of PI PI Culture At Risk 2 Composite score LOW performance LOW improvement 0 HIGH performance LOW improvement 0

11 LEADERS IN WEAK ORGANIZATIONS REQUIRE LASER FOCUS TO DEVELOP CULTURE OF PI LOW performance HIGH improvement LOS COMPOSITE SCORE PROFIT TOP 0% HIGH performance HIGH improvement CORE MEASURES TOP 0% EXPENSE COMPLICATIONS MORTALITY SAFETY LOW performance LOW improvement HIGH performance LOW improvement

12 LEADERS OF HIGH PERFORMERS MUST RAISE BAR OR RISK OF FALLING BEHIND Composite score CORE MEASURES PROFIT MORTALITY PI Culture At Risk LOS EXPENSE COMPLICATIONS SAFETY 2

13 Rate of Rate of Rate of Rate of LEADER S ACHIEVEMENT OF CONSISTENCY HIGHLY EVOLVED CULTURE OF PERFORMANCE IMPROVEMENT MORTALITY H Top H7 H H2 H H9 H6 H0 H8 H4 Top H H3 H7 H4 H6 H2 H LOS H Top H7 H H2 H H9 H6 H0 H8 H4 Top H H3 H7 H4 H6 H2 H HCAHPS Top H3 H2 H8 H4 H2H H3 H7 Top H9 H H7 H6 H H H6 H0 H OPERATING PROFIT MARGIN Top H7 HH3 H H9 H2 H7H H3Top H8 H4 H H2 H6H4 H0 H

14 Rate of Rate of Rate of Rate of WE HAVE NOT MASTERED CONSISTENCY PATIENT SAFETY H7 H7 H4 H0 H H2 H Top H6 H6 H3 H8 HTop H9 H3 H4 H2 H INPATIENT. EXPENSE/DISCHARGE 00 Top H7 H3 H H H3 Top 80 H H2 H H0 H7 H8 60 H6 40 H9 H4 H6 H2 H COMPLICATIONS H3 H H2 H7 Top H HH2 H3 Top H4 H7 H0 H6 H4 H8 H9 H H CORE MEASURES H6 H8 Top H H0 H H2 Top H2 H4 H6 H4 H9 H3 H7 H H3 H H

15 HOW ARE LEADERS DIFFERENT IN 00 TOP HOSPITALS? Top Leadership Board CEO characteristics Communication Goals Infrastructure Investment Executives Clinical performance Nursing Pharmacy

16 MISSION MAKES A SUBSTANTIAL DIFFERENCE IN FOCUS AND PERFORMANCE CHURCH NFP - HIGHEST BALANCED PERFORMANCE Church-owned NFP Best overall balanced performance Significant. lower mortality Significant. shorter lengths of stay Significant. higher HCAHPS Second best in Core Meas., Expense All NFP combined Significant, better safety Significant. lower 30 mortality Strong HCAHPS scores FP Corporation Lowest expense Highest profit Highest core Meas. scores Government-owned (non-federal Lagged behind on all measures Significantly worse on Core measures Expense

17 BROADENING LEADERSHIP INSIGHTS FHIN Finalist Presentation 7

18 LEADERSHIP MEASUREMENT IS SCALABLE AT DIFFERENT ORGANIZATIONAL LEVELS National balanced scorecard based on public data allows aggregation of performance data at many levels States Health Plans, ACOs Health systems Service lines Alignment of the organization Reliability of performance Hospitals Service lines Non-clinical departments Alignment of the organization Physician group practices, PHOs Service lines 7

19 LOCUS OF HIGH PERFORMANCE SHIFTED TO MIDWEST WITH FOCUS ON QUALITY COLLABORATION TO RAISE ALL BOATS Data Year: Quintile Performance Key: Quintile Percentile Range Performance >80 to 00 Best 2 >60 to 80 3 >40 to 60 4 >20 to 40 > 0 to 20 Worst 8

20 NATIONAL ENVIRONMENT BENCHMARKS SHIFT SOUTH AND WEST 20 DATA Quintile Performance Key: Quintile Percentile Range Performance >80 to 00 Best 2 >60 to 80 3 >40 to 60 4 >20 to 40 > 0 to 20 Worst 9

21 Rate of Improvement Rate of Improvement IMPACT OF POLICY, INCENTIVES, PROVIDER FOCUS ON STATE HOSPITAL INDUSTRY BALANCED SCORECARD PERFORMANCE OF NEW YORK HOSPITALS Top 0% 00 H30 H32 H6 H8 H02 H42 H0 H36 H66 H82 H69 H H64 H23 H8 H23 H2 H30 H88 H24 H03 Top 0 H34 H86 H4 H8 H43 H4 H33 H26 80 H4 H3 H76 H42 H36 H7 H92 H H99 H8 H46 H90 H0 H37 H48 H2H79 H H24 H49 H H4 H3 H8 H 60 H2 H06 H4 H63 H27 H H60 H3 H6 H62 H07 H83 H73 H27 H38 H43 H48 H6 H94 H4 H00 H H77 H80 H9 H93 H9 H98 40 H28 H6 H6 H46 H78 H0 H34 H9 H97 H2 H4H67 H29 H26 H44 H9 H37 H39 H08 H0 H33 H9 H3 H8 H2 H74 20 H44 H2 H22 H3 H49 H38 H6 H47 H7 H8H7 H20 H7 H09 H7 H4 H3H20 H2 H7 H70 H39 H0 H H H9 H87 H89 H3 H4 H96 H3 H72H0 H22 H3 H40 H04 H H28 H2 H47 H40 H6 H84 H29 H68 H32 0 H SOLE FOCUS ON FINANCE, PENALTIES 2009 Level of Achievement BALANCED SCORECARD PERFORMANCE OF MICHIGAN HOSPITALS 00 H H7 H H46 H62 H2 H34 H48 H49 Top H37 H9 80 H28 H8 H33 H6 H8 H84 H6 H9 H40 H74 60 H80 H63 H2H H9 H7 H38 H44 H6 H3 H4 H36 H6 H88 H6 H2 H8 H20 H43 H77 H78 H4 H66 H8 H30 H27 40 H0 H82 H69 H24 H42 H2 H4 H87 H29 H H22 H4 H7 H72 H0 H7 H23 H3 H3 H70 H67 20 H2 H7 H68 H86 H8 H H83 H39 H64 H32 H60 H26 H H47 H4 H3 H76 H73 0 H3 H FOCUS ON QUALITY, COLLABORATION 2009 Level of Achievement Longitudinal MedPAR Data 20

22 MICHIGAN CEO COMMITMENT TO COLLABORATE HIGHER STATE-WIDE VALUE DELIVERED HOSPITALS DETROIT MUSKEGON FLINT MIDLAND SAGINAW 3 3 LANSING OWOSSO GRAND RAPIDS HOLLAND 3 ANN ARBOR JACKSON 2 2 KALAMAZOO BATTLE CREEK Quintile Performance Key: Quintile Percentile Range Performance >80 to 00 Best 2 >60 to 80 3 >40 to 60 4 >20 to 40 > 0 to 20 Worst 2

23 CRITICAL FOR BOARDS AND EXECUTIVES: TWO DIMENSIONAL MEASUREMENT NYS HOSPITAL LEADERSHIP IMPACT: PERFORMANACE VS. IMPROVEMENT NYS PERFORMANCE ACHIEVEMENT 20 FFY Quintile Performance Key: Quintile Percentile Range Performance >80 to 00 Best 2 >60 to 80 3 >40 to 60 4 >20 to 40 > 0 to 20 Worst NYS LONG TERM PERFORMANCEIMPROVEMENT FFY

24 MEASURING SYSTEM LEADERSHIP 24

25 Average Percentile of Performance (Higher is Better) SYSTEM MEMBERSHIP AND PERFORMANCE 60 Hospitals in Systems Have Higher Performance and Rates of Improvement on 00 Top Hospitals National Balanced Scorecard (p< Both Comparisons) 0 Non-system members Performance Improvement SOURCE: DAVID FOSTER, PHD., CHIEF SCIENTIST, 202. TRUVEN WHITE PAPER PENDING PUBLICATION 24

26 INITIAL VARIATION ACROSS SYSTEMS TOP HEALTH SYSTEM WINNERS PERCENTILES OVERALL MORT COMP PSI CORE MEAS 30-DAY MORT 30-DAY READMIT ALOS HCAHPS ADVOCATE HEALTHCARE BANNER HEALTH CATHOLIC HEALTH PARTNERS FAIRVIEW HEALTH SERVICES KETTERING HEALTH NETWORK MAYO FOUNDATION OHIOHEALTH CORPORATION SCRIPPS HEALTH SPECTRUM HEALTH UNIVERSITY HOSPITALS HEALTH SYSTEM Quintile Performance Key: Quintile Percentile Range Performance >80 to 00 Best 2 >60 to 80 3 >40 to 60 4 >20 to 40 > 0 to 20 Worst 2

27 ALIGNMENT Alignment of member hospitals Distance from Centroid Closer to centroid, better the score Lower score is better ALIGNMENT OF SYSTEM HOSPITALS Alignment Score Aligned System: 9.7 Top P & I Median: 2. Peer Group Median: 32.8 Alignment Score Unaligned System: 42.4 Top P & I Median: 2. Peer Group Median:

28 MAJOR HEALTH SYSTEM OPPORTUNITY IMPROVE CONSISTENCY, RELIABILITY 203 PERFORMANCE AND -YEAR RATE OF IMPROVEMENT

29 DOES OWNERSHIP OF SYSTEMS MAKE A DIFFERENCE? Source: Differences in Health System Quality Performance by Ownership. David Foster, PHD. Truven Research Brief,

30 Rate of Improvement HEALTH SYSTEM SCORECARD, 20 STUDY 0 Top Health Systems Composite Score HH3 H6 H4 H2 Top 0% Top 0% HEALTH SYSTEM KEY H. SYSTEM A H2. SYSTEM B H3. SYSTEM C H4. SYSTEM D H. SYSTEM E H6. SYSTEM F H Performance Quintile Performance Key: Quintile Percentile Range >80 to 00 Best 2 >60 to 80 3 >40 to 60 4 >20 to 40 > 0 to 20 Worst Performance Level 29

31 FAST FORWARD TO 203 STUDY FOR PROFITS ARE TARGETING HIGHER QUALITY HCA MEMBER HOSPITALS Performance and Rates of Improvement CORE MEASURES HCAHPS Quintile Performance Key: Quintile Percentile Range Performance >80 to 00 Best 2 >60 to 80 3 >40 to 60 4 >20 to 40 > 0 to 20 Worst 30

32 OUR ONGOING PROCESS We are Continually Learning 3

33 VARIATION IN CLASS PERFORMANCE CAN REFLECT LEADERSHIP COMPLACENCY OR BIAS MAJOR TEACH ING HAS HIGHEST SURVIVAL HIGHEST COMPLICATIONS & ADVERSE EVENTS MORTALITY OTHER CLASSES OUTPERFORM IN LOS, PROFIT, HCAHPS ADJ. LENGTH OF STAY COMPLICATIONS EXPENSE CONTROL SAFETY HCAHPS 32

34 CHALLENGE OF RELIABILITY FOR LEADERS ABSENCE OF ALIGNMENT DAMAGES POPULATION MANAGEMENT MORTALITY SCORES OF 2 HOSPITALS IN HEALTH SYSTEM HOSPITAL KEY. MEMORIAL 2. MEMORIAL COUNTY 3. Memorial WEST 4. MEMORIAL EAST. COMMUNITY 6. COMMUNITY NORTH 7. COMMUNITY SOUTH 8. ST. MARK 9. ST MARY 0. POLK. MARSHALL 2. FREDRICK COUNTY 33

35 CHALLENGE TO INSURANCE PLAN LEADERSHIP COMPARISON OF INSURANCE NETWORK PERFORMANCE ON EXCHANGES INDIANA GEOGRAPHIC AND COST SELECTION - INADEQUATE HEALTH NETWORK MIDWESTERN STATES MICHIGAN OHIO 34

36 EMPLOYERS WANT CONSISTENCY ACROSS INSURANCE NETWORK CITY OF SEATTLE SEATTLE, WA EMPLOYER S NETWORK Top Top Hospitals Performance Ranking Hospital Balanced 200 State Level Rankings Excellence Quintile -Best (0) Quintile 2 (0) Quintile 3 (0) Quintile 4 (0) Quintile -Worst () SHOULD EMPLOYER S ASSUME ALL PERFORMANCE IS SAME? WAS SEATTLE EMPLOYER S NETWORK SELECTED ON PRICE ONLY? Provider inclusion based on total 202 active self-insured Medical and Drug Claims 3

37 LEADER S MISSION AND GOALS ARE KEY ADVANTAGE OF PROVIDER-BASED HEALTH PLANS Excellence In Quality, Cost, Efficiency, Patient Perception Of Care A SOUTHERN HEALTHCARE SYSTEM CONSISTENT PERFORMANCE ACROSS COMMUNITIES SERVED LOCAL INSURANCE NETWORK UNEVEN PERFORMANCE ACROSS COMMUNITIES SERVED 36

38 REFORM FORCES SINGLE WORLD VIEW Collaboration brings faster results, consistency Common goals Common data 37

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