Is your healthcare system among the Haves or the Have-Nots?

GE Healthcare Is your healthcare system among the Haves or the Have-Nots? Justin Holland

The economic and regulatory forces converging in healthcare make it imperative for hospitals and health systems to sustain a high level of performance across all areas of operation or be at a considerable disadvantage. Whether reacting to acquisition and integration, alignment, customer satisfaction, or quality, these fundamental business challenges are a prelude to a healthcare industry that is rapidly becoming bimodal. The haves those providers who have realigned their cost structures while simultaneously achieving high marks for quality, safety, and patient and employee satisfaction will be the market leaders who occupy the top half of the performance curve. The have-nots providers who fail to make the grade on key clinical and financial benchmarks will fall further and further behind, risking extinction as the market continues to contract. High demands, low marks Achieving and sustaining market leadership in healthcare is a complex challenge. In our experience, it requires that the hospital or health system integrate three essential disciplines: An operational infrastructure that connects strategy to execution and sustained results so the organization can compete for the future while managing the present. A performance management approach that builds an engaged, accountable workforce, committed to patients and to one another so the organization can become an employer of choice and a patient destination of choice. Continuous programmatic improvements that drive operational rigor and lower costs so the organization can achieve high-quality performance at sustainable costs. How well do most healthcare organizations currently perform in these critical areas? There appears to be considerable room for improvement. According to our research (across 3,450 healthcare employees) i, healthcare managers have clear misgivings about the operational, performance management, and process improvement capabilities of their organizations. For example: Over 30% say that senior management fails to communicate a clear strategy. 78% do not feel the organization deals effectively with poor performers. 60% feel that key processes fail to eliminate non-valueadded time. Proven systems to drive results To achieve market leadership, healthcare organizations need to consider fundamental changes in how they structure their management systems, manage talent, and undertake performance improvements. 1Strengthen your management structure Becoming a market leader requires an operational infrastructure that is hard-wired for success, with management systems in place to help executives develop sound business strategies and execute them effectively. Examine how your organization runs. Are there mechanisms built into the management structure that trigger regular conversations among leaders about the organization s financial, clinical, and cultural goals? These conversations and the data that attach to them are essential to making the decisions that drive organizational change. An organization functions best when its management structure provides:

Timeouts for strategic thinking It s important for the executive team to be proactive, rather than reactive, in pursuing opportunities and addressing challenges. Executives need time to think about the next three years, not just this year or this month. Top-performing organizations create regular opportunities for their leaders to have structured time away from the dayto-day grind of managing the organization to focus on long-range issues and consider new approaches. GE recognized this need within its own organization and in 2006 launched the Leadership, Innovation and Growth (LIG) ii program so that senior managers would have a regular forum for deeper discussions about growth and improvement. Whether it s a program like LIG or a facilitated executive retreat featuring industry thoughtleaders, your organization can benefit when executives have the time and opportunity to gain greater insights into emerging trends and be creative around strategies and tactics. Such opportunities should be scheduled regularly, at least once a year, and tied to action plans that drive execution. Rigorous operating mechanisms Many organizations fail to make substantive progress in meeting performance goals because they lack a formalized operating structure to drive results. We recommend that clients adopt an operating calendar that provides a framework for setting goals, formulating strategies, developing specific programs and work plans, and monitoring progress. The operating calendar provides rigor and rhythm to organizational activities by establishing a regular sequence of management activities that occur at the same time each year. Budgets are determined each September, capital plans developed in January, leadership reviews conducted in April, and so on. Monthly operating reviews and quarterly strategic reviews are held to review key metrics and adjust action plans, if necessary. Having a calendar paces and focuses management efforts, creating a self-perpetuating discipline that enables the entire organization to make progress toward its goals. 80/20 vision A key element of moving the performance needle is an action-oriented, recurring process for reviewing programs and progress. This review process should avoid lengthy exercises in drilling down into numbers and, instead, focus on actions needed to move the numbers in a positive direction. A useful guideline for meetings is the 80/20 rule: 80% of the time should be action-oriented, spent looking forward and determining next steps; only 20% of the time should be spent looking at numbers and analyzing past performance (what did or didn t work and why). Too many organizations devote the bulk of the time to beating up the data rather than focusing on decisions on how to move forward. Data-driven, not data-captive, decisions It s clear that effective decisions flow from a good understanding of the institution s operating realities: market trends, patient and payer profiles, physician constituency, and other variables. But gathering this data, which often exists in separate systems within and outside the institution, can be challenging and time-consuming. For operational decisions (not clinical ones), an executive team should make a reasonable effort to acquire critical data, but have a commitment to moving forward even if the information is not perfect. It is better to make a decision and try something, while continually monitoring the data, than to wait for that elusive final piece of intelligence to fall into place. By that time, the opportunity may have passed, the crisis may be at your door, and valuable time has been lost. Classic symptoms of under-performing organizations Strategic plans, if drawn up at all, stay on the shelf and are never activated. Daily firefighting distracts from critical, longrange initiatives. Lack of talent pipelining limits the caliber of new hires, creates workforce gaps, and drives up staffing costs. High-performing employees leave due to the lack of mentoring and a defined career path; poor performers are tolerated rather than rehabilitated, dragging down the organization. Time and money is wasted on low-impact process improvement efforts, leading to frustration and declining morale.

2Build the talent in your organization strategically As healthcare organizations face mounting pressure to improve performance, one critical area is often overlooked: talent management. Supported by a more rigorous and consistent talent management process, managers have the tools to identify, nurture, and retain top talent; foster individual accountability and alignment with organizational goals; develop a pipeline of emerging leaders; and create an engaged workforce at all levels in the organization all key elements in gaining market leadership. Building a performance culture means creating a workplace that attracts, satisfies, and rewards individuals who embody your organization s values and believe in its mission. Thus, a clear understanding of what your organization is (and isn t) and what it strives to be are essential. The tenets of your culture should be known and lived throughout the organization, residing in its corporate DNA rather than in any one individual. Hallmarks of a performance culture that develops and uses talent most effectively include: Meritocracy High-performing organizations motivate individual performance and accountability to build strong managers, directors, and supervisors. Developing an objective evaluation process to regularly review employee performance is essential. Leadership should have a clear idea of which individuals represent the top 10% of performers, as well which represent as the bottom 10%. Clear processes must be in place to reward highquality talent and provide a pathway for improvement for the rest of the workforce. Talent assessment should be diversified to ensure no diamonds in the rough are overlooked. Collaboration As healthcare organizations make the shift toward accountable care delivery models, there is a pressing need to collapse the traditional silos (geographic, departmental, and professional) that hinder effective collaboration among staff and employees. Are all operating units in the health system kept apprised of process improvement initiatives at all facilities so that learnings can be shared? To get at the heart of workflow bottlenecks, are managers in the ED talking to managers on inpatient units? One way to drive greater collaboration is to convene relevant cross-departmental meetings in your operating calendar that provide regular, repeatable opportunities to share information. For example, if systemwide patient safety metrics are reported out every quarter, have a team meeting that includes stakeholders from across the enterprise. Applied learning Leaders are not born; they are developed. Often in healthcare organizations, clinicians will be promoted to management positions without the benefit of training in leadership and business management skills. High-performing organizations combine competencies, curriculum, and coursework into leadership development programs, where participants are charged with solving real business problems. And these programs are regularly offered as a part of the talent development process. 3Develop a reproducible model of continuous productivity improvements Fulfilling a hospital s mission today depends increasingly on being able to use resources more effectively and efficiently. The goal should be positive productivity growth that enables high-quality care for more people at the same or lower cost. That requires a performance transformation in which productivity systems become embedded in the organization. For performance excellence to become institutionalized, it s critical to establish an infrastructure capable of cultural transformation one that aligns to the strategic imperatives of the organization, defines programs to support those initiatives, identifies metrics to monitor progress, and uses rigorous operating structures to hold people accountable and to sustain improvement. Key elements in building a transformational model for productivity improvement include: A multidisciplinary approach Process improvement efforts need to include staff members from different functional areas and service lines whose activities impact the process being optimized. For example, an initiative to improve patient satisfaction can t just involve representatives from nursing and other frontline clinical staff; every discipline whose actions impact how the patient is treated during his or her stay from housekeeping to the welcome desk staff should be part of the initiative. Governance Some 62% of performance improvement initiatives that fail do so for lack of leadership commitment and oversight. An effective governance structure provides structure and accountability for projects. It can help improve the efficiency and outcomes of performance improvement efforts by ensuring that projects are aligned to strategies; insisting on a common framework/language and best-practice sharing; prioritizing activities to make the best use of human capital; identifying and mitigating risks; and managing stakeholder expectations. Integration with management systems Institutionalizing performance excellence requires a system in which priorities are based on strategic needs,

linked to metrics, and activated through defined initiatives and projects. This framework forces an organization to prioritize improvement opportunities in a way that drives overall performance metrics and resource alignment. It also helps to create a shared vision: people know what is to be accomplished and why it is important. A quality goal, for example, could be linked to the Joint Commission s Core Measures, thus enabling leaders to evaluate their improvement efforts against a national, standardized performance measurement system. A financial goal could be tied to the organization s financial ratios, operating margin, or other financial indicator. Change Management Changing behavior is a challenge all organizations face, yet when productivity activities are grounded in a consistent change management framework, it is more likely that the stakeholders, resources, and processes will align to ensure that improvements are sustained over time. To develop a high-performance culture, it s essential to create the appropriate environment in which people feel comfortable and empowered to be a part of the problem solving process. Conclusion The need for effective management, leadership, and productivity systems has never been greater in healthcare. In this era of reform, the stakes have been raised. Only those organizations that can bend the cost curve while creating a performance-oriented culture that delights patients and employees alike will survive and thrive. Taking on these fundamental business challenges may mean building new capabilities, honing skills, and seeking out new perspectives while taking a bold stand on what to do more of and what to do less of as an organization. Performance Excellence Framework System Mission/Vision Access Patient Experience Quality of Care Market Growth Initiative Initiative Initiative Initiative Initiative Initiative Initiative Initiative VSM 1 Enablers (Lean, Six Sigma, Change Management, Work-Out) VSM 2 Review Mechanisms

Author Justin Holland is the Managing Principal of the Strategy and Leadership practice within GE Healthcare s Performance Solutions. Justin leads a team of experts that partner with healthcare organizations to make world class management, leadership, and productivity systems a reality. Justin has over 15 years of experience helping organizations align with customer and employee expectations in ways that accelerate performance and growth with particular emphasis on developing strategic solutions that reinforce whole systems of care. Justin is a member of the American College of Healthcare Executives (ACHE) and the Healthcare Financial Managers Association (HFMA). Justin can be reached at Justin.Holland@ge.com. i Strategy and leadership systems capability evaluation survey. GE Healthcare Performance Solutions. ii How GE Teaches Leadership to Change. Harvard Business Review. January 2009. Available at http://www.ge.com/pdf/innovation/leadership/hbr_crotonville.pdf. GE Healthcare 3000 North Grandview Blvd. Waukesha, WI 53188 U.S.A. 2012 General Electric Company All rights reserved. GE and GE Monogram are trademarks of General Electric Company. GE Healthcare, a division of General Electric Company www.gehealthcare.com/solutions PS-US-BR092-01.12