Guest Column: Proper comparisons are key to hospital benchmarking
Guest Column: Proper comparisons are key to hospital benchmarking
The poisonous apples-to-apples’ comparison
By Shelley Burns
Knowledge Management Director
Healthcare Management Council, Needham, MA
In the last several decades many industries such as manufacturing, financial services, and hospitality have used benchmarking to identify quicker, more enhanced ways to improve their products, processes, and systems. But the hospital arm of the health care industry hasn’t embraced the benchmarking bandwagon and hasn’t changed significantly in years.
Why? Largely because it lives under the false pretense that benchmarking must occur with identical medical facilities. Otherwise comparisons would be useless. Hospital research philosophy has twisted "apples-to-apples" comparisons to mean that certain performance/ structural criteria are required before cross-company learning can occur. This misleading and inaccurate assumption leads to the decreased efficacy of healthcare benchmarking results.
The apples-to-apples’ myth
Top executives and managers in business know it is not only acceptable but also necessary to benchmark with other industries to obtain process improvements. For example, a major hotel chain desires to improve guest services. This chain not only has other hotel chains to examine for comparisons, but can and should look at theme parks, retailers, restaurants, and others. Instead of comparing hotels to hotels, it’s the guest services that should be compared. Valuable lessons can be gleaned from function-specific benchmarking. While the industries may function very differently, their fundamental guest service processes are common and provide learning opportunities for all parties.
Similarly, inventory/supply management processes lend themselves to cross-industry learning. Retailers have made major improvements in inventory acquisition, warehousing, distribution, and tracking. Hospitals haven’t typically studied these improvements in other industries, citing the uniqueness of health care and hospital operations as the reason. As a result, many hospitals continue to practice outdated and nonintegrated supply transactions, as opposed to making strategic supply management a priority. Numerous processes are similar enough across industries for health care managers to learn and adapt improvements from others.
Even though health care professionals downplay cross-industry benchmarking because of the industry’s uniqueness, they also tend to believe that health-care-to-health-care benchmarks are valid only with organizations that are exactly alike with respect to structure, size, scope, culture, affiliations, physical layout, etc. For example, an outpatient clinic wants to improve its cardiac rehabilitation services, but only wants to be benchmarked against clinics offering cardiac rehabilitation services that use Saturdays to deal with overflow — just as they do. This perspective, however, eliminates potential benchmarking partners and reduces the benchmark’s value. Organizations must step out of their comfort zone and embrace these practice differences for what they are — learning and improvement opportunities.
It is virtually impossible for a hospital to find an identical apple. Using criteria for learning partners such as only 500-bed, nonprofit, teaching hospitals in a suburban location with three remote outpatient clinics, an SNF unit, and an operating margin of at least 3% would eliminate virtually all other hospitals as benchmarking partners.
Hospitals are complex operations. There are an infinite number of differences among hospitals and there isn’t one exactly like another. Eric Franz, manager of financial services at OSF Saint Francis Medical Center in Peoria, IL, agrees. "There is no twin hospital out there," says Franz. "It just doesn’t exist. We are unique and we want to be unique."
It makes no sense for hospitals to proclaim their uniqueness, while at the same time developing lists of acceptable criteria that must be met by benchmarking partners. For hospitals to use benchmarking effectively, they must accept the fact that a twin doesn’t exist. Then they can use their resources to learn instead of wasting resources benchmarking their level of uniqueness.
Narrowing lessens benchmark value
Consider this example of how the value of a benchmark decreases as the hospital attempts to narrowly define acceptable benchmarking partners:
• Apples-to-apples: Benchmark the cost of medical transcription functions at hospitals.
• McIntoshes to McIntoshes: Benchmark the cost of medical transcription functions at hospitals with centralized transcription departments that outsource at least 60% of their transcriptions.
• New England McIntoshes to New England McIntoshes: Benchmark the cost of medical transcription functions at a systemwide set of hospitals with centralized transcription departments that outsource at least 60% of their transcriptions, writing at least 40 different types of reports and an average TAT for history and physicals of 24 hours.
Similar benchmarking requirements surface in many situations. System-based hospitals only want to be compared to other systems and preferably one with a similar structure and size. Why? How will they know if the structure of their systems is a competitive advantage if they don’t compare themselves to different structures or stand-alone hospitals? These highly selective criteria result in a less useful benchmark and less value for the facility that does the benchmarking. For example, attempting to benchmark with a similar transcription department obscures the impact of in-house vs. outsourced transcription, centralized vs. decentralized transcription, and stand-alone vs. corporate systems on turnaround time, cost, and accuracy, among others. This is the exact opposite result expected from a good benchmark.
What do health care organizations learn from the search for and the results from their hospital twin? The search process teaches them that if they add enough criteria, they can reduce their learning pools and maintain the status quo because, as they might say, "There’s no one like us." If they happen to find a few twin hospitals for comparison, they’ll find their solutions are similar, again reducing the learning opportunities. Organizations that are interested in learning recognize that the perceived differences likely point to improvement opportunities. It is ridiculous to let nonrelevant differences eliminate cross-organizational learning opportunities. According to Franz, there are enough similarities among hospitals to determine where improvements can be made. "The comparison hospitals we used for benchmarking were 80-85% similar, which is enough to get a good start on this process," says Franz.
In addition to searching for twins, hospitals similarly search for best practices, which are thought by many managers to be the holy grail of process improvement. Unfortunately, there’s not a single best practice for most health care operations. A recent survey of hospitals found that many hospitals previously outsourcing transcription were now bringing the function in-house, while in-house operations were looking for transcription vendors.
Why? Changes in the way the transcription functions fit with their cultures, their work forces and their environments. The make vs. buy decision is very dependent on the individual organization. So, while buying transcription services is a best practice for Hospital A, it might be a miserable failure for Hospital B. Thus, the job of managers is to sort through their options, coalesce good ideas from multiple sources, and come up with the most effective practice for their organizations.
One hospital cannot simply implement another hospital’s method without adaptation since the cultures, layouts, and environments of each are different. Since hospitals claim to be unique and therefore cannot be compared in a benchmark, why would they willingly presume an outside source knows the best practice for them? Instead, hospitals must take bits and pieces from the successful practices of others and formulate the most effective practices for their organizations.
The hospitals and health care systems that will be the fairest in the land are those that can avoid the common benchmarking mistakes. First, they must figure out what they want to benchmark. If a hospital wants to improve costs, it will benchmark costs and avoid poisoning the functional "apples to apples" comparisons with non-relevant criteria such as payer mix, physical layouts, or corporate structure on the way to determining cost-control opportunities.
Hospitals that use benchmarking as an effective tool will not waste their precious labor resources trying to find twin hospitals. This is because they realize such an effort reduces learning opportunities and encourages managers to accept the status quo. Filtering the list of acceptable learning partners narrows the value and usefulness of the benchmarking results.
Savvy hospital professionals know that slavishly mimicking the best practices of others, without consideration of their own cultures, strategies and needs, is managerial malpractice. The health care organizations that will benefit from benchmarking are the ones who realize the relevant points of difference are driven by their own practices, structures and choices, and they will make changes accordingly. They will gather many effective practices and blend them into strategies that are customized to meet the needs of their organizations.
Rather than compare New England McIntoshes to New England McIntoshes, hospitals that understand the importance of benchmarking will use a variety of apples to identify gaps in their performance and sample an assortment of apples to customize solutions to mesh with their own unique organizations.
Shelley Burns is director of knowledge management at The Healthcare Management Council Inc., a benchmarking and consulting firm in Needham, MA. For more information, call (781) 449-5287 or visit the company web site at www.HMC-benchmarks.com.
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