Large Pediatric Health System Implements Full-Scale Management Reporting to Drive Financial Stewardship
December 22, 2021
This organization drove results and impact
Implemented new financial performance management process and tool across 100+ locations
Collected 200 comments on variance to target within hours of go-live
Engaged leadership at all levels to support variance-to-target resolution plans
Leadership Lacked Forum to Engage Stakeholders on Performance Variances
Hospitals and health systems have historically spent countless hours across their finance and operations teams setting targets that are either misaligned or quickly become outdated by evolving business conditions. With a renewed focus on expense and cost management due to the COVID-19 pandemic, today’s leaders are realizing the need for consistent and transparent full-scale processes to identify, learn from and address cost variances.
Before engaging Strata Decision Technology’s team, one of the largest pediatric health systems in the nation lacked a transparent process to engage their stakeholders on performance variances. Operational leaders did not review monthly reports, and there was no forum for finance and operations to discuss gaps between actual and target performance. The organization set out to implement a standardized, monthly process with actionable metrics to improve accountability using their new tool and process at over 100 locations.
Document, Communicate and Enact a Standard Monthly or Quarterly Review Process
This organization partnered with Strata Decision Technology to implement StrataJazz® Management Reporting, setting out to provide a new tool and process for better precision and accountability. The new process features a few key changes:
- Performance Management Scorecard: The organization rolled out metric-based scorecards to empower operations leaders (cascading from department managers to entity VPs) to review and assess monthly performance. Providing a simplified view rather than a full financial statement allowed non-finance leaders to focus on key, controllable metrics they could understand and explain performance.
- Collecting Explanations: The organization adopted a formal process to solicit and document variance explanations and resolution plans on a set cadence. Alerts encourage department managers and directors to review and research variances, with monthly operating reviews conducted first by EVPs and SVPs, then the Financial Stewardship Executive Steering Team.
- Operating Reviews: The organization established operating reviews set to reinforce accountability, with finance team members now involved to help develop and monitor resolution plans. EVPs and SVPS schedule and conduct monthly operating review meetings, with VPs and AVPS attending monthly operating business review meetings where they ensure teams write variance explanations and resolution plans by their due dates. Directors and their teams attend operating review meetings as needed, supervising the implementation of resolution plans and keeping executives informed of progress and support needed. This cascading review process has strengthened the partnership between Finance and Operations and helped drive a culture shift toward agility and transparency.
Beyond implementing a new tool and instilling an improved process, the finance team educated frontline leaders in understanding metrics, investigating variances and taking action to meet operating targets. Leaders encourage their teams to attend trainings, understand and focus on key metrics, work toward resolutions plans and leverage the Finance team for help. Along with the new monthly cadence, notification emails alert leaders to all variances requiring commentary in the Management Reporting.
Implement Cascading Review Process to Act on Root Cause
The organization saw an immediate and overwhelmingly positive response after replacing income statements with their new process focused on metrics. Within the first morning after kick-off, they received over 200 variance explanations and resolution plan details within the new tool.
Involving leadership in reviews and educating their teams on focused metrics and performance has helped this large pediatric health system drive accountability. They are using a single tool and partnering with leaders to hard-wire and simplify financial management as an ongoing part of regular operations.