The old adage, "You can't manage what you don't measure," especially applies when organizations attempt to streamline operations within corporate services. We'll discuss how to use internal and external benchmarks to foster an environment of continuous improvement by triangulating monthly performance evaluation against the market for relationships and causation in order to evaluate true cost savings opportunities.
Strategic planning in healthcare is the process by which a healthcare organization defines its future vision and goals and maps a course to achieve those goals. Healthcare leaders engage in the strategic planning process to ensure the organization has a long-term roadmap to grow and continue to fulfill its mission for the communities it serves. Through the process, healthcare leaders determine priorities — such as community outreach or increasing patient access — and how best to position their organizations for sustained financial health, competitive differentiation, and strategic growth.
Strategic financial planning in healthcare is a critical component of broader strategic planning by which healthcare leaders define how to allocate financial resources to achieve the organization’s short- and long-term strategic goals. Developing the strategic financial plan includes evaluating the organization’s current assets and operations. Leaders then must determine how best to manage costs and allocate facilities, staff, and other resources to optimize financial outcomes and enhance patient care and access in pursuit of strategic objectives.
Why is strategic planning in healthcare important? A sound strategic plan aligns an organization around its mission and long-term goals. This is increasingly vital to ensuring ongoing success and viability in an evolving healthcare environment. The strategic plan establishes guideposts to help organizations better navigate future unknowns. It also establishes a defined mission that can help keep organizational leaders, staff, and other stakeholders engaged and working together toward a common purpose.
A healthcare strategic financial plan is important because it defines how healthcare organizations plan to accomplish goals laid out in the broader strategic plan. In an industry in which most organizations historically rely on tight operating margins, it aims to ensure resources are used efficiently and effectively to optimize the delivery of healthcare services. The strategic financial plan provides clarity for healthcare leaders and other stakeholders on how resources should be allocated and what steps must be taken to achieve organizational objectives.
The core elements of a strategic plan in healthcare are:
The core components of a strategic financial plan in healthcare are:
The following are key steps in how to develop a strategic plan in healthcare:
Perform a gap analysis
Define organizational goals and priorities
Formulate your strategies
Develop the strategy execution plan
Execute the strategic plan
Monitor progress and recalibrate as needed
Four best practices in strategic planning in healthcare include:
Leaders at a Texas health system sought to expand the gastric services the organization offered, including bringing in a new surgeon, and purchasing a high-end surgical system. The initiative required a $2.5 million capital investment. Through the strategic planning process, organizational leaders identified the goals, assessed competitors and the local market, and built a strong business case for the investment, which ultimately was approved by the board. Learn more examples of strategic planning in healthcare.
Strategic planning in healthcare organizations is essential. Patient needs are continually evolving thanks to today’s fast-paced environment and the growing number of choices of healthcare providers and care options. At the same time, healthcare leaders have access to nearly real-time patient data to better understand their patient population in ways not possible in the past.
To ensure the long-term success of their organizations, healthcare leaders must embrace comprehensive strategic planning and strategic financial planning processes. Such processes help to build engagement, align plans with an organization’s mission, vision, and values, and chart a clear path forward for stakeholders on where the organization is headed and how it plans to navigate a constantly evolving landscape to get there.
Rolling forecasting has come to the fore among increasing numbers of hospitals and health systems as a complement or replacement for the annual budget.
As the global pandemic clearly demonstrated, local, regional, and national factors can render an annual budget useless overnight. Even the routine economic and market forces that all industries face can impact budgets, which age rapidly following creation and adoption.
What’s driving cost and quality variations in your healthcare organization? Axiom™ Enterprise Decision Support monitors and analyzes your data to identify unfavorable trends, so you can take action to improve quality and cost outcomes in your organization.
In this example of a hip replacement cost analysis, see the seven steps to performance improvement with Axiom Enterprise Decision Support:
Hospitals and health systems across the country are experiencing monumental changes and challenges, fueled by forces ranging from a global pandemic and unheard-of labor shortages to shifts toward value-based care and calls for a more consumer-centric approach to patient engagement. The best way forward is to employ high-impact, low-risk strategies to keep patients in-network and know where to grow.
Healthcare benchmarking is the process of comparing one hospital, department, service line, provider group, or other dimension with another for the purpose of quality improvement. By understanding the hospital benchmarking data for one particular measure, a hospital can determine where it stands in relation to peer organizations and undertake an improvement initiative, if necessary.
Quality improvement projects could result in higher profits, lower hospital readmissions or hospital-acquired infections, higher physician productivity, or lower labor or supply costs per adjusted discharge. Every hospital has its unique strengths and weaknesses, so the types of improvement efforts will vary by facility.
Benchmarking in healthcare allows hospitals to compare themselves to best-in-class facilities, hospitals with similar attributes such as bed size, and hospitals in their local or regional area. It also allows hospitals to determine how they stack up against other providers on standards set by the Centers for Medicare and Medicaid Services (CMS) and other regulatory agencies.
Healthcare benchmarking datasets include:
Benchmarking is a critical tool to help organizational leaders make the right strategic choices, remove risk from decision-making, and defend the validity of actions/inactions through the effective use of data. Ultimately, the purpose of healthcare benchmarking is to improve efficiency, quality of care, outcomes, and the patient experience. To do this, financial, operational, and clinical benchmarks should be used throughout the organization to help pinpoint sources of concern and opportunities for growth.
Financial benchmarks are important because they paint a picture of the financial health of the organization, such as your ability to leverage cash or credit positions. Operational benchmarks are important because they measure resource utilization. And finally, clinical benchmarks are important because they measure care outcomes. Different type of benchmarks are important for different audiences, but together, financial, operational, and clinical benchmarks give healthcare leaders, clinicians, and physicians a multi-dimensional view of performance that can help reduce costs, improve outcomes, and better serve the community.
Healthcare benchmarking gives leaders the confidence to know the direction the market is moving and their position in relation to best-performing hospitals, peer hospitals, and local and regional competitors. Benchmarking data can identify how far a hospital needs to go to reach a particular goal, where competitors have an advantage, and where a hospital outpaces others.
No hospital can be best in class on every measure, so benchmarking is a balancing act that begins with determining a baseline metric for a particular measure before embarking on any improvement initiative. Savvy hospitals start in areas with the most upside potential, such as cost savings, quality improvement, or revenue increases.
Types of benchmarking include:
The biggest challenges in hospital benchmarking include finding suitable external data sources and ensuring external data can be effectively integrated with internal data to produce meaningful comparisons.
Many hospital leaders believe their organizations are unique and beyond comparison. Within the world of benchmarking, however, the idea is not to find an exact match. Instead, organizations want multiple comparison groups that provide a range of metrics that show performance against internal benchmarks and help identify potential new performance opportunities.
Even hospitals in the top quartile of national or regional benchmarks cannot be complacent. Being at the highest performance level does not mean that the journey is over; it means less distance to travel.
Healthcare leaders should look to the largest data sources — in terms of the number of hospitals, departments, and physicians — that are updated at least monthly. Quarterly data updates are not sufficient to capture true performance against static benchmarks. Also, is this a data source that you trust? Ask peer organizations about their data sources and look to healthcare consulting companies to see where their data comes from.
The power of benchmarking occurs when hospitals study how other organizations achieve top performance levels and then adapt those strategies for their own use.
Every hospital will have different healthcare benchmarking priorities based on its unique strengths and weaknesses. Healthcare benchmarks are determined by deciding which department or service line to focus on, establishing a baseline of performance in that area, and then finding peer information to see where you stand against similar hospitals. The first focus areas should be the ones where an improvement project would have the most significant impact (e.g., the low-hanging fruit).
As hospitals move from benchmarking as a comparison exercise toward benchmarking as a process to take them to best-practice status, keep these strategies in mind:
Hospital benchmarking can incorporate innumerable measures across every department, but at the executive level, these are the top hospital finance and operational benchmarks that should be tracked at different levels, including provider, department, hospital, and health system.
Axiom™ Comparative Analytics features the most robust and complete dataset in the industry, including data from more than 1,000 hospitals, 6,000 benchmarks, 135,000 physicians, 130 physician specialties, 350 departments, and 100 job classes updated each month.
External comparison data is refreshed monthly and available when month-end close concludes, providing healthcare providers with the industry’s most timely access to current financial analytics.
Features include:
Independent analysis from Hobson & Company shows that Axiom Comparative Analytics delivers significant efficiencies and return on investment (ROI). The potential cost savings or revenue enhancements can be substantial. A Midwestern hospital with 200-299 beds saved $1.1 million by improving surgical productivity per equivalent patient day. A similar-sized hospital in the West saved $1.2 million by decreasing ICU spend per equivalent patient day by 12%.
Comparative Analytics uses a uniform classification process to compare data and eliminate the burdens of data normalization and submission, cutting by 50% the time spent on reconciling, loading, and normalizing data
Axiom Comparative Analytics brings actionable intelligence to hospital decision-making
