Board Development and Leadership:The Road to Performance ManagementTerry Hill, Executive DirectorRural Health Resource Center

Duluth, Minnesota

Technical Assistance & Services Center (TASC)

• Federally designated resource center

• Funded by HRSA’s ORHP

• Supports Flex Program/CAH implementation in 45 states

• Located in Duluth, Minnesota

Current Federal Contracts

• Technical Assistance & Services Center (TASC)

• Small Hospital Improvement Program (SHIP)

• Delta Rural Hospital Performance Improvement (RHPI)

• Rural HIT Project

• Rural Hospital Education

Developing PerformanceImprovement Projects

• Medicare Flex Program emphasis on Quality & Performance Improvement

• Performance improvement/BSC initiatives underway in most states

• Supported by state offices, QIOs and hospital associations

State CAH Performance Improvement Projects

Mississippi Delta Rural Hospital Performance Improvement Project

• 120 hospitals in 8 state region

• Components

- Comprehensive performance assessment

- Targeted performance and strategic planning initiatives

- Balanced Scorecard initiatives

State CAH Performance Improvement Projects

Nebraska P.I. Initiative

• 32 hospitals in BSC initiative

• CAH Executive Leadership initiative

State Balanced Scorecard Initiatives- Alaska - Hawaii- Pennsylvania - Oklahoma- North Dakota - Arkansas- Montana - Illinois- Missouri - Kansas

What We’ve Learned

• Hospitals often operate in a crisis management mode and don’t think strategically

• Strategic planning is done but strategy execution is not maximized

• Most rural hospitals lack ongoing board leadership and management education

• CAHs are already collecting much information

CAH Data CollectionStrategic Purpose

Data Collection

Data Reporting

Data Analysis

Typical Effort

Desired Effort

• Hospitals make significant investments in collecting data for regulatory or accreditation purposes, which limits the value.

• The goals are to push the Effort Curve to the right.

Action Steps

Data -------------Information

“Even small health care institutions are complex, barely manageable places…large health care organizations may be the most complex organizations in human history.”

~ Peter Drucker

In the years ahead…

• Rural health organizations will undergo profound change:

– To meet new consumer and payer demands

– To implement HIT

– To be successful in P4P and new insurance models

• This profound change and increasing complexity will require performance management systems

Performance Management Definition

“A set of processes that help organizations optimize their overall performance. It is a framework for organizing, automating and analyzing methodologies metrics, processes and systems that drive business performance…

Performance management is seen as the next generation of business intelligence, and helps businesses make efficient use of their financial, human, material and other resources.”

- Wikipedia.org

Performance Management Definition

“A framework for getting people, processes and resources aligned and moving in the same direction to achieve strategies that benefit the customer and the bottom line and result in organizational excellence.”

- RHRC

Performance Management Systems

Performance Management Systems have 3 distinct dimensions:1. Strategies- Make strategy the central

organizational agenda

2. Focus and Alignment- Have resources and activities aligned with strategies

3. Organization- Provide the logic and architecture to link all departments and employees behind strategies.

Kaplan and NortonHarvard Business School

The Journey to Performance Management

• Quality Assurance

• Quality Improvement

• Performance Improvement

• Performance Management

Performance Management Framework

a) Studor Pillars

b) Balanced Scorecard

“It is rare to find companies without some form of balanced Scorecard. The difference is that more organizations now understand that the balanced Scorecard is a strategic management system, not just measurement. Strategy maps are the catalyst for that shift.”

--James Creelman, Senior Research advisor, the Hackett Group

System for Managing Performance and Change in Rural Hospitals

Understanding the Balanced Scorecard

“A successful Balanced Scorecard program starts with a recognition that it is

not a metrics project…IT’S A CHANGE PROCESS”

Robert KaplanBalanced Scorecard Collaborative’s

Government Summit. Sept. 2004

RWHC Eye On Health

"OK. I understand a lot is going to change. But how do I stay the same?"

RWHC Eye On Health

"OK. I understand a lot is going to change. But how do I stay the same?"

RWHC Eye On Health

"OK. I understand a lot is going to change. But how do I stay the same?"

The Power of the Balanced Scorecard

Understanding the Balanced Scorecard

• It’s more than most people realize- Not just a measurement system

- Not primarily about the four “quadrants”

- Not primarily a benchmarking tool

• Proven Best Practice for achieving strategies and breakthrough results

• Successfully adapted for Rural Hospitals

“The Balanced Scorecard is a framework that helps organizations put

strategy at the center of the organization by translating strategy into

operational objectives that drive both behavior and performance”

The Balanced Scorecard Collaborative, 2004

Definition of the Balanced Scorecard

Top 5 Reasons to Implement the BSC

1. Provides Focus

2. Creates alignment of resources and strategy

3. Makes strategy “real”

4. Facilitates organization-wide communication

5. Tells an organizational story

Brief History of the BSC

Strategic Management

HarvardBusinessReviewArticles

BSC Perspective

Financial

Customer

Internal Business Processes

Learning & Growth

PerspectivePerspective Key QuestionKey Question

As financial stakeholders, how do we intend to meet the goals & objectives in our hospital mission statement?

As customers of our hospital’s services, what do we want, need or expect?

As members of the hospital staff, what do we need to do to meet the needs of our various customers?

What type of culture, skills, training and technology are we going to improve in order to support our key processes?

HIT Valley of Despair

Choices, Planning, Execution

Determines extent of Slide

Leadership and Management

Determines how long you’re in the valley of despair.

Good Choices and

management determines

level of productivity and

satisfaction

Little or No HIT

Implement EHR

Implemented and Supported

Pref

erre

d Fu

ture

Possible Future

Time

Pro

duct

ivity

HIT Theme Strategy Map

Increased cost efficiency

Increased market share

Finance

Increased revenue

As financial stakeholders, how do we intend to meet the goals and objectives in the hospital’s Mission

Statement?

Patient safety outcomes

Physician satisfaction Patient satisfaction

Increased margin to fund mission

Community health outcomes

Customers & Community

Internal Processes

Learning & Growth

As customers of the hospital’s services, what

do we want, need or expect?

As members of the hospital staff, what do we need to do to meet

the needs of the patients and healthcare

community?

As an organization, what type of culture, skills, training and

technology are we going to develop to support

our processes?

Clinical processes

Acquire HIT expertise

Ensure a skilled workforce

Business processesOperational processes

Establish an empowering work culture

LeadershipInstill change management

Acquire needed HIT systems

Ongoing education

System for Sustaining Performance and Change

2. Empowering Culturea. Change orientedb. Customer Centeredc. Collaboratived. Designed for retention

3. Ongoing Educationa. On siteb. Online

Systems for Sustaining Performance and Change

4. Skilled Workforcea. Nurses and techniciansb. Medical Staffc. IT expertise

5. Ongoing Process Improvementa. Clinicalb. Businessc. Operations

6. Leadership Developmenta. Boardb. Executivesc. Middle Managementd. Physicians

7. Technologya. HITb. Medicalc. Management and Systems

8. Partnershipsa. With physicians/cliniciansb. With other hospitals and health providersc. With the Communityd. With educational institutions

9. Access to Capitala. For improvements to plantb. For investment to infrastructure

10. Outside Technical Expertise

Systems for Sustaining Performance and Change

On-Track to Performance Improvement

The Board’s Role in Performance Management

-Often overlooked

-Crucial to long range success

-Will require investments of time and resources

Seven Deadly Sins of Ineffective Governance

1. Lack of mission, vision, strategies and focus

2. Resisting change and failure to make strategic investments

3. Making do with irrelevant, useless information

4. Lack of hospital board and management alignment

5. Hiring unqualified or ineffective leaders

6. Failure to spend meeting time on strategic priorities

7. Inability to understand or relate to physicians

Start with a plan• Recruit motivated people with needed skills

• Nominating search committee

• Develop selection criteria

• Consider conflict of interest

Board Member Selection

Effective Use of Consent Agenda

Consent Agenda:– The process of grouping routine items

into one agenda item for a single vote, aimed at saving valuable time for critical issues.

Pros:- Frees time for focus on what is important

strategically and operationally

- Much more rewarding experience for members

Effective Use of Consent Agenda

Cons:- Places responsibility (and risk) on members

doing their homework before meetings

- Non-board members can perceive “railroad”

- Requires more work upfront

- Can be counterproductive if members are reading advanced materials during the meeting

Acceptable Consent Agenda Items

1. Committee minutes and reports

2. Board minutes

3. Financial statements

4. Operating statistics

5. Quality reports

6. Medical staff reports and minutes

7. Medical staff credentialing and appointments

8. Management/CEO reports

9. Resolutions (background information in advance)

Source: Jim Stokes

Source: Jim Stokes

Source: Jim Stokes

Source: Jim Stokes

Source: Jim Stokes

“Even if you’re on the right track,you’ll get run over if you just sit there.”

- Will Rogers

Terry J. Hill, MPAExecutive Director,

Rural Health Resource Center

600 E. Superior St., Suite 404

Duluth, MN 55802

218-727-9390, ext. 232

thill@ruralcenter.org