1. Financial Indicators: Early Warnings for Riskbased Supervision P. Van Dyk | Dutch Health Care Inspectorate Coördinating / Specialist Advisor of Research & Innovation +31615 03 5789 | p.v.dyk@igz.nl EPSO | Porto May 2014

2. RiskprofileSupervisionNewsSourcesConcern HOSPITAL X * Click for more information Reports & Complaints Indicators Quality and Safety Theme 1 Theme 2 Theme 3 Theme 4 Theme 5 Theme 6 Theme 7 SupervisionCorporate information External Signals High risk Medium risk Low risk No (reliable) information available No data defined Program: Concern: Institution: Location:Sector: Year: City: Select providers: You are here: Objectview | Riskprofile © 2013 IGZ | BICCPagina 1 / 1 Latest Contact Help Sitemap History20092010201120122013 Governance Finance Fraud HRM Staff Facilities Production Image Cliëntsatisfaction Similar profiles20092010201120122013 Provider 1 X Provider 2 XX Provider 3 X Provider 4 X Similar profile*20092010201120122013 Provider 1 X Provider 2 X Provider 3 X X Provider 4 X X Findings20092010201120122013 Quality Risks Government Riskmanagement Compliancemanagement Increased supervision: StartEndSummary 31-10-201220-03-2013 Reports20092010201120122013 Number of incidents 22 121423 Number of complaints 8 Last inspection:20-3-2013 AspectKPI2013Signal FinanceLiquidity (current ratio) 63,8X Solvability12,5 Debt coverage ratio88,8 X Profitratio -0,1 X HRMAbsentism5,9 Inflow staff10,2 Outflow staff15,5 GovernanceUsing governancecode Ja StaffNursing staff (percentage)73% Hired staff (percentage10% History20092010201120122013 Medication incidents ThemeKPI2013Signal Theme 1HSMRX Unexpected long stay Readmission rate13%X Theme 2Indicator 2.1 Indicator 2.2 Theme 3Indicator 3.1 Theme 4Indicator 4.1NeeX Theme 5Indicator 5.176 Theme 6Indicator 6.183 Theme 7Indicator 7.10,4 Top 3Incidents *Complaints 1.Medication errorsTherapy 2.Infection preventionTreatment 3.CommunicationInformation Top 3Social Media *Customer experiences 1.Therapy 2.TreatmentAftercare 3.CostsInformation Signals / complaints20082009201020112012 Negative signals Social Media 203446 Consumer Quality Index 353240 Top 3Focus supervision* 1.Therapy 2.Treatment 3.Constraints Notes Bla bla Top 3Actions * 1. 2. 3. There are new alerts! ObjectviewHomeSectorviewIGZviewRiskscan Managementreports AlertsMy dashboards Frontoffice IRIS 2.0. Version 25/11/2013 ComplaintsReports Social media

3. 3 Overview concerninformation used for Riskbased Supervision on Dutch Healthcare GOVERNANCE (LACK OF )(CERTIFIED) QUALITY SYSTEEM COMPLIANCE MANAGEMENT RISKMANAGEMENT LOT OF INTERIM-MANAGERS FUSION AND REORGANISATIONS FINANCE CURRENT RATIO CAPITAL BUFFER SOLVABILITY DEBT COVERAGE RATIO RESULTS RATIO FRAUD EXCEPTIONAL CHANGES IN SALES EXCEPTIONAL CHANGES IN PRODUCTION SUPERVISORY BOARD OF 1 PERSON MANY PRIVATE LIMITED COMPANIES UNEXPECTED CHANGE OF OWNERSHIP NOT-CARE-RELATED ACTIVITIES HUMAN RESOURCES ABSENTEISM STAFF TURNOVER STAFF OVERHEAD INTERIM-/FLEXWORKERS FACILITIES OUTDATED BUILDINGS PRODUCTION PRODUCTIVITY ICT INVESTMENTS ON ICT COMMUNICATIONCLIENTSATISFACTION P. Van Dyk | Dutch Health Care Inspectorate

4. 4 Example: Dashboard of a hospital P. Van Dyk | Dutch Health Care Inspectorate

5. 5 Example: Dashboard of a mental health provider (1) P. Van Dyk | Dutch Health Care Inspectorate

6. 6 Example: Dashboard of a mental health provider (2) P. Van Dyk | Dutch Health Care Inspectorate

7. 7 Analysing trends in IRiS P. Van Dyk | Dutch Health Care Inspectorate

8. 8 Analysing trends in IRiS P. Van Dyk | Dutch Health Care Inspectorate

9. 9 Riskbased Supervision: The search for early warnings CHAIN REACTION year T 0 year T +1 year T +2 year T +3 Organizational and managerial problems  financial results  capital buffer  DSCR at risk  long term debts  production Xmismatch of supply - demands  budgets  absenteeism  staff turnover  job vacancies  flexwork / interim Xboard changes  consultancy  short term debts P. Van Dyk | Dutch Health Care Inspectorate

10. 10 Case 1: the risk of merging hospitals Buffer Capital ratio as indicator for financial and managerial problems and – finally - high risks on patientsafety The story of Hospital X: Fusion of two hospitals in 1990. Outcome of a power struggle Increased supervision 2002 - 2005 2005: risks on lung surgery, acute care and orthopedic surgery 2008: high risk of infection on operating rooms  shutdown 2009: new owner; capital injection from government 2012: increased sales; more profit P. Van Dyk | Dutch Health Care Inspectorate

11. 11 Case 2: The fall of an institution. Decline in results, buffer capital, DSCR, turnover, Increase of absenteeism. x €1000 % Debt Service Coverage Rate Amount of cash flow available to meet annual interest and principal payments on debt. Increased supervision since 2010 There was a bankruptcy in 2011 with potential lost of care for all clients. Causes: Fusion of financial weak partners in 2005-2008; No insights in finance; CFO did not communicate … and died suddenly Effects:  bankruptcy 2011 financial setbacks (-18 mln) due to: increase costs, decline of benefits P. Van Dyk | Dutch Health Care Inspectorate

12. 12 Meaning of financial indicators Investigation on 40 yearly financial reports of providers:  with recent capital injection from government  with increased supervision in the last years  with penalties for fraud in the last years Findings:  75% did have financial problems before  25% did have organizational problems Financial problems caused by:  no business information on finance, due to administrative, communicative of ICT failures  no business information on client-needs  disinvestments  low conversion rate (short versus long term interests)  failed fusion of componies  too many major operations (like a fusion + big investments on new buildings) P. Van Dyk | Dutch Health Care Inspectorate

13. 13 Using finance indicators for riskbased supervision Financial indicators are not yet widely used as meaningful indicators for riskbased supervision... There’s a lack of sufficient knowledge on finance indicators  implementation is in progress …. Dutch Health Inspectorate: does not focus on finance itself (no legal task!) Dutch Education Inspectorate: does focus on finance itself (increased financial supervision; legal task!) The last inspectorate also finds relation between finance and quality: Boards under increased financial supervision often have problems with the quality of education in their schools or training. They have a relatively high number of (long-term) weak or very-weak schools. Almost half of the boards under increased financial supervision in basic education have deficiencies in the quality of their education. In secondary education even nine out of twelve (75%). Education is especially at risk in a situation of both financial and quality problems. P. Van Dyk | Dutch Health Care Inspectorate