1. Operational Benchmarking What, Why, How? Kevin Sheeran; National Director, Operational Improvement

2. Agenda  Benchmarking versus Benchmarks  Why Benchmark  What to Benchmark  Sources of Benchmarks  Key Ingredients of a Successful Benchmarking Program  Q&A

3. Reimbursement Quality Outcomes Clinical Integration Population Health The Budget IN A NUTSHELL……

4. Benchmarking and Benchmarks

5. Benchmarks

6. Benchmarks versus Benchmarking  Benchmarking is a process  Benchmarking is learning about and evaluating differences  Benchmarking is searching for a better way  Benchmarking is the starting point for solution development  Benchmarking is not a set of answers Benchmarking - “ Being humble enough to admit that someone else is better at something, and being wise enough to try to learn how to match or surpass them. ” The American Productivity & Quality Center

7. The Value of Benchmarking  Provides a common framework for discussion and decision making  Helps organizations to make better-informed decisions  Exposes organizations to innovations and breakthroughs  Helps organizations to see beyond the barriers, embrace change, and think "outside the box"  Provides organizations with a methodology and a plan for accelerating, implementing, and managing change

8. The Benchmarking Process  Use a standard set of definitions/metrics  Compare with similar organizations  Identify the gap  Perform the internal analysis  Identify a process to improve  Generate alternatives  Communicate with peers where and when needed  Implement change  Monitor performance

9. Benchmarks and Budgeting  Use facility and department level comparative groups  Set customized “targets” at the department level  Assess the impact of structural differences  Develop targets for:  Labor productivity  Labor Expense  Supply Expense  Overtime  Skill Mix  Retarget if/when conditions change  Use targets in setting, monitoring and managing budget performance

10. YORK, PA WellSpan Health

11.  Senior leaders required department heads to work with the Finance Department to identify opportunities for improved performance  Customized Comparative Groups at the department level to identify realistic targets  This transparent, data-driven process helped achieve buy-in from department heads and set expectations from the beginning

12. WellSpan Health  Eliminated a future labor expenditure of $35 million  Improved worked hours per adjusted discharge by 13 percent  Reduced the use of temporary help by 84%

13. Benchmarking and Performance Improvement  Identify differences in process and responsibilities  Identify opportunities in throughput, room utilization, and waste  Use the metrics to focus in on process change opportunities  Communicate with peers and others about specific opportunities or action plans  Trend internal data and external benchmarks to validate positive change

14. CHICAGO, IL Advocate Illinois Masonic Medical Center

15.  100 Top Hospitals ® National Benchmark Award winner  Goal to reduce expenses without compromising high level of care  Nursing focused on Premium Pay (Overtime, Contract Labor….)

16. Advocate Illinois Masonic Medical Center  Reduced overtime expense by $898,000  Reduced contract agency expense by $1.4 million - a 47% reduction in contract agency expense  Nursing division improved turnover rate by 15% and their vacancy rate by 28%  Patient satisfaction improved by 17 percent  The hospital realized $2.3 million in savings to the bottom line

17. Benchmarking and Management Development  Provide managers a view of how similar departments operate  Support discussions regarding the “how to” of change  Promote a questioning/learning environment  Benchmarking is not a one time thing  Benchmarking becomes part of the culture  Facilitate Communication and Learning Opportunities

18. Internal versus External Comparisons

19. Internal Comparisons  Productivity Monitoring  Budget versus Actual  Cost Accounting All important and all meaningful…..but only tell part of the story

20. “It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.“ Mark Twain Why Benchmark?

21. Culture Change Benchmarking Program Identify Opportunities Targets for Budget and Internal Monitoring Process Change

22. “Not everything that counts can be counted, and not everything that can be counted counts.” -Albert Einstein What to Benchmark

23. Operating Expense and Performance Metrics Total Operating Expense Total Labor Expense Total Non Labor Expense Utilization or Throughput Labor Productivity Skill Mix Overtime Contract Labor Average Length of Stay Procedures per Room per Day Walk Out Rate Inpatient Procedures per Inpatient Discharge Medical Supply Expense Non Medical Supply Expense Other Direct Expense  Equipment Repair & Maintenance

24.  Vendors  Truven  Premier  iVantage  GPO’s  Consulting Companies  Cost Reports  HFMA  MAP Keys  State Hospital Associations  Professional Organizations  ANA/NDNQI  Publications Sources of Benchmarking & Benchmarks Is the Information Actionable?  Timely  Consistent  Reliable  Understandable  Level of Granularity Lead to Cultural Adoption?  Transparent  Accessible  Promote Learning

25. A Successful Benchmarking Program

26. Successful Benchmarking Strategies  Compare to similar not identical organizations  Compare to “better” performers  Compare to “future state” organizations  Consistent with Organizational Goals  Recognize that the data is not going to be perfect  Focus on areas of true opportunity  Know yourself  Focus on the process not the numbers  Provide support – change is difficult  Do not accept excuses…..”but I’m different”  Why?  Is that an Opportunity to Change?  Learn and adapt – don’t copy  Linked to Management and Accountability Processes

27. Benchmarking Pitfalls  Not linked to organizational goals  Paralysis by analysis  Data Denial  “…but I’m different”  Unwilling to change  Lack of internal support and coaching  “Go ask your peers”  Perceived as fad of the year  Used as a hammer not a guiding tool  Unrealistic expectations (aka the x th percentile rule)  Lack of accountability

28. Peer to Peer Communication  Not the first thing to do!  Focus on process – not fishing  Know yourself before asking someone else  Provide detail on “how” you do things today  Provide detail on “how” you are planning to do things  Ask specific questions  Don’t copy  How would that work in your organization?  Follow up after process change

29. Indications of Success  Senior Management is aligned and committed  Department directors and managers are empowered to make decisions supported by dependable data  Data is utilized to broaden knowledge and identify opportunities for improvement  The discussions are about “how” not “why not”  Managers know their performance metrics and how they are doing

30. Summary  High performing organizations align strategy, management and leadership in achievement of goals  Performance Improvement requires a change in the “way we do things”  Benchmarking can be an effective tactic to support PI and change  PI requires unwavering leadership support and involvement  The “best” today may be the “norm” tomorrow

31. Thank You 31 Kevin Sheeran kevin.sheeran@truvenhealth.com 724-865-2811