Issue link: https://industrialengineer.epubxp.com/i/905872
December 2017 | ISE Magazine 41 As the healthcare industry continues to evolve and maneuver around everchanging political, regula- tory and environmental constraints, organizations need a self-reflection to assess whether they are leading or lagging. At the heart of this assessment is developing, reviewing and integrating key perfor- mance indicators (KPIs) into the business model. In short, you don't know what you don't know. Top healthcare leaders need to ask several questions during organizational self-assessments: • Are we measuring the right KPIs? • Are the organization's KPIs leading or lagging? — Is the KPI data real time or painting a picture of past performance and issues? • What is being done with the data? — Is the data being used to spawn immediate action plans? • Do the right people have access to the KPI data so that they can use the numbers to implement the appropriate changes? • Are the KPIs trending in the right direction? If the answer to any of these questions is no, then your healthcare enterprise needs corrective action. What to measure The first and most important question to ask is, "Is the orga- nization measuring the right KPIs?" In order to answer this question, your healthcare enterprise needs to dissect itself into a minimum of three levels and determine what KPIs are being measured as compared to the ideal future state. Figure 1 provides a simple breakdown of a healthcare orga- nization into three levels: Enterprise (C-suite view), divisional (strategic business unit) and operational (business unit). The enterprise KPIs are the overarching high-level KPIs that affect the strategic direction of the organization, something that is monitored by and reported to top leaders. Typically, enter- prise KPIs should be limited to a dozen or so. The divisional KPIs focus on the major segments of the organization tied to strategic goals, and the operational KPIs are tied to front-line areas that tend to face the customers. While the number of enterprise KPIs tends to be limited, operational and divisional KPIs can easily reach dozens. It is important to note that although each level may have different KPIs depending on the business unit, all KPIs should roll up and revolve around organizational strategic goals. If not, then the organization more than likely is not measuring the right KPIs. The KPI development process A good starting point when developing organizational KPIs is to define and focus on strategic goals and imperatives. The organization's performance should correlate directly to the strategic direction of the enterprise, and KPIs will signal if the organization is heading in the right direction. Once the KPI focus is established, determine if the data for each KPI is currently real time or retrospective, meaning does the data represent weeks, months or even years past. The goal would be to have as much real-time KPI data as possible to provide an accurate picture of the organization's current per- formance relative to service, cost and quality. Retrospective KPI data carries many problems. After all, the healthcare environment changes constantly, and customer requirements are now in the forefront of how an organiza- tion performs regarding service, cost and quality. Lagging KPI data may provide a false sense of security, because more times than not small issues will become major issues before those in charge realize what's happening. Also, lagging KPI data may present a challenge in meeting current customer requirements in a timely fashion. Although some healthcare KPI data will have to be retrospective simply due to the regulatory environ- ment and reporting mechanisms, the goal is to limit this as much as possible. Next, the focus should revolve around the data source for each KPI. Ideally, each data source would provide an auto- mated real-time report or dashboard data feed of accurate data. It is imperative to validate the data from each KPI source to ensure the data are accurate, reliable and trustworthy. Bad data are useless and could result in disastrous consequences for the customer and organization if used in strategic or operational planning and execution. Third, it is imperative to consider form then function dur- ing KPI development. Form is represented by historical de- mand analysis of the actual number of units per hour for each day of the week that the business unit is processing or servic- ing. For example, it could be the number of bills completed per hour by a billing office, the number of 911 calls received by an ambulance provider or the number of clinic patients seen A FIGURE 1 Divided KPIs Healthcare organizations should place appropriate key performance indicators (KPIs) into three levels: Enterprise goals for the C-suite, strategic goals for strategic business units and front-line metrics for operational business units. Enterprise Divisional (Strategic business unit) Operational (Business unit) C-Suite SBU BU