Guest Column
Benchmarking: Beating the information explosion
By Shelley Burns
Director of Knowledge Management
The Healthcare Management Council
Needham, MA
What could possibly be more intriguing for health care professionals than access to comparative data, of all types, at their doorstep, for use at any time? The only fantasy more engaging would be having the data and actually being able to use them constructively. Many executives shudder at the idea of organizing and analyzing data. That reaction comes from the sheer volume of the data, their complexity, and often their complete irrelevance to their situations. Yet, it’s widely known that when data are organized strategically, such as with benchmarking analysis, they suddenly take on a sense of structure. It’s the structure behind benchmarking that gives organizations the confidence to use their databases for making decisions and taking action.
One of the biggest challenges for health care organizations is interpreting their data. But data are gathered so those organizations can compare themselves to others in the same field, have a better understanding of their own operations, and have the data for use as a guide in the search for improvement priorities. With these data seem to come tremendous opportunity, but not without a caveat. Challenges often arise when organizations attempt to make sense out of massive amounts of information.
For starters, far too much is expected of these unanalyzed data, especially when department managers are the ones delegated to the job of analyzing them. The unique skills required for such extensive data analysis are greatly underestimated. The reality is that well-analyzed but imperfect data rate as far more valuable than a massive, insignificant database. What is needed is a method by which the data can be organized and structured — or the practice of benchmarking. It provides the means for an organization to identify the most important questions to ask as well as the confidence to act on them accordingly.
The basics of benchmarking
Stated simply, benchmarking ties all the numbers together in a way that uncovers best practices within an industry. "It’s a guidepost," says Sherry Kwater, director of Case Management at St. Francis Medical Center in Peoria, IL. "It shows me my current opportunities, where my future opportunities may be, as well as where my organization can make a potential impact." Kwater believes strongly in the practice of benchmarking. Once she determines opportunity, she also uses benchmarking to find out where to focus her efforts. "If it says I have a $5 million dollar opportunity in my rehab department, first I do a check and balance with past rehab records, and then I move forward."
Kwater further emphasizes that the most important step in her process is contacting the organizations she aspires to emulate. "I’ll ask them what their top five innovative developments are that have contributed the most to improved performance." From there, she analyzes how those might transfer to her organization.
"All benchmarking really tells us is someone is doing it better, so let’s find out what they’re doing," adds Kwater. In other words, health care organizations need to step back from the trenches created by what is called data denial. Without knowing it, an institution can be swallowed up in mounds of data, which ends up defeating its purpose.
Consider an example: A 243-bed hospital faces the prohibitive costs of maintaining a low-volume obstetrics service line. In 1999, the hospital had 396 obstetrics cases. After doing an analysis, it uncovered the following:
• Cost per case for the obstetrics service line was 131% greater than the benchmark target.
• The primary issue was a cost per patient day, which was 90% above the benchmark target.
• A functional cost review shed greater light on this problem, identifying nearly $800,000 in potential savings over the 65th percentile target in obstetrics nursing at the hospital.
• Management issues that were highlighted included: high cost per patient day ($992 vs. benchmark target of $318) and high labor hours per patient day (34 hours vs. benchmark target of 11 hours).
After performing a market analysis, the organization learned that the majority of births to mothers in its city (and surrounding communities) were performed at other hospitals in the area. While community hospitals typically overlook the unprofitable nature of obstetrics in order to build relationships within the community, the marketplace viewed obstetrics as a specialized service.
Consumers were choosing hospitals based on reputation and amenities instead of proximity and allegiance to their community. Rather than trying to find more ways to cut costs on an unpopular service line, the hospital determined the best way to impact profit margin would be to eliminate the obstetrics unit. In the end, it expects to reduce its budgeted loss by more than $1 million for 2001.
As with the prior example, benchmarking helps uncover what otherwise might take many years and many thousands of dollars to disclose. Using the following tips, organizations can save time, money, and reputation:
• Educate the entire team on the role being played by benchmarking analysis.
• Focus on data relevance vs. statistical significance.
• Utilize any well-analyzed, relevant data. Don’t write off "older" data by waiting for a new report. As long as they’re relevant and strategic, they’re useful.
• Focus on as few specific, strategic numbers as possible. The alternative will create massive reports with great detail but no focused direction.
• Benchmark data by comparing them with peer performance.
• Compare the data to other organizations that are also committed to sharing practices.
• Encourage integration of information from multiple sources. That includes internal trends, external comparisons, anecdotal knowledge, and industry trends.
Somewhere in an organization’s reams of data are the sources of their biggest operating challenges and the clues to their greatest opportunities. But why search for the right questions to ask about company performance when benchmarking can lead directly to them? One of the biggest challenges for organizations is to be able to interpret data so the best decisions can be made accordingly. By strategically analyzing significant information, health care institutions can jump far ahead in understanding what performance improvement opportunities are available. Only then can they plan for and establish their own best practices.
[Shelley Burns heads the Knowledge Management team at The Healthcare Management Council Inc., located in Needham, MA, a benchmarking and consulting firm. For further information, call (781) 449-5287 or visit the company Web site at www.HMC-benchmarks.com.
If you have an idea for a guest column, contact Healthcare Benchmark’s editor Lisa Hubbell at [email protected].]
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