More than Metrics: A Structured Approach to Healthcare Operational Performance
To maximize revenue, cash flow, profitability, patient satisfaction and successful health outcomes, all stakeholders in the U.S. healthcare system need to understand how their business is impacted by particular internal and external drivers. In addition to business performance metrics, healthcare businesses must continuously assess and drive improvement in both operational and clinical processes, workflows, policies and controls that impact the critical metrics that matter to the business. Without such measures, healthcare leadership is flying blind, unable to compete in an increasingly complex and ever-changing operating and regulatory environment.
This is easier said than done. The struggle for healthcare leaders is not merely to identify, report on and communicate the metrics that matter, but to implement effective strategies to move those metrics in a positive manner and to tie metrics to performance measures and outcomes for internal and external audiences in a consistent language that makes sense to all participants.
How can healthcare stakeholders – who are always constrained by time and resources – overcome these obstacles to deliver measurable and meaningful performance improvements for the organization?
Riveron’s Healthcare Industry Team has developed some simple and practical suggestions for addressing and improving key metrics for participants in the healthcare ecosystem. They go beyond identification and measurement, to significantly address how a management team thinks about, communicates, and understands the metrics that impact business outcomes.
Everything starts with having the right people in the right roles and engaging those people in smart ways. When identifying metrics, do so as a team. Identify the smallest group of people within an organization who are “champions” of a given initiative. Collect continuous input and assign responsibilities for developing a reliable proof-of-concept. It is easier to address some simple metrics first rather than try to do this all at once and to learn along the way what works and does not work for the organization’s culture, processes and controls, systems and vendors/suppliers/partners.
As an example, some organizations prioritize metrics related to financial measures that feed into Days Sales Outstanding in a direct or indirect way, but others begin by examining indirect drivers to financial measures that focus on insurance verification and eligibility rations, claims and denials, and patient access ratios.
To sustain this effort, it is critical that high-level business performance metrics are tied in some way to business unit and ultimately individual metrics, and that the approach is determined by team consensus. Again, every organization will be different in terms of the metrics that matter, but also in terms of the cultural alignment potential between individual metrics and business performance outcomes.
2. Processes, Policies and Controls
Once you have established your teamand the metrics that matter, it is necessary to define and prioritize reliable and relevant sources of data, and the period of consideration. It is helpful, for instance, to perform a 12-24 month lookback to establish a baseline set of expectations (‘benchmarks”) upon which to develop improvement plans and forecasts going forward. It is also necessary to, as a team, develop a common language around metrics and what those metrics mean. How will one group interpret Claims Denial rates from another? How will one audience use a rolling cash forecast? The reason and the purpose of metrics are as important as the metrics themselves.
As mentioned above, don’t try to address all challenges at once. Define the few metrics as priorities, then begin to slowly expand upon measures and outcomes to serve multiple audiences within the business. Some Riveron clients are primarily focused on cash flows, AR or profitability while others focus on patient health outcomes, payor payment rates, and payor mix.
Once metrics are implemented, establish and document policies for critical tasks, and continuously refine and improve processes and controls by layering in additional metrics and bands of performance tolerance. As mentioned above, implement improvement goals tied to personnel performance goals.
Addressing metrics such as revenue, cash flow and profitability means identifying root causes such as optimizing the payor mix or avoiding bad debt. Make sure to identify true root cause and not just secondary drivers. Avoiding bad debt, for instance, means engaging clients and payors as early in process as possible to set expectations and avoid surprises. That entails more than registration or point of service collection. Avoid surprising patients with unexpected bills by investing in, and motivating and training staff to communicate openly and frequently on expectations and payment methods (financial clearing). Give the team tools to estimate cost upfront, and make sure that staff is well-informed on potential financial assistance options. Avoid angering clients at sensitive times; the evening before a procedure is not the right time to reach out via email or phone, and mindfulness around this type of gaffe is crucial. Spend the time with the team to keep them motivated, engaged and informed in areas such as data entry requirements, patient communication requirements, payor rules, and workflow tools.
Ensure that communications with partners (such as payors) are frequent and thorough. This requires a payor contracting specialist who is not afraid of tough conversations. Make it as easy as possible for the patient to pay. Make it as appealing as possible to implement and adopt consistent payor interactions.
Allot time during serial meetings with (for example) the Revenue Cycle Management team on root cause analysis. Get the team involved by asking each team member to present a challenge the team can discuss collectively and develop hypotheses to test and identify opportunities for improvement. Do not get into a habit of identifying solutions until you can prove that the hypothesis you are testing is indeed correct and not merely symptomatic of or correlated with another driver.
Occasional outside eyes such as an audit team or a business process expert helps both validate that things are happening according to plan, and offer ideas and observations for improvement. Third party perspective proffers experience from many different situations and challenges, and current knowledge of various tools and technology, regulatory changes and other issues of interest.
3. Systems and Technology
As mentioned previously, every organization is unique, so apart from critical cash flow and revenue metrics, every organization will prioritize and track metrics specific to their business and to the population served. Getting the metrics right includes getting the people, processes and controls in place, but it is also crucial to support the business with appropriate tools and technology. Whenever considering the systems and technologies needed to support the business, keep in mind that IT supports the business, not the other way around. Get processes right first, then address the technology environment to support the business. Include the business owners and system users in understanding and defining business requirements for IT as well as the reports and metrics your team needs.
To support a team, consider going beyond basic financial reporting systems to provide robust data analytics and business intelligence tools for financial analysis, claim and denial trending, bad debt write-offs, propensity to pay, and cash flow forecasting. A high-performing team will consider metrics such as payment trends by procedure, payor performance and payor mix trending, authorization trending, payment by geography, and by specialty.
In addition to metrics, many organizations include workflow tools for staff support, online patient payment channels and other tools to support internal teams.
Finally, implementation costs are a sound investment. Testing, project management and documentation are all important not only for systems implementation today, but for future needs such as integration of an acquisition or merger. Measure twice, cut once.
The healthcare system is increasingly complex, volatile, and subject to intense pressure from regulations and legislation, market and consumer demands, competitors and disruptors. It is critically important to go beyond metrics and reports and support the business with the right people and skills, the right processes and controls, and the right systems and tools to support the organization.