Board Development and Leadership: The Road to Performance Management

1. Board Development and Leadership: The Road to Performance Management Terry Hill, Executive DirectorRural Health Resource Center Duluth, Minnesota

2. Technical Assistance & Services Center (TASC) • Federally designated resource center • Funded by HRSA’s ORHP • Supports Flex Program/CAH implementation in 45 states • Located in Duluth, Minnesota

3. Current Federal Contracts • Technical Assistance & Services Center (TASC) • Small Hospital Improvement Program (SHIP) • Delta Rural Hospital Performance Improvement (RHPI) • Rural HIT Project • Rural Hospital Education

4. Developing PerformanceImprovement Projects • Medicare Flex Program emphasis on Quality & Performance Improvement • Performance improvement/BSC initiatives underway in most states • Supported by state offices, QIOs and hospital associations

5. State CAH Performance Improvement Projects • Mississippi Delta Rural Hospital Performance Improvement Project • 120 hospitals in 8 state region • Components • - Comprehensive performance assessment • - Targeted performance and strategic planning initiatives • - Balanced Scorecard initiatives

6. State CAH Performance Improvement Projects • Nebraska P.I. Initiative • 32 hospitals in BSC initiative • CAH Executive Leadership initiative • State Balanced Scorecard Initiatives • - Alaska - Hawaii • - Pennsylvania - Oklahoma • - North Dakota - Arkansas • - Montana - Illinois • - Missouri - Kansas

7. What We’ve Learned • Hospitals often operate in a crisis management mode and don’t think strategically • Strategic planning is done but strategy execution is not maximized • Most rural hospitals lack ongoing board leadership and management education • CAHs are already collecting much information

8. Data -------------Information Action Steps CAH Data CollectionStrategic Purpose Data Collection Data Reporting Data Analysis Typical Effort Desired Effort • Hospitals make significant investments in collecting data for regulatory or accreditation purposes, which limits the value. • The goals are to push the Effort Curve to the right.

9. “Even small health care institutions are complex, barely manageable places…large health care organizations may be the most complex organizations in human history.” • ~ Peter Drucker

10. In the years ahead… • Rural health organizations will undergo profound change: • To meet new consumer and payer demands • To implement HIT • To be successful in P4P and new insurance models • This profound change and increasing complexity will require performance management systems

11. Performance Management Definition “A set of processes that help organizations optimize their overall performance. It is a framework for organizing, automating and analyzing methodologies metrics, processes and systems that drive business performance… Performance management is seen as the next generation of business intelligence, and helps businesses make efficient use of their financial, human, material and other resources.” - Wikipedia.org

12. Performance Management Definition “A framework for getting people, processes and resources aligned and moving in the same direction to achieve strategies that benefit the customer and the bottom line and result in organizational excellence.” - RHRC

13. Performance Management Systems • Performance Management Systems have 3 distinct dimensions: • Strategies- Make strategy the central organizational agenda • Focus and Alignment- Have resources and activities aligned with strategies • Organization- Provide the logic and architecture to link all departments and employees behind strategies. • Kaplan and Norton • Harvard Business School

14. The Journey to Performance Management • Quality Assurance • Quality Improvement • Performance Improvement • Performance Management

15. System for Managing Performance and Change in Rural Hospitals • Performance Management Framework • Studor Pillars • Balanced Scorecard • “It is rare to find companies without some form of balanced Scorecard. The difference is that more organizations now understand that the balanced Scorecard is a strategic management system, not just measurement. Strategy maps are the catalyst for that shift.” • --James Creelman, Senior Research advisor, the Hackett Group

16. Understanding the Balanced Scorecard “A successful Balanced Scorecard program starts with a recognition that it is not a metrics project… IT’S A CHANGE PROCESS” Robert Kaplan Balanced Scorecard Collaborative’s Government Summit. Sept. 2004

18. The Power of the Balanced Scorecard

19. Understanding the Balanced Scorecard • It’s more than most people realize • Not just a measurement system • Not primarily about the four “quadrants” • Not primarily a benchmarking tool • Proven Best Practice for achieving strategies and breakthrough results • Successfully adapted for Rural Hospitals

20. Definition of the Balanced Scorecard “The Balanced Scorecard is a framework that helps organizations put strategy at the center of the organization by translating strategy into operational objectives that drive both behavior and performance” The Balanced Scorecard Collaborative, 2004

21. Top 5 Reasons to Implement the BSC • Provides Focus • Creates alignment of resources and strategy • Makes strategy “real” • Facilitates organization-wide communication • Tells an organizational story

22. Brief History of the BSC Strategic Management HarvardBusinessReview Articles

23. BSC Perspective Perspective Key Question As financial stakeholders, how do we intend to meet the goals & objectives in our hospital mission statement? As customers of our hospital’s services, what do we want, need or expect? As members of the hospital staff, what do we need to do to meet the needs of our various customers? What type of culture, skills, training and technology are we going to improve in order to support our key processes?

24. HIT Valley of Despair Implemented and Supported Implement EHR Good Choices and management determines level of productivity and satisfaction Preferred Future Leadership and Management Determines how long you’re in the valley of despair. Productivity Little or No HIT Choices, Planning, Execution Determines extent of Slide Possible Future Time

25. HIT Theme Strategy Map Increased cost efficiency Ensure a skilled workforce Increased revenue Ongoing education Acquire needed HIT systems Clinical processes Acquire HIT expertise Increased market share Operational processes Establish an empowering work culture Leadership Instill change management Business processes Increased margin to fund mission Patient safety outcomes Patient satisfaction Community health outcomes Physician satisfaction Finance As financial stakeholders, how do we intend to meet the goals and objectives in the hospital’s Mission Statement? Customers & Community As customers of the hospital’s services, what do we want, need or expect? Internal Processes As members of the hospital staff, what do we need to do to meet the needs of the patients and healthcare community? Learning & Growth As an organization, what type of culture, skills, training and technology are we going to develop to support our processes?

26. System for Sustaining Performance and Change • 2. Empowering Culture • a. Change oriented • b. Customer Centered • c. Collaborative • d. Designed for retention • 3. Ongoing Education • a. On site • b. Online

27. Systems for Sustaining Performance and Change 4. Skilled Workforce a. Nurses and technicians b. Medical Staff c. IT expertise 5. Ongoing Process Improvement a. Clinical b. Business c. Operations 6. Leadership Development a. Board b. Executives c. Middle Management d. Physicians

28. Systems for Sustaining Performance and Change • 7. Technology • a. HIT • b. Medical • c. Management and Systems • 8. Partnerships • a. With physicians/clinicians • b. With other hospitals and health providers • c. With the Community • d. With educational institutions • Access to Capital • For improvements to plant • For investment to infrastructure • Outside Technical Expertise

29. On-Track to Performance Improvement

30. The Board’s Role in Performance Management • Often overlooked • Crucial to long range success • Will require investments of time and resources

31. Seven Deadly Sins of Ineffective Governance • Lack of mission, vision, strategies and focus • Resisting change and failure to make strategic investments • Making do with irrelevant, useless information • Lack of hospital board and management alignment • Hiring unqualified or ineffective leaders • Failure to spend meeting time on strategic priorities • Inability to understand or relate to physicians

32. Board Member Selection • Start with a plan • Recruit motivated people with needed skills • Nominating search committee • Develop selection criteria • Consider conflict of interest

33. Effective Use of Consent Agenda • Consent Agenda: • The process of grouping routine items into one agenda item for a single vote, aimed at saving valuable time for critical issues. Pros: - Frees time for focus on what is important strategically and operationally - Much more rewarding experience for members

34. Effective Use of Consent Agenda Cons: - Places responsibility (and risk) on members doing their homework before meetings - Non-board members can perceive “railroad” - Requires more work upfront - Can be counterproductive if members are reading advanced materials during the meeting

35. Acceptable Consent Agenda Items • Committee minutes and reports • Board minutes • Financial statements • Operating statistics • Quality reports • Medical staff reports and minutes • Medical staff credentialing and appointments • Management/CEO reports • Resolutions (background information in advance)

36. Source: Jim Stokes

37. Source: Jim Stokes

38. Source: Jim Stokes

39. Source: Jim Stokes

40. Source: Jim Stokes

41. “Even if you’re on the right track,you’ll get run over if you just sit there.” • Will Rogers

42. Terry J. Hill, MPA Executive Director, Rural Health Resource Center 600 E. Superior St., Suite 404 Duluth, MN 55802 218-727-9390, ext. 232 thill@ruralcenter.org