CEO Alert: Is your performance scorecard missing the mark?

Most US hospitals, large or small, have a mechanism in place to track performance metrics. Having a scorecard is a good start but consider these questions: Are you certain your scorecard is measuring the right things? Is it helping you diagnose causes and effects? Is it helping you create inter-departmental alignment? Is it generating evidence-based business intelligence you can you can use to tangibly improve performance? If you answered ‘No’ to any of these questions, you may find the following suggestions useful:

Suggestion #1: Monitor outcomes (effects) and performance drivers (causes).

Employee satisfaction, employee engagement, and employee loyalty are outcomes. So is patient satisfaction, turnover rates, and financial scores. On the contrary, the talent of senior leadership, front-line manager capability, and focus on patients vs. profits are performance drivers. What we typically see when we examine healthcare scorecards is that they mostly track outcomes and not performance drivers. By missing the latter, you are losing the ability to establish cause and effect relationships that can give you useful information on improving performance.

Although departmental metrics may be meeting your internal targets, unless you can compare each department’s scores to national standards (i.e., percentiles) you don’t really know which departments are underperforming. It’s the difference between an x-ray and an MRI scan. For example, you may find that the employee engagement level of your ICU is 75 points out of 100 and consider that satisfactory. Nevertheless, that score may place the ICU on the 50% percentile when compared to national scores. In other words, even though it appears that employees in the ICU are engaged, when compared to their peers in other units across the country, they clearly are not. In short: unless you compare each department to its equivalent in the healthcare industry, you don’t really know how well that department is performing.

Suggestion #3: Ensure that your scorecard is designed to improve organizational alignment.

Poor organizational alignment is one of the fundamental root causes of shrinking net operating margins and poor performance. Unless your scorecard is purposely designed to improve organizational alignment and ensure that everyone is working together to achieve their stated objectives, it is missing the mark.

Suggestion #4: Use a ‘structured’ approach that converts raw data into actionable business intelligence.

A “structured approach that converts raw data into actionable business intelligence will allow you to create customized action plans (prescriptions) for each leader. Customizing action plans one department at a time, is the most effective way to improve overall performance.

Suggestion #5: Customize your scorecard to your organization’s goals, strategies, and structure.

Generic scorecard models can be useful but they should only serve as points of reference. Customizing your scorecard to your particular situation and needs is paramount.

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Suggestion #2: Compare your metrics to national benchmarks not only at the organizational level but at the departmental level as well.