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CHAPTER

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CREATING ALIGNMENT: QUALITY MEASURES AND LEADERSHIP

Michael D. Pugh

Introduction

Creating alignment around strategic quality and operational objectives is a critical leadership function. When organizational quality strategy fails to deliver, the question is often presented as a binomial choice of whether the failure was the result of a poorly conceived strategy or poor execution. Usually, it is a combination of both: Poorly articulated, nonmeasurable quality aims gener- ally lead to poor execution. Organizational efforts to improve quality, patient safety, patient experience, and clinical care begin with clearly articulated and measurable quality aims, with measures that then can be cascaded down the organization to create alignment of efforts at all levels. This chapter will explore some of the measurement tools and approaches that organizational leadership can use to create alignment and deliver results.

Quality Measures and Metrics

The past decade has witnessed an explosion of quality metrics and quality mea- surement across healthcare, not only to support organizations’ internal quality improvement efforts, but also to meet the demands of external accreditation agencies (e.g., The Joint Commission), health insurance companies, and gov- ernment payment programs.

The Centers for Medicare & Medicaid Services (CMS) requires hos- pitals to submit more than 60 measures—in addition to Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey results—as a condition of participation in the Medicare and Medicaid programs. These measures are used by CMS both for payment programs and for efforts to inform the public about comparative hospital performance (including published star ratings). CMS also requires submission of quality measures for long-term care (e.g., nursing homes), physician services, dialysis centers, and some ambula- tory care settings.

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C o p y r i g h t 2 0 1 9 . H e a l t h A d m i n i s t r a t i o n P r e s s .

A l l r i g h t s r e s e r v e d . M a y n o t b e r e p r o d u c e d i n a n y f o r m w i t h o u t p e r m i s s i o n f r o m t h e p u b l i s h e r , e x c e p t f a i r u s e s p e r m i t t e d u n d e r U . S . o r a p p l i c a b l e c o p y r i g h t l a w .

EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 9/18/2023 10:38 PM via NATIONAL UNIVERSITY AN: 2144507 ; David Nash.; The Healthcare Quality Book: Vision, Strategy, and Tools, Fourth Edition Account: natuniv.main.eds

The Healthcare Qual i ty Book302

Payment systems continue to evolve from the traditional fee-for-service models to value-based payment models in which payments are modified based on the achievement of measure-based quality goals. Accountable care organiza- tions (ACOs) must submit quality metrics and achieve certain measurable goals to qualify for risk-sharing payments. Hospitals that participate in the Medicare Value-Based Purchasing Program have a percentage of their Medicare payment at risk, depending on comparative quality performance.

Physician payment for professional services is increasingly being tied to achievement of quality goals and submission of quality metrics in the physician office setting. The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), for instance, made significant changes in the way that physicians are paid for their services.1 These changes are not limited to government programs. Private health insurance payment systems, too, are moving toward value-based payment programs that require the submission of performance and quality measures.

The collection and publication of quality measures have become big business for a number of organizations and a major cost for healthcare pro- viders. Kevin Sower, former CEO of Duke University Hospital in Durham, North Carolina, noted in 2016 that Duke spent approximately $11,000,000 per year collecting, analyzing, and reporting healthcare quality measures to various external agencies.2

CMS uses quality measures submitted by hospitals, nursing homes, reha- bilitation centers, and other provider types, as well as quality measures collected from Medicare Advantage health plans, to present consumer-facing compara- tive information. This information is available via the Nursing Home Compare (www.medicare.gov/nursinghomecompare/) and Hospital Compare (www. medicare.gov/hospitalcompare/) websites, which use five-star quality rating systems, as well as through the Medicare Advantage star ratings for health plans.

Beyond CMS, a variety of online systems use both the publicly available Medicare database of submitted measures and proprietary databases to present ratings and rankings. Multiple states, state hospital associations, hospital trade groups, commercial websites (e.g., Healthgrades.com), and business coalitions (e.g., the Leapfrog Group) also publish sets of quality measures.

Transparency about quality and performance is intended to spur health- care organizations to pay closer attention to important indicators and to pro- vide consumers with the information they need to make better healthcare purchasing decisions. However, many people in the healthcare field consider the public reporting of performance data as a questionable regulatory process that does not necessarily provide a meaningful reflection of an organization’s performance. Complying with regulatory reporting requirements, they note, is different from focusing on a set of key performance indicators that organi- zational leaders use to guide improvement efforts.

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Chapter 12: Creat ing Al ignment: Qual i ty Measures and Leadership 303

Commonly Used Quality-Measurement Sets Hospitals routinely collect and review patient satisfaction and financial indicators and monitor a large, diverse set of quality indicators. The Joint Commission requires organizations to collect, monitor, and report specific sets of indicators as a condition of accreditation. Currently, CMS requires both hospitals and long-term care facilities to collect a broad set of quality and clinical indicators that are then made publicly available through CMS websites.

The National Committee for Quality Assurance (NCQA) sponsors the Healthcare Effectiveness Data and Information Set (HEDIS), which is used by more than 90 percent of US health plans and managed care organizations to measure performance across important dimensions of care and service. To demonstrate effectiveness of care for their members, health plans collect data on the percentage of eligible members who receive screening for breast cancer and colorectal cancer, among other measures. They also collect information on whether members receive appropriate treatment for diabetes, cholesterol management in heart disease, and upper respiratory infections in children.

HEDIS measures extend to individual physician practices and organized medical groups, which are measured on patient satisfaction as well as on the HEDIS clinical data set. Medical groups and outpatient care systems may also collect and track workflow and process indicators, such as the average waiting time to the next open appointment, the number of clinic visits per day, and the waiting time before patients are seen by a clinician.

Background and Terminology Robert S. Kaplan and David P. Norton first used the term balanced scorecard in their 1992 Harvard Business Review article “The Balanced Scorecard: Mea- sures That Drive Performance.” Based on a study of multiple companies, the authors examined approaches to organizational performance management beyond the use of standard financial and accounting measures. Kaplan and Norton’s theory is that reliance on traditional financial measures alone limits a company’s ability to increase shareholder value. This investigational premise is consistent with the position of quality guru Dr. W. Edwards Deming, who maintained that companies cannot be run by visible numbers alone (Aguayo 1991). To overcome this limitation, successful organizations use a broader index of performance metrics to create a balance between financial results and other important dimensions of performance.

Kaplan and Norton’s 1996 follow-up book, The Balanced Scorecard: Translating Strategy into Action, further examined the development of per- formance measures linked to organizational strategy. They advised that, for an organization to achieve results, the balanced scorecard should be central to the leadership system—not merely a balanced set of outcome measures for the organization. Kaplan and Norton (1996) observed that most organizations

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collect performance measures for important nonfinancial dimensions, such as customer service and product quality, but that those measures are usu- ally reviewed separately from the financial results and with less emphasis by senior leadership. Kaplan and Norton also noted that leaders can increase organizational alignment by simultaneously reviewing and monitoring critical measures across multiple dimensions of performance, not just financial dimen- sions. According to Kaplan and Norton, the balanced scorecard is more than a way to monitor a broad set of outcome or process measures—it is central to deploying organizational strategy.

Dashboards Although the terms dashboard and scorecard are often used interchangeably, they actually refer to two different things.3 The term dashboard brings to mind the instrument panel on an automobile, which, when the car is moving, enables the driver to monitor key performance metrics such as speed, fuel level, and direction. The driver may also have access to such metrics as tire pressure, revolutions per minute, engine temperature, and oil pressure. Many of the more detailed engine and car performance measures may be important to a professional driver in a high-performance race car but are generally not critical to the average driver’s journey from point A to point B. Instead, casual drivers rely on a dashboard that presents a core set of high-level measures to track the real-time process of driving the car. The pilot of an airplane, meanwhile, depends on a dashboard with a much more complex collection of instruments to track critical operating information.

Both the driver of a car and the pilot of an airplane monitor multiple performance indicators simultaneously to arrive at the intended destination successfully. At any given point in the journey, the driver or the pilot might focus on a particular indicator, but overall success depends on the collective performance of the systems represented by the various indicators on the dash- board. Similarly, in the business world, dashboards are tools that report on the ongoing performance of the critical processes that lead to organizational success rather than on the success itself.

Scorecards The term scorecard brings to mind a different image. Scorecards are used to record and report on periods of past performance, rather than on real-time performance. Generally, scorecards reflect outcome measures rather than process measures. They are analogous to school report cards, which are issued after all work has been completed and use a specific grading standard to indicate how an individual student performed.

Although a lag time exists between the performance and the reporting, the information in a report card can still be used to make changes to influence

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Chapter 12: Creat ing Al ignment: Qual i ty Measures and Leadership 305

future outcomes—for instance, improvements in the student’s study habits or class attendance, allocation of additional study time to specific subject matter, outside tutoring, or help with homework preparation. However, the possible changes result from the investigation of the current process rather than the review of past performance information presented in the report card.

The differences between scorecards as measures of outcomes or results and dashboards as measures of process may be logical, but in terms of practi- cal application in healthcare, they are rarely distinct. Healthcare organizations are complex, and a metric often may serve as a process measure and the proxy for an outcome measure at the same time. As a result, many organizational scorecards and dashboards contain a mix of outcome-, strategy-, and process- related measures. The key issue is how leadership uses individual measures and measurement sets to align priorities and achieve desired organizational results.

Quality Assurance, Quality Control, and Quality Improvement

Quality assurance, quality control, and quality improvement are related but distinct concepts that represent different mental models and different uses of quality measures and data in healthcare delivery organizations. Exhibit 12.1 illustrates some of the key characteristics of each.

Quality Assurance • Retrospective review • Risk management—root

cause analysis

Quality Control

• Take action when not meeting targets or KPIs

• Regulatory approach

Quality Improvement • Process and system improvement • Reduce variation • Align outputs to customer needs • Continuous & part of daily work

Source: MdP Associates, LLC. Used with permission.

EXHIBIT 12.1 Quality Control, Assurance, and Improvement

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Quality Assurance Quality assurance (QA) can generally be described as the process of retrospective review or study to identify problems or patterns of problems. The collection of patient incident data can be categorized as a QA risk management function, as can the routine or special retrospective audit of patient medical records. Audit processes are routinely used by researchers, clinical staff committees, and others to compile retrospective performance data or investigate incidents or other questions about clinical care. The data produced may be useful for finding areas that need improvement or identifying incidents of patient harm that may need further investigation.

Quality Control Quality control (QC) can generally be described as the collection and ongoing monitoring of process and clinical measures that have been identified by the organization or are required for submission to an external payer or regulatory agency. It is essentially a management function, and the data monitored should be important to the managers and clinicians in the care delivery system as a means of spotting problems and issues that need to be addressed.

One way to think about QC is to imagine a common scene from old science fiction movies. A control room is full of people in white coats staring at monitors and dials when, suddenly, something dramatic happens. Red lights flash, dials spin, and warning sirens go off, signaling an emergency and causing people to quickly react. Quality control in healthcare is often similar. Measures are collected and monitored, and when a measure is not meeting expected levels of performance, management is expected to take prompt corrective action.

Hundreds of QC measures are collected throughout the healthcare deliv- ery system. For instance, hospitals routinely collect and monitor the number and rate of hospital-acquired infections, patient falls, and other patient safety indicators. Other QC measures may include appointment no-show rates, read- mission rates, imaging study retake rates, clinical care guideline adherence, and average wait times. Most of the measures collected and reported to external agencies fall into the category of QC.

Sometimes, organizations select certain subsets of QC measures and label them as key performance indicators (KPIs), with assigned targets for per- formance. The KPIs are then used for a variety of management incentive and performance review programs. Organizations may also use their QC measures to help set organizational priorities for improvement.

One of the early quality pioneers, Dr. Joseph Juran (1974), is known for the “Juran Trilogy” of quality planning, quality control, and quality improve- ment. Quality planning involves understanding what is important, needs to be measured, and needs to be “controlled.” Quality control involves monitor- ing key performance metrics to ensure that performance is within expected

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Chapter 12: Creat ing Al ignment: Qual i ty Measures and Leadership 307

standards, or the “zone of control.” When leaders determine that a metric needs to operate at a different level of performance or with a different set of standards, they pursue quality improvement to move the performance of the system into a new “zone of control.”

Quality Improvement An old adage states that “you do not fatten a cow by weighing it.” Moving beyond simply collecting and reporting measures for QC, quality improvement (QI) in healthcare can be described as the active effort to improve clinical, experience, safety, and cost outcomes by focusing on the processes and systems that produce those outcomes.

Hospital mortality rates, patient satisfaction scores, readmission rates, inpatient length of stay, glycemic control in diabetic patients, blood pressure control, patient functional outcome measures, cost per discharge or procedure, and cost per member per month in health plans are all examples of outcome measures of complex clinical and administrative processes. In recent years, the Institute for Healthcare Improvement’s (IHI’s) Triple Aim, shown in exhibit 12.2, has sought to move the discussion about outcomes from delivery system outcomes to the population-based outcomes of population health, patient experience, and cost per capita (IHI 2018; Stiefel and Nolan 2012).

In developing and deploying a QI strategy, organizational leadership might focus on one or two high-level outcome measures—such as hospital mortality, patient harm index, or patient satisfaction scores—and then seek to focus improvement efforts on the processes and care systems that contribute to the outcomes being measured. For example, improving hospital mortality

Per Capita Cost

Experience of Care

Population Health

IHI Triple A im Source: The IHI Triple Aim framework was developed by the Institute for Healthcare Improvement in Boston, Massachusetts (www.ihi.org).

EXHIBIT 12.2 The Triple Aim

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generally requires an organization to focus on reducing device-related infections from central line insertion and ventilators; ensuring the early identification and aggressive treatment of sepsis; working to prevent medication errors, patient falls, and other patient harm events; and reducing delays in treatment. Rather than simply monitoring measures and levels, organizations apply QI tools and methods to find ways to dramatically reduce or eliminate events that contribute to hospital mortality.

The description of QI presented in this section is intentionally narrow to enable comparison with the functions of QA and QC. However, for some healthcare organizations and leaders, QI is not just a set of projects or activi- ties but rather a philosophy that shapes leadership and management systems. Organizations such as Virginia Mason (Seattle, Washington), Park Nicolett (Minneapolis, Minnesota), ThedaCare (Appleton, Wisconsin), and McLeod Health (Florence, South Carolina) treat QI as a specific management philosophy and corresponding set of mental models that leaders adopt and use to organize their leadership and management systems.

Leaders in these organizations, building largely on the work of Deming (2000) and his System of Profound Knowledge, have sought to transform the way healthcare work is designed, organized, and performed to reduce cost, remove waste, and improve the patient experience and clinical outcomes. The branding of these efforts, with specific sets of tools, activities, and methods, has led to popular approaches such as Lean, the Toyota Production System (TPS), Robust Process Improvement (RPI), and Continuous Quality Improvement (CQI). The leadership effort involved in transforming an organization based on the principles of a management philosophy is significantly broader than simply using QI or Lean tools for certain projects or initiatives.

Leadership, Measurement, and Improvement

In 2013, IHI published a white paper titled “High-Impact Leadership: Improve Care, Improve the Health of Populations, and Reduce Costs.” In that paper, Swensen and colleagues (2013) propose that, to achieve Triple Aim results, leaders need to adopt new mental models about quality and value, practice high-impact leadership behaviors, and create a deployment strategy around the IHI High-Impact Leadership Framework (see exhibit 12.3).

According to the IHI paper, one of the five high-impact leadership behaviors that is directly related to the measures and measurement is trans- parency (see exhibit 12.4). Leaders model transparency by being open about organizational progress against strategic quality aims and by promoting the

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Chapter 12: Creat ing Al ignment: Qual i ty Measures and Leadership 309

IHI High-Impact Leadership Framework

High-Impact Leadership Behaviors

New Mental Modes

How leaders think about challenges and solutions

What leaders do to make a difference

Where leaders need to focus efforts

Source: Swensen S, Pugh M, McMullan C, Kabcenell A. High-Impact Leadership: Improve Care, Improve the Health of Populations, and Reduce Costs. IHI White Paper. Cambridge, MA: Institute for Healthcare Improvement; 2013. (Available at ihi.org.)

EXHIBIT 12.3 IHI High-Impact Leadership: Improve Care, Improve the Health of Populations, and Reduce Costs

1. Person-centeredness

2. Front Line Engagement

3. Relentless Focus

4. Transparency

5. Boundarilessness

Be consistently person-centered in word and deed

Be a regular authentic presence at the front line and a visible champion of improvement

Remain focused on the vision and strategy

Require transparency about results, progress, aims, and defects

Encourage and practice systems thinking and collaboration across boundaries

Source: Swensen S, Pugh M, McMullan C, Kabcenell A. High-Impact Leadership: Improve Care, Improve the Health of Populations, and Reduce Costs. IHI White Paper. Cambridge, MA: Institute for Healthcare Improvement; 2013. (Available at ihi.org.)

EXHIBIT 12.4 High-Impact Leadership Behaviors

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use of visual boards and the posting of quality and safety data about harm, satisfaction, and process reliability at the unit level by frontline workers. The open discussion of negative events is critical to leadership efforts to shape an organizational and team culture that promotes patient safety and supports accelerated rates of improvement.

The IHI High-Impact Leadership Framework (shown in exhibit 12.5) has two dimensions in which quality measures and metrics play a key role: (1) “Create Vision and Build Will” and (2) “Deliver Results.” Establishing mea- surable quality aims systemwide—such as “Reduce hospital mortality by 50 percent over five years” or “Reduce serious safety events by 70 percent”—helps create a vision of the quality efforts and build the will to achieve that vision.

The “Deliver Results” dimension requires leaders to have a plan to use proven QI methods that are dependent on quality and process metrics and deliver measurable outcomes that correspond to the three elements of the Triple Aim.

Source: Swensen S, Pugh M, McMullan C, Kabcenell A. High-Impact Leadership: Improve Care, Improve the Health of Populations, and Reduce Costs. IHI White Paper. Cambridge, MA: Institute for Healthcare Improvement; 2013. (Available at ihi.org.)

EXHIBIT 12.5 IHI High-Impact

Leadership Framework

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Chapter 12: Creat ing Al ignment: Qual i ty Measures and Leadership 311

Dashboards and Scorecards in a Strategic Leadership System Leadership in a healthcare organization is a complex system that incorporates beliefs, values, and behaviors, as well as a series of complex processes. Although the term leadership is commonly defined or associated with individual behaviors or characteristics, every organization has a system of leadership that is defined by the values, behaviors, and actions of leaders—in particular, where and how they spend their time, energy, and attention.

Exhibit 12.6 presents one depiction of a leadership system in a healthcare delivery organization. The system drives both organizational culture and the design and alignment of daily work, ensuring consistency with the mission and vision of the organization. One of the key elements of the leadership system is the measurement process, which includes dashboards and scorecards.

The challenge for healthcare leaders is to make sense of the multitude of measures and metrics that are routinely available. Scorecards and dashboards are useful for organizing important metrics, but healthcare leaders struggle with the question: What should we measure? That answer is tied to the answer to another question: For what purpose? Form should follow function.

Scorecards and dashboards should drive leadership behavior and be used to create alignment in organizations. Financial and volume measures have tradi- tionally driven management behavior in healthcare. Governing boards of health- care organizations have spent considerably more time reviewing and discussing financial reports than quality or patient satisfaction reports. Financial review still tends to dominate governance assessments of organizational performance, but

Mission &

Vision

People Processes Quality Processes Management Processes Clinical Processes Strategy Processes Communication Processes Measurement Processes

Design & Alignment of Daily Work

(operational & clinical measures)

Performance Patient & Organizational Outcome

Measures

Organizational Culture

(employee & cultural measures)

Values & Belief Systems Mental Models Business Model Patient Engagement Model Leadership Behaviors Organizational Structure

Source: MdP Associates, LLC. Used with permission.

EXHIBIT 12.6 Healthcare Leadership System

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an important shift has occurred over the past decade. Increasing numbers of hospital boards and senior leadership teams are recognizing that performance in healthcare involves much more than the financial bottom line and are now devoting equal or more time to reviewing clinical quality, workplace culture, and patient experience data. However, despite the increased global emphasis on patient safety and harm prevention, patient safety indicators still tend to be underrepresented on many organizational performance scorecards, relative to other measures of performance.

A typical hospital routinely collects hundreds of quality and performance measures for external reporting to regulatory agencies and for internal quality monitoring. Reports generated by the quality department are often volumi- nous, populated with hundreds of process-based measures and some outcome measures, and they tend to be reports of past performance rather than drivers of future efforts. It is up to leadership to create a focus around a core set of measures to drive the quality strategy.

For example, a quality control measure such as the hospital infection rate or the hospital inpatient mortality rate is commonly included in a leader- ship report, even absent an active improvement effort or link to organizational strategy. Healthcare organizations have monitored infection rates and mortality rates for years but have tended to act only when an infectious outbreak has occurred or when an incident report or the medical staff peer review process has revealed known instances of avoidable patient harm or death. Simply tracking an indicator is not enough. Often, a wide gap exists between the measurement set that is considered to be a scorecard or dashboard and leadership’s actual use of the tool to drive improvement and change.

Organizing Measures by Category Creating useful information out of the myriad measures and data routinely collected for internal improvement efforts and external reporting to CMS or others is a challenge for healthcare organizations. The availability of electronic medical record and billing systems in the United States is making it easier for healthcare delivery organizations to collect some quality and performance measures, but taking full advantage of technology to track and report quality measures remains, for many organizations, a significant challenge and expense.

Healthcare organizations traditionally sort the measures they collect into categories such as financial, volume, satisfaction, patient safety, clinical quality, and population health. Some healthcare organizations have developed summary dashboards of key indicators, organized by category, to sharpen focus and to facilitate reporting and day-to-day management of various functions. Quality scorecards and safety dashboards have become popular ways of reporting on clinical quality to medical staff committees and to the board.

Dashboards and scorecards may be organized in formats ranging from simple tables to web-based graphical reports embedded in computerized

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Chapter 12: Creat ing Al ignment: Qual i ty Measures and Leadership 313

decision-support systems. Data report formats include tables, radar charts, bar graphs, run or control charts, and color-coded indicators designed to highlight metrics that do not meet targets or expectations.4 In some organizations, each operating unit has a scorecard of key indicators that mirrors the organizational scorecard.

Formatting available measures into a summary dashboard—whether departmental, category specifi c, or cross-dimensional—is a start. However, senior leaders can harness the real power of measures by organizing their leadership systems to achieve results.

Measures for Governance and Leadership Healthcare organizations should consider the use of three basic sets of mea- sures when designing a scorecard or dashboard: those of governance function, leadership function, and management function. These three basic types are summarized in exhibit 12.7.

At the governance level, a set of organizational performance measures should be defi ned and monitored, and the organization should link those mea- sures to how it defi nes performance within the context of its mission, vision, and values. A governance-level scorecard of performance measures should be a basic tool for all healthcare governing boards.

At the senior leadership level, an additional set of measures should be used to align priorities, lead the organization, and embody the concept of a balanced scorecard. The organization should link these measures to its critical strategies, or “vital few” initiatives, and use them to drive desired results. As Kaplan and

Governance Function

Leadership Function

• Measures related to strategy execution

• Focal point of leadership system

• Used to create alignment and focus

Management Function

• Process measures important to daily work

• Key financial & operational measures

• Quality control

• Quality improvement

• Link to mission and vision

• Outcome measures used to judge overall organizational performance

• Comparative performance measures

Source: MdP Associates, LLC. Used with permission.

EXHIBIT 12.7 Measures Aligned to Function

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Norton (1992, 1996) suggest, strategic measures should be at the center of the organization’s leadership system. Although leadership’s main role is to deploy strategy, monitoring deployment is also its responsibility. A dashboard of stra- tegic measures is a tool that leaders can use to set priorities and drive change.

The board may use the same dashboard as a scorecard to monitor the deployment of strategy and assess leadership effectiveness. An important rela- tionship exists between the overall organizational performance measures and the strategic measures. Strategy should focus on what drives desired results. The test of good strategy and strategic measures is whether successful deployment of the strategies results in improved performance as measured by the scorecard.

Dimensions of Performance in Healthcare What is good performance in healthcare? How do we know whether we are doing a good job? How should we organize our important measures to have the greatest effect? What should be on our organizational scorecard?

These questions are critical for healthcare leaders. Exhibit 12.6 indicates that performance is an outcome of the leadership process and ultimately should be measured in terms of the organization’s ability to achieve its mission and vision. Another way to think about performance is by important dimensions. Healthcare is about more than the bottom line. In exhibit 12.8, use of the word performance instead of quality emphasizes that performance is a broader concept that encompasses quality—although some advocates of QI theory may disagree. The point is that performance and quality in healthcare should be considered broadly; therefore, leaders and managers should identify the multiple important dimensions of performance for their organization, department, or function.

One method of defining performance is in terms of traditional finan- cial, satisfaction, human resource, and clinical dimensions. However, many organizations have benefited from a broader view of the critical dimensions of performance, as shown in exhibit 12.8.

• Patient Engagement • Employee and Staff Satisfaction (culture)

• Patient Satisfaction • Efficiency (cost)

• Effectiveness (clinical outcomes)

• Financial

• Appropriateness (evidence and process)

• Flow (wait times, cycle times, and throughput)

• Safety (patient and staff ) • Access

• Equity • Population Health

Source: MdP Associates, LLC. Used with permission.

EXHIBIT 12.8 Critical

Dimensions of Performance

in Healthcare Organizations

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Chapter 12: Creat ing Al ignment: Qual i ty Measures and Leadership 315

In its Crossing the Quality Chasm report, the Institute of Medicine (IOM) suggested a different way of thinking about performance in healthcare. It recommended that patient care be reorganized and redesigned to focus on six specific aims (IOM 2001):

• Safety • Effectiveness • Patient centeredness • Timeliness • Efficiency • Equity

Some organizations have found these six aims useful in defining organiza- tional performance and the metrics that should be included on their scorecards.

Organizations can use a variety of approaches to develop and define the important dimensions of performance. Traditional financial, human resource, satisfaction, and clinical dimensions provide the foundation for most methods. In addition, religiously affiliated healthcare organizations often include dimen- sions of performance related to the mission of their sponsoring organization.

Creating an Organizational Scorecard The development of an organizational scorecard should involve more than a simple transfer of existing measures into a new format or framework. The first step is to decide on an appropriate framework. Next, senior leadership and the governing body should define the dimensions of performance that are relevant to the organization’s mission and the results they wish to achieve. Once they have agreed on these dimensions, they should select appropriate outcome measures for each of the chosen dimensions.

At the organizational level, the ideal cycle time for performance measure- ment is quarterly. However, some metrics may be too difficult or expensive to obtain every quarter, so the organization may be forced to make exceptions and settle for one or more annual measures. Sometimes, the preferred outcome measure for a dimension does not exist, in which case the organization must use a proxy measure or invest in the development of new metrics.

Healthcare leaders and trustees should include enough measures in the organizational scorecard to define the desired results for each of the important dimensions. Initially, in their enthusiasm for the new approach and their desire to include great detail, organizations may identify more measures than are practical to track and focus on process measures rather than outcome measures. Additional measures may be interesting, but the focus should remain on results. Organizations can maintain this focus by concentrating on the results they want to achieve rather than on potentially good measures. In the for-profit corporate

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world, the aim is fairly straightforward—increased shareholder value (which extends beyond ever-changing stock prices). In the not-for-profit healthcare world, the aims may be more numerous, but they are just as measurable.

The governing body and senior leadership of a healthcare organization should use a scorecard to monitor overall performance and balance. They also should use it to assess CEO and leadership performance. Although boards and senior leadership will continue to look at supporting reports of financial performance, clinical quality, and other areas, they should focus on the results they wish to achieve as defined by the scorecard of organizational performance measures.

When possible, organizations should compare their performance results to the best levels of performance, or benchmarks, reported by similar types of organizations. They should then deploy strategies to close the gaps between their current performance scores and the benchmarks.

Benchmarking in healthcare is a challenge, but it is becoming easier in some areas. Benchmarks for patient and employee satisfaction are available through proprietary databases maintained by survey companies and by CMS. Comparative financial and workforce information is available through multiple sources—some free and some subscription based. Comparative clinical outcome metrics are becoming more widely available as well. Setting best-in-class tar- gets and high expectations on performance scorecards will help organizations achieve their desired results and thus increase healthcare reliability in key areas.

For some clinical and safety measures, the organizational goal or target should be 100 percent or 0 percent. For instance, for the patient, there is no “right rate” of patient harm other than 0. Many healthcare organizations and leaders, however, struggle with the concept of 100 percent or 0 percent as a goal or target on a scorecard or a unit’s visual board. One common approach is to acknowledge that the goal is “no harm” or “should always happen” but that current systems are incapable of producing that result. So, as an interim target, the organization might count the number of incidents (e.g., 20 patient falls with injury last quarter) and then set a target of reducing that number by 50 percent (or more) over a specified period to focus efforts on reduction of patient harm. Once that target has been achieved, the organization might then repeat the “cut in half” approach or switch to a measurement system that counts the “days since the last occurrence” method of measuring and inform- ing staff about progress.

A healthcare organization could begin to create a scorecard by identify- ing potential measures for each of the six IOM aims. For example:

• Safety: Number of patient harm or serious safety events (SSEs)

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Chapter 12: Creat ing Al ignment: Qual i ty Measures and Leadership 317

• Effectiveness: Functional outcomes as defined by SF-12 health surveys,5 hospital mortality rates, compliance with best-practice guidelines, and disease-specific measures

• Patient centeredness: Satisfaction levels reported on patient discharge survey

• Timeliness: Number of days until the third next available appointment • Efficiency: Hospital or clinic costs per discharge • Equity: Access to care and clinical outcomes compared by race/

ethnicity and gender

The sample performance scorecard in exhibit 12.9 organizes the key metrics by culture, preventing harm (patient safety), clinical quality, and finan- cial health, demonstrating the balance between the various dimensions. The scorecard then shows the ultimate level of performance to be achieved in three years, the performance target for the current year, and the prior year’s performance. The quarterly performance is color-coded to indicate whether it exceeded, met, or fell below the target for that quarter.

Source: MdP Associates, LLC. Used with permission.

EXHIBIT 12.9 Sample Performance Scorecard for a Hospital Board

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Case Study: Board-Adopted Quality Aims

In 2010, the board of a regional multihospital healthcare system in the southern United States was concerned about its governance oversight of quality performance. After several months of data review and the investiga- tion of a series of patient harm events, the board adopted a set of high-level quality aims to be achieved over a fi ve-year time frame. The aims included the following:

• Reduce overall mortality (excluding inevitable mortality) by 50 percent.

• Reduce all cases of patient harm by 80 percent. • Provide the “right care” to 100 percent of patients. • Reduce unplanned readmissions by 80 percent. • Achieve patient satisfaction scores in the top 10 percent.

Exhibit 12.10 provides a simple but powerful one-page display of how the board set interim targets and tracked the key quality aims.

FY 2010 20% FY 2011 Trend

Inpatient Mortalities 1,254 251 1,003

Inpatient All-Cause Readmissions 10,392 2,078 8,314

Harm

Related to Medical Management 679 136 543

Hospital Acquired Infections 1,549 310 1,239

Related to Patient Care 905 181 724

Other 14 3 11

Total 3,147 629 2,518

Sentinel Events 162 32 130

with harm 75 15 60

Perfect Care 81% 16 97%

p

p

Source: MdP Associates, LLC. Used with permission.

EXHIBIT 12.10 Dashboard of Quality Aims

Tracked by the Board

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Chapter 12: Creat ing Al ignment: Qual i ty Measures and Leadership 319

Keys to Success The successful use of measures and measurement to drive change and improve performance depends on a variety of factors. This section describes some of the critical steps that organizations can take to maximize their effectiveness.

Develop a Clear Understanding of the Intended Use The CEO, senior leadership team, and board must have a clear understanding of why a scorecard or dashboard is being created and how the measures will be used to drive execution and improvement.

Engage the Governing Board in Development of Organizational Performance Measures Ultimately, the governing body is responsible for the performance of the orga- nization. This responsibility extends beyond simple fiduciary duties and includes clinical and service performance. Because scorecards should reflect desired per- formance results, governing bodies must be involved in defining the important dimensions, choosing the relevant measures, and setting the desired levels of performance. Much of the development work may be assigned to leadership and clinical teams, but the final determination of the important dimensions, the measures, and the targets is the board’s responsibility.

Use the Scorecard to Evaluate Organizational and Leadership Performance Once developed, the performance scorecard should be central to the organi- zation’s governance system. The scorecard should reflect the mission of the

The board-adopted aims provided a framework for the organiza- tional quality and improvement strategy. In addition to using the high-level dashboard, the board routinely received reports from leadership on specific initiatives and measures linked to the aims. For example, leadership con- ducted an in-depth analysis of hospital mortality using a variety of tools and methods, which revealed that contributors to hospital mortality included sepsis recognition and management, device-related infections, delays in recognition and response to deteriorating patient conditions, delays in diag- nosis and initiation of treatment, and incidences of falls and other patient harm events. Reducing mortality required multiple strategies and initiatives across the organization to reduce patient harm events and infections and to improve response times to critical patient needs.

Five years later, hospital mortality had been reduced by approximately 48 percent. The system calculated that more than 1,000 lives had been saved by the efforts to improve quality and performance.

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organization and be used by the board and leadership to evaluate progress toward achieving that mission. The governing board should review the scorecard at least quarterly. Because scorecards are about results, they can be useful in evaluating CEO performance and serve as a balanced set of objective measures that can be tied to compensation plans and performance criteria.

Be Prepared to Change the Measures Developing a good organizational performance scorecard may sound like a simple idea, but it is difficult to do. An organization is unlikely to achieve a perfect set of measures the first time. Often, measures of desired results for a performance dimension do not exist and must be developed. Other times, organizations realize after a couple of review cycles that they want better measures than those they currently use. Scorecard development is usually an iterative process rather than a single-shot job. Organizations should continue to improve their scorecards as they gain an understanding of the desired results linked to each dimension and as better metrics are developed. Nevertheless, to borrow a phrase from the philosopher Voltaire and others, “Perfect is the enemy of good.” Organizations should work toward creating a good scorecard, not a perfect one.

Make the Data Useful, Not Pretty Scorecard formats should be useful and understandable. Many organizations struggle with fancy formats and attempts to create online versions. A good starting point is to construct simple run charts that display the measures over time and the desired target for each measure. Simple spreadsheet graphs can be dropped into a text document, four or six per page. The information con- veyed, not the format, is what matters. Organizations have had mixed success with more sophisticated formats, such as radar charts. Some boards find radar charts invaluable because they display all the metrics and targets on a single page; other boards have difficulty interpreting the charts. The admonition to start simple does not imply that other approaches will not work. One innovative computer-based display, for instance, used a radar chart backed by hotlinked run and control charts for each performance metric.

Integrate the Measures to Achieve a Balanced View Although some organizations like to use scorecard and dashboard formats for financial and quality reports, the routine display of metrics in separate, category-driven reports may reflect a lack of integration. Organizations that compile separate, detailed scorecards of financial, quality, and service metrics and review each independently, as tradition dictates, will probably place more emphasis on financial results and pay less attention to clinical, satisfaction, and other dimensions, except when a crisis erupts in one or more of these areas.

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However, if an organization has developed a broader set of high-level measures and the category-based reports support those measures, the use of detailed, separate scorecards can be useful.

Develop Clear and Measurable Strategies Kaplan and Norton (1992, 1996) contend that strategic measures should be central to the leadership system. Strategic dashboards and balanced scorecards are key tools that leaders can use to align strategies and actions. Unfortunately, in healthcare, strategy and strategic planning are generally underdeveloped. Many organizations engage in a superficial annual process that results in a set of vague objectives that are task oriented rather than strategic. Often, the stra- tegic plan is then set aside until the time comes to prepare for the next board retreat. Organizations will have difficulty developing a balanced scorecard as envisioned by Kaplan and Norton if their strategies are not clear, measurable, and truly strategic. Most organizations do, in fact, have a simple set of critical strategies that, if successfully deployed, will accelerate progress toward their mission and vision. Organizations should clearly identify those critical strate- gies and develop a set of specific measures for each strategy.

Tracking progress on a specifically designed strategic dashboard can be highly effective. The choice of measures is important because they reflect what the strategy is intended to accomplish. Most critical strategies inspire innumerable ideas and potential approaches. All proposed tactics, initiatives, and projects should directly affect one or more strategic measures. If not, leadership should invest its resources elsewhere.

Use Organizational Performance Dimensions to Align Efforts One approach for using scorecards and dashboards to create alignment is to build cascading sets of metrics that correspond to the key dimensions of performance on the scorecard. Under this approach, each operating unit or department is required to develop a set of metrics for each of the key dimen- sions. For example, if patient safety is a key dimension, each nursing unit could track and seek to improve its fall rate or rate of adverse drug events. If employee well-being is a key performance dimension, each department could track voluntary turnover rates. Executive review of departmental performance should include the entire set of clinical, process, financial service, and safety measures, rather than focusing on the financial dimension one month and a service or clinical quality dimension the next month.

Avoid Using Indicators Based on Averages Because averages mask variation and tend to be misleading, they should be avoided when developing scorecards and dashboards. For example, the aver- age time from door to drug in the emergency department may be lower than

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the preset operating standard; however, examination of the data may reveal that a significant percentage of patients do not receive treatment within the prescribed amount of time. A better approach is to measure the percentage of patients who receive treatment within the amount of time specified in the standard. Average waiting times, average length of stay, average satisfaction scores, and average cost are all suspect indicators.

Develop Composite Clinical Indicators for Processes and Outcome Indicators for Results Approaches to clinical indicators continue to evolve. Healthcare organizations are complex and generally provide care across a wide spectrum of conditions and treatment regimens, and they often have difficulty determining which clinical indicators are truly important and representative of the processes of care provided. One approach is to develop composite indicators for high- volume, high-profile conditions. For example, the CMS review set for heart attack contains six cardiac indicators. Most hospital organizations track their performance against each of the indicators, which is appropriate at the opera- tional level. However, at the senior leadership level, tracking the percentage of cardiac patients who received all six required elements may be more useful. This tracking accomplishes two things. First, it limits the number of metrics on a senior leadership or governing board scorecard. Second, it emphasizes that all patients should receive all required aspects of care in the bundle, not just four out of six.

Organizations can use the same approach to track performance for chronic diseases such as diabetes. They can establish the critical aspects of care that should always be performed (e.g., timely hemoglobin testing, referral to the diabetes educator, eye and foot exams) and develop a composite measure that reflects the percentage of patients who receive complete care.

Another approach to developing clinical performance metrics is to con- sider the results rather than the process. Mortality and readmission rates are obvious results. Some organizations are beginning to look beyond such mea- sures and are considering clinical results from the perspective of the patient. Development of experimental questionnaires and new approaches to assessing patient function are under way and may include the following types of patient- centered questions:

• Was pain controlled to my expectations? • Am I better today as a result of the treatment I received? • Am I able to function today at the level I expected? • Is my function restored to the level it was at before I became ill or was

injured? • Did I receive the help I need to manage my ongoing condition?

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Chapter 12: Creat ing Al ignment: Qual i ty Measures and Leadership 323

• Am I aware of anything that went wrong in the course of my treatment that delayed my recovery or compromised my condition?

Use Comparative Data and External Benchmarks When possible, use external benchmark data to establish standards and targets. Many organizations track mortality and readmission rates on their scorecards. Mortality is a much stronger performance measure when it is risk adjusted and compared to other organizations’ performance to establish a frame of refer- ence. Without that frame of reference, mortality tracking provides little useful information other than directional trends.

Beyond establishing a frame of reference, however, organizations should set targets based on best performance in class, rather than peer group aver- ages. Comparison to a peer group mean tends to reinforce mediocrity and deflects attention from the importance of the desired result monitored by the performance measure. Consider, for instance, the peer averages and percen- tiles that most vendors of national patient satisfaction surveys provide. Being above average or in the top quartile does not necessarily equate to high patient satisfaction. A significant percentage of patients may be indifferent about or dissatisfied with the care they received. Instead of percentile-based targets (targets based on ranking), average raw score or the percentage of patients who express dissatisfaction may be better indicators.

Change Your Leadership System One mistake that some organizations have made is to roll out an elaborate set of cascading dashboards and scorecards and then fail to change the way the leadership system functions. Scorecards and dashboards can quickly become another compliance effort, or something done for The Joint Commission outside of the organization’s “real work.” Leadership must make the review of measurement sets an integral part of its function. When senior leaders review departments or operating units, the unit scorecard or dashboard should be their primary focus. If a strategic dashboard is developed, progress review should occur at least monthly or be coordinated with the measurement cycles of the indicators. Governing boards should review the organizational performance measures at least quarterly. Reviews should not be done solely for the sake of reviewing but for the purposes of driving change and setting priorities.

Focus on Results, Not on Activities A well-developed system of dashboards and scorecards allows leadership to focus on results instead of activities. Many results-oriented, high-performing organizations work from a leadership philosophy of tight-loose-tight. Senior leaders are very clear and “tight” about the results they wish to achieve and measure them through the use of strategic and operational dashboards. At the

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same time, they are “loose” in their direct control of those doing the work, creating a sense of empowerment in those charged with achieving the results. In the absence of clear measures, leaders tend to control activities, microman- age, and disempower others in the organization. When desired results are clear, senior leaders can be “tight” about holding individuals and teams accountable for achieving them.

Cultivate Transparency One characteristic of high-performing organizations, such as Baldrige Award winners, is that every employee knows how her individual efforts fit into the bigger picture. Healthcare has a long tradition of secrecy about results—in part a reflection of the historical view that quality is about physician peer review and in part a reaction to the malpractice environment. Transparency is a big step for some organizations, but the results gathered on the organizational scorecard should be discussed openly and shared with employees and clinical staff. Ideally, the results should also be shared with the community served.

Employees and clinical staff need to know what dimensions of per- formance are important to the organization, what process and management indicators are used for evaluation, what dashboards are related to their daily work, what the quarterly performance results are, and what those results mean. The same is true for strategic measures. Many organizations seek to keep their strategic measures confidential and do not routinely share them with employees. That approach is usually counterproductive. After all, successful deployment of strategy depends on what an organization itself does, not on what its com- petitors may do. Sometimes, a specific tactic, such as building a new clinic in a competitive part of town, may need to be kept confidential because of market issues, but the critical strategy relating to growth of the enterprise should not be a secret. Creating awareness and improving key processes can be difficult if the underlying strategy and strategic measures are not widely known.

Conclusion

Healthcare organizations are complex service-delivery systems, and they are increasingly dependent on quality and performance measures for regulatory and payment purposes. Performance is measured across multiple dimensions, including financial performance, patient experience, clinical outcomes, employee engagement, and patient safety. Scorecards and dashboards are useful leadership and governance tools for creating focus and alignment within the organization on areas that need to be improved, and they are critical to tracking progress on strategic objectives. A direct link should exist between an organization’s strategy and quality improvement efforts, so that resources are committed

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Chapter 12: Creat ing Al ignment: Qual i ty Measures and Leadership 325

to improvements that move the organizational and governance performance measures in the desired direction.

Notes

1. The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) was passed with bipartisan support and signed into law on April 16, 2015. MACRA created the Quality Payment Program that repeals the Sustainable Growth Rate formula, changes the way that Medicare rewards clinicians for value over volume, streamlines quality programs under the Merit-Based Incentive Payments System (MIPS), and provides bonus payments for participation in eligible alternative payment models (CMS 2018).

2. Kevin Sower shared this information during a panel discussion at the 2016 Institute for Healthcare Improvement (IHI) Change Conference. The chapter author was a member of the IHI Expert faculty supporting the conference and verified the statements with Mr. Sower.

3. In deference to the work of Kaplan and Norton (1992, 1996) and the specific idea of leaders using balanced scorecards of strategic measures, this chapter does not use the term balanced scorecard except in direct reference to Kaplan and Norton’s concept. Instead, it discusses the use of dashboards and scorecards in broader, generic terms, exploring a variety of applications that create focus and alignment in healthcare organizations.

4. A popular approach has been to use the “stoplight” color scheme of red, yellow, and green to highlight indicators when performance is judged against a predetermined standard. Indicators that reflect negative performance are highlighted in red, and indicators judged to be satisfactory or above expectations are highlighted in green. Yellow can signify caution or need for further review. Although useful for identifying problems or failure to meet a target, this format does not provide trended information useful for assessing progress or decline and, depending on the standard chosen, may reinforce poor actual results.

5. The 12-Item Short Form Health Survey (SF-12) was developed for the Medical Outcomes Study, a multiyear study of patients with chronic conditions (RAND Corporation 2018). The short-form survey instrument provides a solution to the problem faced by many investigators who have needed to restrict survey length. The instrument was designed to reduce respondent burden while still achieving minimum standards of precision for purposes of group comparisons across multiple health dimensions.

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Study Questions

1. Based on your experience with healthcare, what do you consider the important dimensions of performance? How would you know whether an organization is performing well? What indicators do you think are important for a hospital to track? For a physician practice? A home care agency? A long-term care facility? A managed care organization?

2. What might be good indicators of patient centeredness as recommended by the Institute of Medicine?

3. What are some of the pitfalls of overmeasurement? How do you determine what is important to measure in an organization?

4. Why is creating alignment an important leadership function? What are some methods of creating alignment, and how can the use of measurement support their deployment?

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Deming, W. E. 2000. The New Economics for Industry, Government, Education, 2nd ed. Cambridge, MA: MIT Press.

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Chapter 12: Creat ing Al ignment: Qual i ty Measures and Leadership 327

Swensen, S., M. Pugh, C. McMullan, and A. Kabcenell. 2013. “High-Impact Leader- ship: Improve Care, Improve the Health of Populations, and Reduce Costs.” Institute for Healthcare Improvement. Accessed November 9, 2018. www.ihi. org/resources/Pages/IHIWhitePapers/HighImpactLeadership.aspx.

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