What should be the hospital’s first consideration when we begin to think about benchmarking?
The first consideration should be to decide, “What question do we want the benchmarking process to answer?” Hospitals often want benchmarking to tell them how they can (or should) staff their departments. Unfortunately, no matter how carefully the peer group is drawn, external benchmarking alone cannot answer that question directly for a number of reasons, not the least of which is that the numbers are from external sources, not your own hospital.
What does benchmarking tell us?
What benchmarking can do is identify the range of observed staffing in departments that are reasonably alike. Determining your relative position within the peer group is the beginning, not the end, of the improvement process.
We want to use benchmarking data to develop department staffing standards. Can we do this?
It depends upon how you do it. There is nothing wrong with selecting department productivity goals in terms of paid and worked hours per unit of service. Very often significant productivity improvements will occur–often in the range of 10% or so–simply as a result of beginning to pay attention to productivity measures. However, it is usually necessary to make changes both within and outside of the department to achieve more ambitious goals, no matter how badly cost reductions may be needed. What you do not want to do–what should be avoided at all cost–is to arbitrarily mandate budget-driven cuts without first making the changes in staff mix, scheduling methods, technology choices, physical plant layout, etc., that contributed to the staffing variance in the first place. Otherwise, it is almost certain that quality, physician and patient satisfaction, employee relations and community image will be significantly impaired.
How are peer groups selected? We want to compare “apples-to-apples.”
Every department and every hospital is unique. Pure “apples-to-apples” comparisons are not only impossible, they wouldn’t be very helpful as a change tool if you could find them. Peer groups, to be useful, should consist of departments with approximately the same responsibilities and approximately the same workload in hospitals that are generally similar in terms of size, teaching status, setting and case mix. We refer to this as “intrinsic factors.”
Peer groups will differ from one another in how they approach meeting those responsibilities and performing the work. These differences are referred to as “extrinsic factors.” You will find differences in staff mix, scheduling methods, technology choices, supplies used, work processes, physical plant layout, the focus of department managers, and a host of other variables. After all, it is the aggregate effect of those differences that accounts for observed staffing variances among peer group members. That is the value of benchmarking.
How often should our benchmarks be updated?
First, let’s make a distinction between external staffing benchmarks and internal management standards or targets.
Performance should be measured against internal management standards at least monthly and, if possible, at each pay period with the caveat that year-to-date numbers are more important than the result of a single reporting period.
The best use of staffing benchmarks is to keep management standards calibrated. Whenever significant changes in workload occur, new staffing benchmarks must be obtained to facilitate update of your management standards. This is essential to quality maintenance and effective cost management because the relationship between workload changes and staffing requirements is not linear. Labor hours per unit of service decrease when workload expands and increase when workload declines. If utilization has changed materially since your benchmarks were last reviewed, they should definitely be updated. Failure to do so will almost certainly produce a mismatch of staffing to workload.
What are the most important steps leading to a successful benchmarking effort?
The short list would look something like this:
- Make certain that everyone across the organization has a common understanding of why benchmarking is being done and what the expectations are.
- Get front end “buy in” at the department manager level and develop confidence in the validity of the benchmark comparisons. This is a process that must begin before the first reports are produced.
- Observe the “KISS” principle. Don’t drown your managers with page after page of complicated reports that they don’t have time to read and do not understand.
- Provide support to managers. Make sure they have the tools and support to help them make the changes required to meet productivity targets.
Many department heads are convinced that labor cost cutting always damages quality. You seem to be saying the opposite. How does that work?
Hospital department managers tend to be “get the job done” type people. Most of them were educated in a technical or professional specialty and many have little formal management training or education. If something is impeding patient care or standing in the way of getting the job done, the most expedient solution is to “staff up” to overpower the problem. However, we know that a lot of things can get in the way of doing the job including not having the right equipment, using bad work processes, rework caused by errors in other departments, etc. The same factors that cause the manager to “staff up” also hurt quality, employee relations and physician and patient satisfaction. That’s why a department that has higher than average staffing often has quality, employee relations and “customer” satisfaction issues as well. The benchmarking process will help identify such improvement opportunities.
How long does the process take? We need results now. We don’t have the time or the budget to launch a massive project that will take years to complete.
Although you can’t improve organizational effectiveness until you eliminate performance barriers, benchmarking can be the start of a fast-paced, cost-effective, structured, systematic process to quickly identify the greatest performance limiting factors affecting the hospital. We say “quickly” because the process should not require more than four to six weeks from start to finish. It should produce immediate action by department heads when issues lie within their span of authority and, when appropriate, a set of specific recommendations for consideration by executive management and governance.