Benchmarking Mistakes: The Poisonous ‘Apples to Apples’
Senior executives and managers in other industries know that it is not only acceptable, but necessary to benchmark against other industries for process improvements. For example, a major hotel chain wants to improve guest services. Not only does this chain have other hotel chains to pore over for comparisons, but you can and should look to theme parks or retail corporations as well. Instead of comparing hotels to hotels, the hotel’s guest service policies are compared to the guest service policies of theme parks, restaurants, and others. Valuable lessons are drawn from this benchmarking process. While industries may operate very differently, their fundamental guest service processes are common and provide learning opportunities for all parties. Similarly, retailers have made significant improvements in inventory acquisition, storage, distribution, and tracking. Hospitals have generally not studied these processes, citing the “uniqueness” of hospital and healthcare operations as the reason. As a result, many hospitals continue to practice outdated and non-integrated supply transactions, instead of making supply management a priority. Many processes are similar enough across industries for healthcare managers to learn and adapt process improvements from others.
Even though healthcare minimizes cross-industry benchmarking due to the uniqueness of healthcare, they also believe that healthcare-to-healthcare benchmarks are valid only with those organizations exactly alike in structure, size, reach, culture, affiliations, physical design, etc. etc. For example, an outpatient clinic wants to improve its cardiac rehab services, but only wants to compare itself to cardiac rehab clinics that use Saturdays to deal with overflow, as they do. Health systems also want to benchmark themselves against other systems rather than independent facilities. While it is important to determine how others are handling problems, using practice and environmental factors to weed out potential benchmarking partners reduces value and learning opportunities for organizations doing benchmarking.
Is there a twin?
It is practically impossible for a hospital to find an identical apple. There are approximately 5,800 hospitals in the United States. Focusing on, for example, just 500 beds, non-profit organizations, can further reduce this. Just adding a few more criteria… academic teaching hospital vs. not; rental; penetration of managed care; number of buildings; outpatient volumes; etc., simple math shows that one hospital can eliminate all potential hospitals as benchmarking partners.
Requiring multiple, non-relevant criteria narrows the list of acceptable benchmarking partners. Hospitals are complex operations. There are countless differences between hospitals, and no one is exactly the same as another. Eric Franz, Manager of Financial Services at OSF Saint Francis Medical Center in Peoria, Illinois, agrees. “There’s no sister hospital out there,” says Franz. “It just doesn’t exist. We are unique and we want to be unique.” It makes no sense, then, for hospitals to proclaim their uniqueness and at the same time develop lists of “acceptable” criteria that benchmarking partners must meet. For hospitals to use benchmarking effectively, they must accept the fact that their twin does not exist. Then they can use their resources to learn instead of wasting resources comparing their uniqueness level. apples to apples
Misunderstood: The Benchmarking Poison
Consider this example of how the value of a benchmark decreases as the hospital tries to narrowly define acceptable benchmarking partners:
Apples to apples: Compare the cost of hospital-based medical transcription features. McIntoshes-to-McIntoshes: Compare the cost of hospital-based medical transcription functions to a centralized transcription department that sources at least 60 percent of its transcriptions.
New England McIntoshes-to-New England McIntoshes: Compare the cost of medical transcription functions at a set of system-wide hospitals with a centralized transcription department obtaining at least 60 percent of its transcription, writing at least 40 different types of reports and an average TAT for History and Physical Exams of 24 hours. There must be at least three, but no more than six hospitals in the system, located at least 10 miles apart, but within a 124-mile radius.
Similar benchmarking “requirements” arise in many situations.
Systems-based hospitals only want to be compared to other systems, “preferably one of similar structure and size.” Why? How will they know if the structure of their system is a competitive advantage if they do not compare themselves with different structures or independent hospitals? These highly selective criteria result in a less useful benchmark and less value to the benchmarking facility. Attempting to “compare to a similar transcription department” in the example above obscures the internal vs. outsource transcription; centralized vs. detranscription; autonomous vs. corporate systems has in response time, cost, precision, etc., … exactly the opposite result that is expected from a good benchmark.
mirror mirror on the wall
What do healthcare organizations learn from the search and ultimately from their “twin” hospital? The search process teaches them that if they add enough criteria, they can narrow their learning pool and maintain the status quo because “there’s no one like me!” If they find some “twin hospitals” to compare with, they’ll find that their solutions are similar…reducing learning opportunities again (what can you learn from someone like you?). Getting an organization to recognize that perceived “differences” likely point to opportunities for improvement is difficult. How much more comforting to believe that “my costs could be lower if I didn’t have these corporate assignments, a non-integrated information system, and high managed care penetration,” than to accept the fact that your costs are higher because of your choices ( independent vs. corporate) and practices (allowing departments to buy information systems that do not interact).
It is ridiculous to let truly minor differences eliminate learning opportunities between organizations. According to Franz, there are enough similarities between the hospitals to determine where improvements can be made. “The comparison hospitals we used for benchmarking were 80 to 85 percent similar, which is enough to get this process off to a good start,” says Franz.
In addition to looking for twins, hospitals are also looking for best practices…which many managers consider the holy grail of process improvement. In the transcription example above, you can almost hear the manager thinking “…if I can find the best practice regarding transcription, my problems will be solved.” The problem here is that, just like at the sister hospital, there is no single “best practice” for most healthcare operations. A recent survey of hospitals found that many hospitals that had previously outsourced transcription are now incorporating the feature in-house; while internal operations were looking for transcription providers.
Why?
Changes in line with your culture, your workforce and your environment. The “do” vs. The decision to “buy” is very much up to the individual organization. So while buying transcription services is a best practice for Hospital A, it could be a miserable flop for Hospital B. That’s the job of managers…sort through their options, merge good ideas from multiple sources, and generate the most effective practice for your organization. One hospital cannot simply implement another hospital’s approach without adaptation, since everyone’s cultures, layouts, and environments are different. Remember…hospitals claim to be unique and therefore cannot be compared against a benchmark. So why would they willingly assume that someone outside of their organization knows what the best practice is for them? Instead, a hospital should take snippets of the best practices of others and formulate the best practice for its organization.
Who is the most beautiful of all?
The hospitals and health systems that will be the “fairest in the country” are those that can avoid common benchmarking pitfalls. They will discover WHAT they want to compare. If they want to improve costs, they will compare costs and not poison “apples to apples” comparisons with irrelevant criteria like salary mix, physical layouts, corporate structure, etc., on the way to determining their cost opportunities. . Hospitals that use benchmarking as an effective tool will not waste valuable labor resources trying to find a sister hospital because they realize that this reduces learning opportunities and encourages managers to think that the status quo is acceptable. Winning the list of acceptable learning partners reduces the value and usefulness of the benchmarking results.
The healthcare organizations that will benefit from benchmarking are the ones that realize that the relevant points of difference are driven by their own practices, structures and choices; and, they will make changes accordingly.
Hospitals that bring together many effective practices and combine them into a strategy that meets the needs of their organization will benefit. These hospitals know that slavishly mimicking a process without considering their own culture, values, and needs is poor management practice. Instead of comparing New England McIntoshes to New England McIntoshes, organizations that understand that the best use of benchmarking is to identify gaps in their performance will be the ones to learn from many others in the effort to find the best apples. appropriate to improve your own unique processes and performance.