Because of the well-known revenue and cost challenges providers face today, almost all hospital leaders agree that they need to take a much more radical approach — a clinical transformation – to manage productivity, efficiency, and clinical decision-making, all of which drive margin.
After such a transformation, the most improved facilities have been able to achieve and sustain 5-10% improvements in their operating costs: 1-3% from productivity gains resulting from greater operational efficiency; another 3-4% through clinical standardization; and an additional 1-3% through process and decision-support changes related to supply choice and utilization. In addition, greater efficiency and liberated capacity enabled the facilities to increase both volume and stakeholder satisfaction.
Our experience with clinical operations transformations in more than 200 hospitals across the US and overseas has shown that high performers tend to execute five things well:
- They focus relentlessly on the metrics that drive value.
High performers use their strategic and financial imperatives (e.g., specific service line growth, labor cost reduction) to identify the metrics to be improved, such as operating room (OR) utilization and case volume within a service line, average length of stay, cancellation rates in the OR, and the number of patients who leave without being seen in the emergency department. They also use those imperatives to define specific improvement targets for each metric. They then design a transformation program that focuses efforts directly against those metrics and targets. Too often, we have seen health systems develop their performance improvement programs the other way around or focus on metrics that drive little value. As a result, and the systems struggle to convert operational improvement into measurable financial or clinical impact.
- They optimize processes and procedures from the patient’s perspective.
High performers tend to use a highly cross-functional and cross-departmental approach that focuses on optimizing the end-to-end patient journey rather than just subcomponents of it. To address inpatient care, for example, they work on “arrival to discharge” (including all the interfaces between different departments and individuals throughout that journey) rather than on discharge processes alone. This approach helps avoid the “balloon” phenomenon of thinking that an issue has been addressed, only to see it emerge somewhere else along the patient journey.
- They place equal weight on what we consider to be the three key elements of any transformation program: the operating system; the performance management system; and mindsets, behaviors, and capabilities.
Research has shown that around 70% of large-scale change efforts fail – not because the wrong solution was implemented (i.e., changes to the operating system), but because the “softer” elements of change were not fully addressed. Without a compelling case for change, role modeling, aligned rewards and incentives, and capability building for those being asked to change, a transformation is highly unlikely to succeed.
- They develop a change program that has clearly defined bottom-up, horizontal, and top-down strategies and tactics.
For example, high performers use a bottom-up approach to engage the frontline by having them participate on working teams and empowering them to make decisions about what needs to change. In addition, they provide mechanisms for peers to hold each other accountable for their performance (e.g., through physician peer review committees and shared governance nursing forums). As part of their top-down tactics, they develop “standard work” for leaders – the pre-defined things all leaders must do to support the desired outcome.
- They reframe the hospital-physician relationship so that physicians are considered teammates rather than customers.
When this occurs, not only do the physicians rise to the challenge of leading operational and clinical change to drive business results, but they typically also report greater satisfaction with the hospitals because of their involvement in the change effort.
It would be wrong to suggest that there is a “cookie-cutter” approach that guarantees success in a clinical operations transformation. However, we believe that getting these five things right dramatically increases the probability of success.