A. Marc Harrison
Cleveland Clinic tracks KPIs daily to measure progress toward achieving the organization's strategic objectives. This effort has helped reduce labor costs and other expenses-and improve quality of care.
At a Glance
Cleveland Clinic's enterprise performance management program offers proof that comparisons of actual performance against strategic objectives can enable healthcare organization to achieve rapid organizational change. Here are four lessons Cleveland Clinic learned from this initiative:
- Align performance metrics with strategic initiatives.
- Structure dashboards for the CEO.
- Link performance to annual reviews.
- Customize dashboard views to the specific user.
Many healthcare organizations possess a wealth of untapped strategic
information in their transaction systems. If this information could be summarized in a meaningful and intuitive manner and updated daily, leaders for these organizations would have real-time views of actual performance against strategic objectives-and could use these data to help focus scarce resources and accelerate change.
Sixteen years ago, Cleveland Clinic of Cleveland began tracking key performance indicators (KPIs) that had an impact on financial performance. At the time, Cleveland Clinic's CEO sought ways to better monitor and manage performance across the organization's multiple facilities. Since then, the initiative has helped Cleveland Clinic reduce costs and enhance quality of care, even during periods of financial turmoil. For example:
- Since 2006, Cleveland Clinic has reduced nursing agency expenses by more than $5 million per year.
- Careful analysis of blood product use has enabled Cleveland Clinic to reduce its blood product expenses by more than $400,000 annually.
- The organization is able to more effectively recruit clinical professionals to prepare for seasonal shifts in employment.
Focusing on Key Performance Data
Between 1993 and 1994, Cleveland Clinic began identifying operational drivers that had an impact on financial performance. Previously, the organization's performance metrics were based primarily on financial outcomes; income was evaluated against targets two weeks after month's end, which was the soonest that data were available. Applying metrics to operational drivers allowed Cleveland Clinic to understand the relationship between operations and finance, enabling the organization to align operational tasks with strategic goals. Initially, the organization focused on improving its revenue cycle and financial performance.
One access metric that Cleveland Clinic tracked was appointment phone line performance. Patients calling to schedule appointments in a particular department had been waiting 2.5 minutes, on average, before their calls were answered. Cleveland Clinic established a goal to have appointment lines answered within 25 seconds. With the focus of both managers and staff, that goal was achieved within several months, although improving response times required continual monitoring.
One might ask: "Is improvement as simple as identifying the issue and monitoring for change?" Providing managers and staff with accurate, intuitive, and easily interpretable data is one-third of the recipe for improvement. The other ingredients are alignment with strategic objectives and a system for accountability.
For example, to help improve call response times, Cleveland Clinic's CEO reinforced the strategic importance of providing patients with access to high-quality care and of improving response times on volume, market share, and financial performance. To help encourage improvement in areas that involved physician participation, the CEO used monthly medical executive committee meetings to reinforce the importance of key metrics, review performance in a transparent forum, and give physician leaders an opportunity to share best practices. The natural competitive nature of physicians to want to perform in the top echelon relative to their peers was a catalyst for improvement as well.
Initially, tracking KPIs was a labor-intensive task that required extracting data from mainframe audit reports on a monthly basis. The data, which were generally a month old, were extracted into Excel 13-month run charts and compared with targets. The effort produced modest improvements in practice and performance, especially around the revenue cycle.
The initial success of this effort prompted Cleveland Clinic to identify additional operational drivers that had an impact on financial performance, and by 1995, the organization was tracking up to 20 operational indicators via a monthly "performance wheel" report, which was distributed to executives in over 150 departments. By graphically representing all indicators on a single page, the performance wheel facilitated tracking of current performance against target goals and the previous month's performance. Indicators on the performance wheel included:
- Relative value unit (RVU) per staff full-time equivalent (FTE)
- Average direct cost per case
- Average patient length of stay (ALOS)
- Speed of answering appointment calls
- Coding denials
These performance improvement efforts progressed at a modest pace until Cleveland Clinic experienced significant economic turmoil in the late 1990s. In 1998, Cleveland Clinic's CEO instituted monthly "continuous improvement summits," in which the CEO and top executives met to discuss monthly operational and financial results. The summits created a new culture of accountability and led to a heightened interest in expanding the use of indicators to improve performance. The monthly wheel report became the focus of each summit, enabling executives to focus on the indicators that reflected the organization's priorities.
New indicators were implemented to track revenue cycle effectiveness. Denials decreased, accountability for obtaining prior payer authorizations was established, patient access improved, and operating income increased significantly. In 2002, Cleveland Clinic began publishing the performance wheel reports on its intranet system to speed the distribution and increase the efficiency of the process.
The reported success of the initiative prompted members of the organization's board to request daily access to performance improvement information. Once the organization had determined that daily extraction of data and delivery of information would be possible, significant improvements to performance began to be noted. When this initiative began in 2004, the process for daily reporting had been time-intensive and inefficient. Reports from operations and finance had provided overlapping data elements that were sometimes contradictory.
Operations and finance executives partnered in 2005 to automate processes for data extraction and to establish a single source of truth. This business intelligence infrastructure consolidated data into a distributed enterprise data warehouse model linked to highly intuitive dashboard views customized to the user. Today, this infrastructure extracts data from more than 20 transaction systems on a daily basis.
The more efficient infrastructure, combined with web-based tools, enabled Cleveland Clinic to create executive dashboards that provided daily information via the intranet beginning in 2006. These dashboards display a balance of KPIs from finance and operations to provide a high-level view of performance across the entire enterprise. Meanwhile, unit-manager dashboards were created to facilitate a more concentrated focus on performance in a specific area.
Accelerating Performance Improvement
The timeliness of the data presented in the dashboards enables executives to closely monitor operational performance and even evaluate the effectiveness of interventions in as close to real time as possible. From a workforce-management perspective, the specificity of dashboard data allows managers to monitor labor productivity on a daily basis to drive performance improvement.
For example, nursing dashboards used by Cleveland Clinic consolidate critical performance information in one easily accessible location. Major KPIs included in the nursing dashboard include:
- Patient experience, such as the criteria contained within the CMS's and the Agency for Healthcare Research and Quality's Hospital Consumer Assessment of Healthcare Providers and Systems program
- Quality metrics
- Drill-down capabilities into key human resources metrics, such as overtime by job code and employee
Exhibit 1 shows various components of the "nursing productivity" subtab on the nursing dashboard, which allows information from Cleveland Clinic's productivity system to be presented in a single view. Each dashboard has the same basic structure to make it easier for users to quickly assimilate information. For example, "premium labor FTEs" are highlighted on the upper left of the dashboard, and secondary premium labor metrics (agency and overtime) are displayed on the upper right. The bottom half of the dashboard shows a 27-pay period performance trend.
Dashboards support focused initiatives for performance improvement. Through a combination of focused interventions on root causes and weekly monitoring of agency costs, Cleveland Clinic was able to reduce nursing agency expenses from more than $500,000 per month to less than $50,000 per month, thereby reducing annual expenses by more than $5 million.
Most of the reductions in nursing overtime and agency expenses at Cleveland Clinic were simply the result of raising the awareness of the nurse manager of KPIs using the dashboards. On a weekly basis, financial analysts worked with nursing directors and managers to review performance, challenged the need for agency labor, and helped identify root causes and daily practices that were driving increased labor expenses.
Issues with overtime were sometimes as simple as a nurse wanting overtime and a manager willing to accommodate the request. Causes of premium labor were sometimes more complex. For example, every summer, Cleveland Clinic would experience a drop in intensive care unit (ICU) nurses when several nurses would enroll in school to become certified registered nurse anesthetists. This predictable loss in ICU nurse staffing was resolved when the organization recognized that it needed to recruit for several ICU nurse positions during the winter months in anticipation of the summer vacancies.
One significant advantage of the dashboards is that they present cost, productivity, quality, and patient experience data in a single location, thereby helping executives analyze the interdependencies between performance metrics. For example, the dashboards allow users to investigate the relationship between hours per patient day, skill mix, quality of care, and patient experience.
Linking Quality and Financial Performance
Use of the performance dashboards also has enhanced quality of care at Cleveland Clinic facilities while reducing costs. Cleveland Clinic created a "blood utilization dashboard," for example, to examine why the organization was a high consumer of blood products, which are expensive, and to set parameters for their use. To address this issue, two basic questions needed to be answered:
- Who ordered the blood product?
- What are the parameters for determining whether a blood product is needed?
The use of a blood utilization dashboard enabled Cleveland Clinic to extract physician ordering information and the hemoglobin level of the patients for whom blood products were ordered from the organization's data systems and analyze, down to the department and physician, when blood products were ordered for patients with a hemoglobin level greater than or equal to nine (patients for whom blood products may not have been needed).
The availability of specific and transparent data drove performance improvement in this area. Establishing a blood utilization dashboard has raised awareness of the need to quantify when blood products are used across the organization, and has reduced blood product use by approximately $400,000. It is important to note that this dashboard does not replace clinical judgment: There may be cases where ordering blood for patients with a hemoglobin level greater than or equal to nine is appropriate. The dashboard raises awareness, reports trends, and identifies outliers.
The success of Cleveland Clinic's enterprise performance management initiative has led to additional investment in the program.
Tapping the power of business intelligence is not simple, and the investment in personnel and infrastructure can be significant. Key to Cleveland Clinic's success in this initiative was the organic development of business intelligence tools and the strong partnership and level of trust between Cleveland Clinic's finance and operations teams.
Cleveland Clinic has learned many lessons over the past 16 years as its initial KPI monitoring initiative has evolved into an enterprise performance management program. These lessons fall into three categories: operational adoption, technical adoption, and governance.
Lessons pertaining to operational adoption were as follows:
- Start small and get early wins. (You don't have to be a giant organization to succeed.)
- Align performance metrics with strategic initiatives.
- Structure the dashboards for the CEO.
- Link performance to annual reviews.
- Make the dashboard views useful and focused to the specific user.
Regarding technical adoption, Cleveland Clinic benefited from the following lessons:
- Issue data reports daily to significantly improve performance.
- Ensure that the data being reported are accurate.
- Use business intelligence tools to facilitate more rapid data collection and distribution of data, which are vital to program success.
- Use single sign-on to significantly increase utilization.
The following lessons pertain to governance:
- Enlist C-suite support. This is a prerequisite.
- Make sure the initiative is driven by the business owners, not the IT department.
- Build trust and cooperation among finance, operations, quality, and IT departments in developing the system. It will dramatically improve speed and outcomes.
Daily views of actual performance against strategic objectives can enable and accelerate organizational change. The ability to pinpoint and evaluate clinical, operational, and financial interdependencies provides a more holistic view of performance at a time when payers and consumers are demanding more accountability for clinical outcomes and patient experience. Such a synoptic view of performance across all levels of the organization also can crystallize expectations and priorities-and help to focus scarce resources.
Tom Wadsworth is managing director, business intelligence, Cleveland Clinic, Cleveland (firstname.lastname@example.org).
Brian Graves is global practice leader for healthcare, Kronos, Inc., Chelmsford, Mass., and a member of HFMA's Massachusetts-Rhode Island Chapter (email@example.com).
Steve Glass is CFO, Cleveland Clinic, Cleveland, and a member of HFMA's Northeast Ohio Chapter (firstname.lastname@example.org).
A. Marc Harrison is vice chairman of professional staff affairs and director of medical operations, Cleveland Clinic, Cleveland (email@example.com).
Chris Donovan is senior director, finance, Cleveland Clinic, Cleveland, and a member of HFMA's Northeast Ohio Chapter (firstname.lastname@example.org).
Andrew Proctor is administrative director, medical operations, Cleveland Clinic, Cleveland (email@example.com).
Publication Date: Thursday, October 01, 2009