The Revolution in Hospital Management web page/Griffith_White.pdf · The Revolution in Hospital Management John R.Grifﬁth, FACHE, Andrew Pattullo Collegiate Professor, Department

The Revolution in HospitalManagementJohn R. Griffith, FACHE, Andrew Pattullo Collegiate Professor, Department of HealthManagement and Policy, The University of Michigan, Ann Arbor, and Kenneth R.White, Ph.D., FACHE, associate professor and director, Graduate Program in HealthAdministration, Virginia Commonwealth University, Richmond

................................................................................................E X E C U T I V E S U M M A R YFive healthcare systems that have either won the Malcolm Baldrige National Qual-ity Award in Health Care or been documented in extensive case studies share acommon model of management: they all emphasize a broadly accepted mission;measured performance; continuous quality improvement; and responsiveness tothe needs of patients, physicians, employees, and community stakeholders. Thisapproach produces results that are substantially and uniformly better than average,across a wide variety of acute care settings. As customers, courts, and accreditingand payment agencies recognize this management approach, we argue that it willbecome the standard for all hospitals to achieve.

This article examines documented cases of excellent hospitals, using the reportsof three winners of the Baldrige National Quality Award in Health Care and pub-lished studies of other institutions with exceptional records.

For more information on the content of this article, please contact ProfessorGriffith at [email protected]. To purchase an electronic reprint of this article, go towww.ache.org/pubs/jhmsub.cfm, scroll down to the bottom of the page, and clickon the purchase link.

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E xcellent organizations demonstratelong-term results that satisfy most

or all of their stakeholders. Thisarticle examines documented casesof excellent hospitals, using the reportsof the three winners of the MalcolmBaldrige National Quality Award inHealth Care and published studiesof other institutions with exceptionalrecords (see Table 1). These reportsshow that the organizations sharemany management practices.

While these are certainly notthe only excellent institutions, theirachievements have been successfullyapplied in a wide variety of settings,generating results that are substantiallysuperior to those of typical hospitals.Their approach has now beentested in over 100 diverse Americancommunities, suggesting that it isan appropriate model for most U.S.hospitals and healthcare systems.

The Malcolm Baldrige Health CareCriteria for Performance Excellence(2004) provide a template that showshow this management approach hasbeen built into day-to-day actions thatproduce excellence in quality, cost,financial stability, and physician andworker satisfaction. The Baldrige criteriain general are deliberately designedto cover a broad range of businessesand strategies and organized in sevensections that emphasize leadership,strategy, patient relations, workerrelations, information management,operations, and results.

L E A D E R S H I PLeadership is “how senior leadersaddress values, directions, and

performance expectations, . . . focuson patients and other customersand stakeholders, empowerment,innovation, and learning . . . .also . . .governance and . . . public andcommunity responsibilities” (BaldrigeHealth Care Criteria 2004).

The Baldrige expects leadersto establish universal two-waycommunication practices and to usethem to deploy organizational valuesand performance expectations. Leadinghospitals now do the following:

1. Use mission, vision, and valuesstatements as central referents todescribe the organization to itspublics, attract compassionateworkers, focus ongoing dialog, andtest propositions for change. SSMHealth Care (SSMHC 2002) hasa “Passport” for every employeethat states its mission, vision, andvalues. St. Luke’s Hospital’s (SLH2003) “Very Important Principles”card lists its strategic goals. CatholicHealth Initiatives (CHI) keepsits values—“Reverence, Integrity,Compassion, and Excellence”—constantly in the mind of itsassociates by including them onbadges, posters, and other printedmedia (Griffith and White 2003).

2. Use several hundred measuresand benchmarks to provideeach responsibility center withmultidimensional measuresof performance (Griffith andWhite 2002; Simmons 2000).Baptist Hospital, Inc. (BHI 2003)aggregates more than 75 measuresto 14 for governance reporting. SLH

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TA B L E 1Characteristics of Systems and Hospitals Studied

Hospital or Scope ofHealthcare System Documentation Size Service Locations

Baptist Hospital,

Inc.

Baldrige

National

Quality Award

Application,

2003

$158 million

revenue; 492-

bed urban

hospital

Tertiary and

referral care

Pensacola,

Florida

Catholic Health

Initiative

Case study;

Thinking Forward

book

$6 billion

revenue; 47

“market-based

organizations”

of one or more

hospitals

Ranges from

“critical access”

hospitals to

tertiary centers;

includes long-

term and

palliative care

64 communities

in 19 states

Intermountain

Health Care

IHC annual

reports; Harvard

Business School

Case 9-603-066

$3 billion

revenue; 20

hospitals and

clinic facilities

Ranges from

rural clinics to

Intermountain

Medical

Center, a

tertiary medical

teaching center

27 communities

in Utah and

Idaho

SSM Health

Care

Baldrige

National

Quality Award

Application,

2002

$2 billion

revenue; 21

general and

specialty

hospitals with

clinic facilities

Acute,

long-term,

rehabilitative,

and palliative

care

7 markets

in Missouri,

Illinois,

Wisconsin,

and Oklahoma

St. Luke’s

Hospital

Baldrige

National

Quality Award

Application,

2003

$308 million

revenue; 482-

bed suburban

hospital

Tertiary and

referral care

Kansas City,

Missouri

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(2003) aggregates 86 broadly usedmeasures to a color-coded scorecardof 27 for senior leadership.

3. Report promptly and often publicly.Important performance measuresare reported daily, biweekly, andmonthly so that all managers andmost employees know exactlywhere they stand. Both BHI (2003)and SLH (2003) stress 90-dayaction plans. BHI claims, “Theagility inherent in 90-day review . . .gives BHI an advantage in itshighly competitive environment.”SSMHC (2002) reports 49 measuresmonthly and 14 more quarterly.At SSMHC “ . . . specific goals andobjectives . . . are posted in [each]department. Posters provide avisual line of sight connection fromSSMHC’s mission to departmentgoals.”

4. Use the measurement system toshape two-way communication.Performance improvement teams(PITs) identify, test, and implementprocess changes that drive nextyear’s goals. A hospital mayhave a dozen or more teamsredesigning processes. PITs arefacilitated and supervised by asenior management group (BHI2003; SLH 2003; SSMHC 2002;Griffith and White 2003). SLH(2003) claims its performancemanagement process “produces aset of specific, measurable behaviorsthat exemplify the core values foreach and every SLH employee.”The values, the scorecard, andcontinuous quality improvement(CQI) converge to empower

workers and lower-level managers.A culture is created that requiressenior management to listen to andrespond to frontline concerns (BHI2003; SLH 2003; SSMHC 2002;Griffith and White 2003).

5. Attract and retain effective teammembers. Leading organizationsmonitor satisfaction, turnover, andsafety routinely for physicians andemployees. All have formal andinformal listening activities suchas forums and walking rounds.SLH has an “administrator oncall” 24 hours a day/7 days a weekand an “open door policy.” The“service value chain” concept—satisfied workers produce satisfiedcustomers and improved overallperformance—has been widelyaccepted (Heskett, Sasser, andSchlesinger 1997). BHI pioneeredthe service value application tohospitals, and along with SSMHC,has won national awards foremployment practices. CHI isimplementing the concept atseveral sites, pursuing a “Spirit”model that focuses employeeeducation on a new topic eachmonth (Griffith and White 2003).SSMHC (2002) is implementing anaccountability-based professionalpractice model “to give nurses andother employees greater decision-making authority.” As of 2004,all hospitals have implementedthe model in nursing, and manyhave implemented it in all clinicalservices (Friedman 2004).

6. Use financial incentives to rewardgoal achievement, supplementing

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the recognition and celebrationincluded in CQI and the servicevalue chain. BHI and SLH usea merit increase program withindividual objectives and a detailedreview. CHI offers substantial cashincentives for managers. At leastone CHI site provides performance-based awards for all workers.Intermountain Health Care (IHC)allows its managers to earn bonusesthat meet national pay standards(Griffith and White 2003).

The Baldrige asks how seniorleaders create “an environment . . .that fosters legal and ethical behavior”(Baldrige Health Care Criteria 2004).BHI (2003) leaders are required toattest that they “have no knowledge ofviolations of Baptist’s high standards.”CHI and SSMHC use an audit systemthat makes the internal auditoraccountable to an outside agency.CHI supplements the audit withquarterly certification of reports by itslocal CEOs and CFOs. It has a similarlysophisticated compliance process,designed as much to create effectiverelationships as to prevent violationsof the law (Griffith and White 2003).SSMHC uses the model complianceplan proposed by the Office of theInspector General as a foundationbut “goes beyond compliance . . . toensure that SSMHC values are reflectedin all work processes . . . .KPMG hasidentified SSMHC’s corporate reviewprocess as a best practice nationwide”(SSMHC 2002).

The Baldrige application askshow the organization “addressesits responsibilities to the public

[and] practices good citizenship.”Leading hospitals and systemshave identified and measured theircommunity contribution (CatholicHealth Association 2001) and madetheir information public (see eachorganization’s web sites). SLH hasestablished a joint venture in cancercare with its largest competitor,HCA. In Portland, Oregon, fourhealthcare organizations havelinked with state and county healthdepartments to establish a collaborativenetwork (Griffith 1998). BHI (2003)collaborates with a competitor to runclinics.

The Baldrige is also concernedabout how the hospital “contributesto the health of its community.” Thebest hospitals have established effectiveprocesses for contributing to promotehealthy behavior and to prevent illness.They have promoted alternatives toacute care, such as chronic diseasemanagement and palliative care(Griffith and White 2003). TheAmerican Hospital Association’s“Healthy Communities” movementhas taken hold as a priority in winninghospitals. SSMHC (2002) launched asystemwide “Healthy Communities”initiative in 1995, and it also has acommittee to foster environmentalawareness at each local site. InKearney, Nebraska, CHI establishedan award-winning collaborationwith local industry, government, andreligious organizations. The model hasincreased in popularity and gainedcommitment while sharing the cost ofthe program with other organizations(Griffith and White 2003). BHI (2003)sponsors a Partnership for Healthy

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Communities and “Get HealthyPensacola” program . . . . [E]nrolleescan earn prizes or discounts arrangedwith local businesses . . . .”

S T R AT E G I C P L A N N I N GAccording to the 2004 BaldrigeHealth Care Criteria, strategicplanning is “how your organizationdevelops strategic objectives andaction plans. . . . how your chosenstrategic objectives and action plansare deployed and how progress ismeasured.”

The Baldrige application expectsthe components of continuousimprovement—goals, empowerment,analysis, and revision—to be imbeddedin the culture. Change is the rule.The strategic process is abouthow alternatives are selected andimplemented through a plan withexplicit goals and timetables.

Leading institutions do thefollowing:

1. Begin an annual cycle with a reviewof mission, vision, and values,both to keep these current and toreinforce them as core criteria toguide their strategy.

2. Undertake a rigorous, multifacetedenvironment review of threatsor opportunities presented bythe market, technology, criticalcaregivers, competitors, andregulation. They explicitly integratefinancial needs and resources.Support from system corporateoffices has helped many hospitals.

3. Use retreats to build consensusaround the implications of the

facts and the appropriate strategicresponses.

4. Set goals based on systematicanalysis of benchmark and marketdata as well as local history.

5. Use task forces or PITs to changeperformance. PITs have broadparticipation, clear charges anddeadlines. The plans they develophave explicit timetables andperformance expectations.

6. Empower member units bydelegating authority.

7. Build plan achievement targets intomanagers’ goals and incentives.

SLH has evolved a particularlycomprehensive strategic process. Asshown in Figure 1, it is based on threedimensions of “roll out” (SLH 2003):

• From strategic (Level 1) concernsthrough several levels of accountabil-ity (Levels II through IV)

• From long-term to short-term (90day) action plans.

• From strategic goals to processimprovement to individualdevelopment plans.

Measures, goals, and processimprovement plans are articulatedat each step of each dimension. Thestrategy role out itself is improvedby feedback from each of the threedimensions.

Figure 2 shows the 90-day trackingmechanism at the senior managementlevel. At SLH, it is in color: blue,green, yellow, and red for four levelsof goal achievement. Managers can“drill down” for run charts, goals, and

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F I G U R E 2SLH Hospital Scorecard Sample Template

SCORING CRITERIA

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Operating Cash Flow 5

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Outcome of Care 9IP Active Admitting

Physician Ratio 9

OP Admitting Physician Counts 5

**Community IP Market Share 6

Eligible IP Market Share - Draw Zips 5

Eligible IP Profitable Market Share - Draw

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OP Referral Counts Draw Zips 10

***IP Clinical Care Index 8

***OP Clinical Care Index 7

***Patient Safety Index 6

***Operational Index 7***Maryland Quality

Indicator Index 8

***Infection Control Index 5

***Medical Staff Clinical Indicator Index 8

Net Days in Accounts Receivable (IP/OP) 6

Human Capital Value Added 4

Retention 10

Diversity 7

Job Coverage Ratio 8

**Competency 10**Employee Satisfaction 7

** Indicates annual measure. ***Detail in Appendix B Overall Score 72 Qtr 3 Qtr 4 Qtr Goal 7

Overall Score Stretch 10

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benchmarks. Similar reports go to the“Level” managers of Figure 1.

The processes for strategy are notsubstantially different from thoseused at IHC and Henry Ford HealthSystem a decade ago (Griffith, Sahney,and Mohr 1995). The difference, asIHC executives noted at the time,is implementation. Focused on theresults, leaders implement the processwith both vigilance and rigor. Vigilanceallows them to spot opportunities andthreats faster. A network of informedand committed agents uncoversnew ideas. A rich background toevaluate them develops quickly. Rigorprotects them from the usual causesof bureaucratic delay. Denial, specialinterests, and paralysis by analysissimply are not acceptable in leadinginstitutions. The loop is closed by theshort-term plans.

F O C U S O N PAT I E N T S , O T H E RC U S T O M E R S , A N D M A R K E T SThis criterion is about “how yourorganization determines requirements,expectations, and preferences ofpatients . . . and markets. . . . buildsrelationships . . . and determines thekey factors that lead to . . . satisfaction,loyalty, . . . retention, and . . . serviceexpansion” (Baldrige Health CareCriteria 2004).

The Baldrige application expectssolid and expanding relationships withpatients, families, physicians, otherhealthcare providers, students, insurers,employers, patient advocacy groups, thecommunity, and government agencies.The leaders systematically do thefollowing:

1. Refine a comprehensive system of“listening and learning tools” usingfocus groups, community needsurveys, patient and other customersatisfaction surveys, reports fromPITs, meetings with physicians, andindustry market research. BHI is“obsessed” with patient care andcustomer satisfaction, surveyingevery inpatient and one of eightoutpatients. Scores are near the99th percentile in the nationwidedata (BHI 2003).

SLH creates a “patient path,”a patient-friendly format of thecare plan that explains timingand purpose. All employees areempowered and expected to resolvecomplaints. Each patient is assignedto a patient advocate (PA) whovisits patients on their first, fifth,and tenth day, and more frequentlyif needed. Many of the PAs arebilingual and serve as translators(SLH 2003).

2. Assess opportunities for improvingservice and clinical quality. Throughenvironmental scanning, one ofSSMHC hospitals discovered anopportunity to satisfy an increaseddemand for heart services as aresult of the dissolution of aphysician group. The hospital thenopened the first heart hospital in itscommunity, for which the hospitalreceived an “Innovator of the Year”Award (SSMHC 2002).

3. Analyze performance to identifywhat contributes to patient loyalty.The SSMHC planning staff providesmonthly reports to each entity thatidentify trends and opportunities

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in patient loyalty. For example,classes about particular diseases orconditions, support groups, ande-health information empowerpatients to proactively managetheir disease/condition andtherefore build loyalty (SSMHC2002).

4. Meet requirements of physicianpartners and build physicianloyalty. SSMHC (2002) hospitalshave physician liaisons and otherstaff members who focus onphysician relations, recruitment,and retention. BHI and SLH (2003)survey physicians annually andhold periodic interviews and focusgroups. BHI (2003) implementeda “Physician Action Line,” whichallows members of the medicalstaff to give BHI leaders feedback.When BHI leaders found out thata common physician irritant wasnot being able to locate nursesquickly, they issued wireless phonesto nurses. BHI also trains physicianoffice staffs and assists with officepatient satisfaction surveys.

5. Treat employers as importantcustomers. BHI surveys communityemployer groups to assesssatisfaction, attitude, and needs.In focus groups with employers,BHI (2003) discovered a desireto encourage healthy lifestyleand responded with an incentive-based healthy lifestyle program forworkers.

6. React immediately to customercomplaints with a standardizedprocess of response, tracking,follow-up resolution, and pattern

analysis. BHI (2003) maintainsa customer loyalty team thatfocuses on making things rightwhen responding to complaints.Complaints are addressed within24 hours at SLH (2003), andSSMHC (2002) uses a softwaremanagement program for trackingcomplaints developed by one of itshospitals.

7. Celebrate extra effort for the cus-tomer, and “recover” from ser-vice errors. All of the Baldrigewinners describe service recoveryprocesses that focus on listening tothe customer and recommendingproblem solutions. Employees atBHI (2003) are empowered withspending guidelines for resolutionof problems that involve lost items,delays, or complaints concerningphysicians. Extra effort by employ-ees is explicitly rewarded with writ-ten acknowledgment, celebration,and gifts. CHI’s “Complaints asa Gift” program emphasizes thatcomplaints are an opportunity tomake things better (Griffith andWhite 2003). Dominican Hospital(DH 2003) tracks complimentsfor communication to employees,physicians, and key stakeholdersand celebrates results with individ-ual employees.

8. Search outside the healthcare in-dustry to learn about maintainingcustomer loyalty and building cus-tomer relationships. BHI’s (2003)Standards Team, a subcommittee ofthe Culture Team, actively pursuesbest practices in leading nonhealth-care organizations.

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M E A S U R E M E N T, A N A LY S I S ,A N D K N OW L E D G EM A N A G E M E N TThis criterion is defined as “how yourorganization selects, gathers, analyzes,manages, and improves its data,information, and knowledge assets”(Baldrige Health Care Criteria 2004).

The Baldrige scores knowledgeas a resource that is slightly moreimportant than the human resource.The points are equally dividedbetween “measurement and analysisof organizational performance”and “information and knowledgemanagement.”

“Measurement and analysis”require definitions, input, verification,standardization, archiving, and analysisof large volumes of data from multiplesources. The management challengeis to develop, maintain, and use thesedata to improve performance. Theleading institutions follow these steps:

1. Build medical-records codingand data, billing, materialsmanagement, cost accounting,satisfaction surveys, and humanresources data so effectively andreliably that they are taken as agiven. CHI and SSMHC use theirinternal audit function to ensurethe accuracy of critical nonfinancialmeasures (Griffith and White 2003;SSMHC 2002).

2. Benchmark and compare tobest practice. No goal is setwithout benchmarking. SLH(2003), for example, uses sixoutside commercial sources forcomparisons, including surveycompanies, financial analysts,

and market analysts plus VHA,Maryland Quality Indicators,and the Missouri PRO. SLHand BHI are signed up for theCenters for Medicaid and MedicareServices’ “7th Scope of Work”initiative that goes beyond the JointCommission’s “Key Measures” (SLH2003; BHI 2003). SSMHC (2002),which believes “external visits arekey to the benchmarking process,”has a guide book on its intranetthat describes sources and uses ofbenchmarks.

3. Provide internal consultants tohelp PITs analyze the relationshipsbetween measures, identify trends,and prepare forecasts. Improvementproposals are expected to providequantitative forecasts of allrelevant measures, and acceptedproposals are expected to achievethe forecasts. IHC’s Institute forHealthcare Delivery Research hasbeen central to several significantprocess changes (Bohmer,Edmondson, and Feldman 2003).

4. Use a formal structure to improvethe data processing resource andthe selection and definition ofmeasures. SSMHC (2002) and BHI(2003) use an information council,including senior managementand representation from usersand information specialists. Adhoc information managementteams develop and evaluatespecific measurement andknowledge programs. They bringin technical expertise, listen forimplementation issues, and createspecific short-term and long-term

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plans. SSMHC (2002) and CHI(Griffith and White 2003) use afarm system—required, standard,and nonstandard—that allowsindividual units to experiment withnew measures.

5. Involve line management inknowledge management. Theleaders have invested heavilyin managerial effort, workertraining, and data warehousesover a period of years. They believethese investments have paid off,and they plan to continue a highlevel of investment.

The 2004 Baldrige Health CareCriteria state, “Information andknowledge management . . . examineshow your organization ensures theavailability of high quality, timelydata . . . for all your key users.” Thecriteria address needs, not methods.They do not demand an electronicmedical record or even computerizedpatient order entry. The leaders do thefollowing:

1. Build the process management andgeneral business capability ahead oftheir clinical information systems.They have emphasized usingstandard commercial software andthe information it produces ratherthan developing modifications.

2. Use web technology to putmanagement information at thecaregivers’ and the managers’fingertips. BHI (2003) claimsthat it “provides a ‘no secrets’environment with organizationallyeducated, knowledgeable

employees.” All employees andphysicians are encouraged to accessthe BHI intranet for information.

3. Expand electronic medical recordcapability. Access to clinicalinformation is now a high priority.IHC has the most comprehensiveelectronic medical record, whichwas developed over several years(Griffith and White 2003). BHI’sinformation system covers orderentry and some results reporting.SLH has only recently moved to anelectronic order entry, results, andcommunication system.

4. Emphasize reporting to physicians.SLH has built a system to supplydischarge summaries, key findings,EKG results, and cardiac imagingto referring physicians. It is alsodeveloping an electronic intensivecare unit monitoring and reportingsystem, allowing intensivists inthe flagship hospital to care forpatients in smaller institutions.SLH and CHI are working activelyon telecommunications with ruralhospitals and patients (SLH 2003;Griffith and White 2003).

5. Keep data secure and confidentialto meet HIPAA (Health InsurancePortability and AccountabilityAct) requirements. Permanentcommittees supervise confidentialitypolicies and access. SLH has anextensive firewall system, hourlytape backups of critical data, and adisaster recovery process.

This strategy emphasizes measuresand users, as opposed to hardware andtechnical capability. The leaders show

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that when the strategy is pursued fora few years, it results in a situationwhere people “understand wherethe numbers are coming from andmove on to improving . . . operations”(Griffith and White 2003, 35). Fromthat emerges a culture that is evidencebased, quantitative, and committedto continuous improvement. CHIhas shown substantial results inonly three years, with a modestinvestment in hardware (Griffithand White 2003). IHC’s managersbelieve its cost accounting system anddeliberate collaboration with physiciansare as important to success as itsmedical record technology (Bohmer,Edmondson, and Feldman 2003).

F O C U S O N S TA F FThis focus is defined as “how yourorganization’s work systems andstaff learning and motivation enableall staff to develop and utilize theirfull potential . . . . and maintain awork environment . . . conducive toperformance excellence and to personaland organizational growth” (BaldrigeHealth Care Criteria 2004).

The Baldrige expects humanresource practices that attract and retaincompetent and satisfied employeesand that continuously improve theirskills. The work environment mustdevelop staff, volunteers, students, andindependent practitioners by aligningtheir expertise and efforts with theorganization’s overall strategy. Theleading institutions do the following:

1. Strive to identify and keep goodemployees as the core of the hu-man resources strategy. BHI’s

(2003) employee turnover ratehas declined from 31 percent in1997 to 13.9 percent in 2003.The percentage of staff reportingpositive morale has risen from 47percent in 1996 to 84 percent in2001. In 2002 and 2003, BHI wasranked in the top 15 in Fortune’s100 Best Companies to Work Forin America. SSMHC’s (2002) all-employee turnover rate fell from 21percent in 1999 to 15 percent in2002. SLH’s (2003) employee re-tention approaches 90 percent. Allthree exceed the Saratoga Institute’smedian, which is about 70 percentin 2002.

2. Create human resources systemsthat foster high performance. Jobdescriptions, career progression,motivation, communication, recog-nition, and compensation are well-designed, integrated processes.Selection, training, and on-the-job reinforcement of knowledgeand skills are tied to individualand organizational objectives andaction plans. Explicit policies pro-vide ways to recognize employ-ees, physicians, and volunteers.An executive career developmentprogram identifies and developsfuture leaders (SSMHC 2002). SLH(2003) uses matrix accountabilityto manage work and jobs, empha-sizing multidisciplinary teams andcommittees to enhance a patient-focused delivery model.

3. Emphasize organizational learningand adaptation to change. Theseorganizations provide more than40 hours training to each employee

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per year, with managers receivingalmost twice as much as hourlyworkers. SLH (2003) appointed achief learning officer in 2003 toidentify learning needs for all staff,volunteers, and physicians. BHI’s(2003) commitment to trackingthe learning investment in businessresults led to its recognition as a“Top 50” learning organization byTraining magazine in 2003.

4. Continually improve staff well-being, motivation, benefits, andworkplace safety. To attract andretain the women who comprise82 percent of its workforce, SSMHC(2002) offers flexible work hours,work-at-home options, long-termcare insurance, insurance coveragefor legally domiciled adults, retreatsand wellness programs. Its workersregard its tuition assistance andstudent loan repayment programsas differentiating SSMHC from itscompetitors. At SLH (2003), factorsthat determine employee well-being, satisfaction, and motivationare uncovered through formalsurveys, open forums with seniorleaders, targeted focus groups,senior leader “walk rounds,” “stay”and “exit” interviews, and a peer-review grievance process.

5. Promote a diverse workforce. SLH(2003) has focused intensely onensuring that its workforce reflectsthe diversity of the community,including diversity training for allemployees and “lunch and learn”sessions about diversity-relatedtopics. Minority managers andprofessional staff have increased

from 3 percent in 1998 to almost10 percent in 2002. SSMHC (2002)has used a diversity mentoringprogram to increase minoritiesin professional and managerialpositions from below 8 percentin 1997 to 9.2 percent in 2001,part of a larger diversity programthat was recognized as a nationalbest practice in 2002 by the AHA.Both SLH and SSMHC substantiallysurpass the healthcare industryaverage of 2 percent.

P R O C E S S M A N A G E M E N TProcess management deals with “yourorganization’s process management,including key health care, business, andother support processes for creatingvalue” (Griffith and White 2003).

The Baldrige approaches orga-nizations as a large set of workprocesses. Each process is describedand monitored by performancemeasures that usually cover availability,cost, quality, customer satisfaction, andworker satisfaction. The benchmarks,goals, and stakeholder opinionsfrom the strategic planning criterionare used to identify opportunitiesfor improvement. A performanceimprovement council commissionsPITs to pursue the most promisingopportunities. Table 2 shows thescope of process improvementsamong Baldrige winners. Becauseof page limitations of this journal, theprocesses listed are the applicants’ bestexamples. They include both outpatientand inpatient activities, althoughthey focus on the expensive episodes.Prevention and chronic disease careremain frontiers, but many activities

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that generate general waste and qualityproblems are addressed.

The leaders’ process managementprograms do the following:

1. Change the culture of theirorganizations from professionaljudgment to measured performance.Nursing, medicine, humanresources, and accounting arenot evaluated on the opinion oftheir professional leaders; rather,they are evaluated by performancemeasures.

2. Support a service line structure thatorganizes accountability aroundgroups of patients with similarneeds, rather than the traditionalfunctional silos. The service linesintegrate inpatient and outpatientactivity.

3. Pursue all important opportunities.The leaders have the capability tosupport many teams simultane-ously. They have no sacred cows,where history or authority protectsa process from review.

4. Decision of whether performanceis “good” or “not good enough” isbased on comparison to goal. Anymeasure, from the post infarctionmortality rate to days of accountsreceivable, is “good” if it achieves apreviously negotiated goal. The goalis often moved forward each year,based on benchmark or, in somecases such as incorrect surgicalsites or medication errors, on zerodefects.

5. Listen extensively to supplementthe measures. Qualitativeinformation from customers,

workers, and other stakeholdersis broadly sought and sensitivelyanalyzed.

6. Revise processes based on carefulanalysis of qualitative andquantitative information, “outsidethe box” search for alternatives,and study of the work of others.Like the measures, the processesare compared to similar situationselsewhere. Learning from othersis a way to speed improvementand reduce its risks. SSMHC(2002) has “collaboratives,” andCHI has “affinity groups” ofmanagers that perform similarjobs across their systems (Griffithand White 2003). SSMHC, CHI,and IHC participate in Institute forHealthcare Improvement programsto share best practices (IHC 2004).

7. Train improvement team leaders.Team leaders get “meeting in abox” tools, analytic skills, moneyto travel to comparison sites, andfunds for experimentation.

8. Monitor improvement teamsclosely. Timetables and interimgoals are set. Rigorous analysis isexpected. Constructive advice oncomplex situations and conflictresolution assistance is availablefrom senior management.

O R G A N I Z AT I O N A LP E R F O R M A N C E R E S U LT SAccording to the 2004 Health CareCriteria, this criterion refers to“performance and improvement. . . .relative to those of competitors andother organizations providing similarhealth care services.”

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The measurement focus of leadinghospitals allows them to documenttheir achievements, which, in turn,has led to a number of awards. TheBaldrige winners exceed nationalmedians in more than 75 percent oftheir reported measures.

D I S C U S S I O N A N DC O N C LU S I O NThese institutions’ achievementsset a new standard for performanceaccountability and excellence that webelieve is a revolution in hospitalmanagement. Simply put, theyhave shown how to run healthcareorganizations substantially betterthan is typical. Similarly, they havedocumented the processes thatproduce excellence. The new normwill not be overlooked in boardrooms,reimbursement negotiations, bondrating agencies, accrediting reviews,and courts. Just as medicine nowfollows guidelines for care; successfulmanagers will use evidence andcarefully developed processes to guidetheir decisionmaking. Healthcaresystems and hospitals that copythese processes can expect to dowell. Their stakeholders—patients,trustees, physicians, nurses, payers—willbe pleased. As word spreads, otherstakeholders will demand no less.

Professional excellence for hospitalmanagement will become the abilityto use these processes and matchor exceed these numbers. Hospitalmanagers, across the nation and at alllevels, face a substantial challenge.

The evidence suggests that thechallenge can be met in only a fewyears. Although IHC and SSMHC began

their quality journeys before 1990, BHIbegan intensive employee training in1997 and CHI achieved success in justthree years. As Sister Mary Jean Ryan(2004), president and CEO of SSMHC,says, “the Baldrige criteria also establisha path to meet that challenge.” Thefirst four leadership steps—mission,measures, prompt reporting, and two-way communication—are the rightbeginning.

Revolutionary change includesprofound shifts in organizationalculture. Governance becomes proactiverather than reactive. It turns toongoing cooperation instead ofnegotiated settlements. The conceptsof professional domains—the board’s,the physicians’, the nurses’—givesway to dialog about the cost andquality per case; it is a fundamentalshift in perspective from inputs tooutputs, from tradition to results,from static to dynamic. Managementis now dually accountable—upwardsfor results, downwards for supportingand training associates and teams.The approach is firmly grounded inlearning and rewards; it is not punitiveor coercive. Collaboration has becomethe key word at all levels. Teamscollaborate to improve care, supportunits collaborate to meet caregiverneeds, and the organization as a wholecollaborates with stakeholders tofurther mutual aims.

R e f e r e n c e sBaptist Hospital, Inc. 2003. Baldrige Award

Application. Pensacola, FL: BHI.Bohmer, R., A. C. Edmondson, and L. R.

Feldman. 2003. “Intermountain HealthCare.” HBS Case9-603-066. Cambridge,MA: Harvard Business School Publishing.

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Catholic Health Association. 2001. CommunityBenefit Program. St. Louis MO: CHA. Alsosee http://www.chausa.org/RESOURCE/COMMBENEFITPROGPROMO.ASP.

Dominican Hospital. 2003. Baldrige AwardApplication. Santa Cruz, CA: DominicanHospital.

Friedman, P. 2004. Personal interview, Sep-tember 3.

Griffith, J. R. 1998. Designing 21st CenturyHealthcare. Chicago: Health Administra-tion Press.

Griffith, J. R., V. K. Sahney, and R. A. Mohr.1995. Reengineering Healthcare. Chicago:Health Administration Press.

Griffith, J. R., and K. R. White. 2002. The Well-Managed Healthcare Organization, 5thedition. Chicago: Health AdministrationPress.

. 2003. Thinking Forward: Six Strategiesfor Highly Successful Organizations. Chi-cago: Health Administration Press.

Heskett, J., W. E. Sasser, and L. Schlesinger.1997. The Service Profit Chain. New York:The Free Press.

Institute for Healthcare Improvement. 2004.[Online information; retrieved 6/30/04.]http://www.qualityhealthcare.org/IHI/Topics/Improvement/ImprovementMethods/Literature/LessonsfromtheBaldrigeWinnersinHealthCare.htm.

Malcolm Baldrige Health Care Criteria forPerformance Excellence. 2004. [On-line information; retrieved 2/27/04.]http://baldrige.nist.gov/HealthCareCriteria.htm.

Ryan, M. J. 2004. “Achieving and SustainingQuality in Healthcare.” Frontiers of HealthServices Management 20 (3): 3–11.

Simons, R. 2000. Performance Measurement andControl Systems for Implementing Strategy.Upper Saddle River, NJ: Prentice Hall.

SSM Health Care System. 2002. BaldrigeAward Application. St. Louis, MO:SSMHC.

St. Luke’s Hospital. 2003. Baldrige AwardApplication. Kansas City, MO: SLH.

P R A C T I T I O N E R A P P L I C A T I O N

David L. Bernd, FACHE, chief executive officer, Sentara Healthcare, Norfolk, Virginia

W ith one-third of the nation’s hospitals running in the red and another thirdbreaking even, the need for a model of healthcare management cannot be

more imminent. This article provides an insightful glimpse into the practices ofsome of the nation’s best health systems and begins to answer the need for a stan-dard management approach through which organizations can achieve excellence.By operationalizing the Baldrige Criteria and using process-based decisionmaking,the systems described in this article have achieved superior quality in operationsand excellence in relationship management.

An emphasis on the Baldrige criteria, however, will not forge excellence in andof itself. The Baldrige winners described here and other organizations that striveto emulate them must undertake a simultaneous culture shift—one that embracesquality as a differentiator and a key to long-term success. The acceptance of theseprinciples will prove useful for the practitioner in several ways.

The Baldrige approach to management does not create a cumbersome newbureaucracy as a means for achieving results. This initiative is successful because

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quality roots itself within and throughout an organization. The choice of adoptionand belief that quality will make a difference in care delivery are large componentsof achieving excellence.

The Baldrige model provides intangible principles through which managementcan lead and derive operational goals. More important, however, are the tangibleexperiences of the systems that have implemented the Baldrige model and haveincorporated quality into their raison d’être. Organizations that strive for similarrecognition and results can learn from the mistakes of past Baldrige winners.

The establishment of a common ground for comparison is another advantagefor organizations that implement the Baldrige approach to quality and manage-ment. The accomplishments of organizations that live by these principles provide astandard against which the industry can measure performance. The implications ofstandardization reach beyond internal system boundaries and extend out into thecommunity, providing a language for collaboration across systems and improvedhealth information for consumers.

Most importantly, this article is a guide, demonstrating how some of the mostsuccessful systems have achieved results. Healthcare institutions do not have toreinvent the wheel; instead, they can look to these exemplary organizations tolearn how to focus resources into a formula that will result in operational excel-lence. Change is both realistic and realizable, and it does not take a lifetime orenormous capital investment to create a culture of quality.

The authors assert that “The institutions’ achievements set a new standardfor performance accountability and excellence that we believe is a revolution inhospital management.” I challenge that proclamation, arguing that while a rev-olutionary groundwork has been laid, the true revolution will occur when manymore hospital executives guide their organizations using a commitment to qualityand the Baldrige criteria as a foundation. In turn, these hospitals and health sys-tems will exceed the standards of today and become the models for operationalexcellence of the future. In the words of Dr. Joseph Juran, “We are headed into thenext century which will focus on quality . . . we are leaving one that has focused onproductivity.”

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Documents

The Revolution in Hospital Management web page/Griffith_White.pdf · The Revolution in Hospital Management John R.Grifﬁth, FACHE, Andrew Pattullo Collegiate Professor, Department