These days it almost goes without saying that many hospitals are facing serious financial challenges. Healthcare needs to change. Less care, more efficient care, better care. But how can you be sure that you are achieving your strategic objectives while ensuring that your finances remain healthy, both now and in the future?
A properly organised planning and control cycle with the right financial, logistical and strategic indicators and targeted reporting are essential for enabling management to take timely action to intervene where necessary.
Hospitals are working hard to improve their insights on the financial and logistical parameters by configuring Business Intelligence tools, defining KPIs and developing reporting processes.
But that’s not enough. Even if the tools and insights are available to produce a great set of coherent reports covering all levels of the organisation – which very often is not the case – then the next question becomes: are you using this information properly? Is the process right?
Risks of top-down planning and control cycle
Management reports will often land in the in-tray of the Executive Board first. Its members will do their best to interpret the figures and explain divergences from plans or standards. This can prompt a flood of questions to the finance department, which will then forward those questions to other departments or responsible units. The latter will then immerse themselves in the figures and try to track down the facts or divergences that have been identified. The explanation may or may not be found and the information will then be passed back up to the Executive Board, often via Finance.
This form of monitoring poses two risks:
- Shortly after the initial reports there is a frantic burst of activity in the organisation. Ad hoc questions need to be investigated and information needs to be interpreted and processed quickly to provide the Executive Board with answers. The Executive Board will often then need to hold a second meeting so that it can consider the reports with the aid of the information that has been gathered.
- The responsible unit does not take full responsibility for the entire result; its response is reactive. The Executive Board gets a response to what it has asked for and is looking for, but there is no thorough analysis of all the other indicators that also affect the result. And so we cannot expect any corrective measures in respect of these indicators.
This approach therefore results in unrest, inefficient decision-making by the Executive Board and a failure to give everyone full responsibility.
Turning the process: bottom-up
One possible solution would be to turn the process upside-down. You could make the reports available to the individual departments first, where a small team would analyse and interpret them properly. The team would note explanations for acceptable divergences and describe corrective measures for any unacceptable divergences. Finance would consolidate the sets of reports accompanied by explanatory notes and pass them on to the Executive Board member responsible for the departments in question. That board member would then interpret the report and if necessary consult a department head. Finance would prepare the overall Executive Board report. A single Executive Board meeting would be held to discuss and explain the divergences, ratify any corrective measures and take decisions.
The cycle would therefore be entirely bottom-up. This would provide the Executive Board with all the necessary information to have a good substantive discussion of the results and to facilitate efficient decision-making. It would also generate a greater sense of ownership and proactiveness among department heads. They would be working on corrective measures even before the Executive Board asked them.
This process would certainly enable a hospital to be managed more effectively. However, if this approach is to succeed, it must be enabled by comprehensive data, the effective translation into a small number of relevant KPIs for each level and a set of compact, readable reports that are easy to consolidate. And obviously it would require the competence to properly interpret information and KPIs, deduce causes and take the right corrective measures.
