Research by Chris Serb

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Executive dashboards—automated systems that report on a limited number of key metrics—are now commonplace in the health care industry. The streamlined approach, ease of use and graphics-heavy format allow executives, trustees and managers to check performance quickly, for an up-to-date glance at where things are going well and where improvements need to be made. That plays well throughout a health care system, from a chief financial officer's aiming for debt-to-capital targets to a unit manager's planning staffing levels for the next week.

But the dashboard approach isn't always as simple as it seems. Experts agree on three of the biggest categories that dashboards should illustrate: financial health, operational efficiency and quality of care. Specific metrics that accurately reflect these categories, however, are more elusive. Also, health reform's massive impending changes will demand better tracking of specific measurements. A philosophical shift away from active health care and toward managing population health will demand further sets of measurements that are just now being imagined.

The Basics

The key to an effective dashboard is a limited number of meaningful measurements. Think of your car's dashboard. If you have 200 gauges measuring everything from remaining spark plug life to current gross weight, they'll swallow up the basic, but important, information like speed and fuel level.

"Sometimes organizations will generate dozens of ratios and charts simply because they can," says Jason Sussman, managing director with Kaufman, Hall & Associates, a Skokie, Ill.-based health care financial consulting service. "On the financial planning side, there are hundreds of ratios, but we boil them down to eight or nine for a dashboard. The key is to find a reasonable number of indicators that will then lead you to a problem area, so you can manage and adjust."

A useful dashboard generally should include 15 to 25 measurements, though this can be customized to include a few more for very technical job functions, or fewer for higher-level executives or board members.

"The higher up the food chain a user is, the less important some of the specific metrics are going to be," says William Cleverley, president of Cleverley & Associates, a hospital consulting firm in Worthington, Ohio. "A set of 10 metrics can be terribly confusing and utterly useless to a board member if the metrics don't relate to overall performance goals of the firm."

So, what should health systems track on their dashboards? Kaufman, Hall recommends that all hospitals start with a common set of five financial measurements:

1 | Operating cash flow margin
2 | Days cash on hand
3 | Debt service coverage
4 | Cash-to-debt ratio
5 | Capital expenditures as a percentage of annual depreciation

Cleverley & Associates has a set of 75 specific metrics that hospitals can use, but each relates to one of 10 key areas, ranging from capital position to supply costs to investment efficiency. Organizations also should cull specific quality measurements that not only indicate overall quality, but also avoidable costs, such as nosocomial infection rates or readmission rates.

Not all functions benefit from the same information. The nursing manager doesn't care about the hospital's average cost of equity, while the controller can do little about day-to-day volume fluctuations on a specific unit. Flexibility is important, so that people in specific functions get the information they need. The 15 to 25 metrics on a CEO's dashboard would look slightly different from those the CFO could access, and drastically different from those a specific unit manager might see.

"We have multiple dashboards, depending on the audience," says Andrew Proctor, senior director for business intelligence at the Cleveland Clinic. "In each domain of finance, quality, access and so on, you have tables with current performances, then each tab has a dedicated operational dashboard with more depth on the metrics. Some executives will drill down on that, some won't, but the managers who have responsibility in that area and the individual drivers of an initiative always will."

IT Considerations

Whether it's homegrown or off-the-shelf, the nuts and bolts of building a basic dashboard are easy. Any number of applications can link quickly to your legacy systems to graphically display things like days cash on hand or federally mandated quality measurements. The more advanced analytics are harder to put together—for reasons that have little to do with technology.

"You can pull data out of one system and get one answer, pull it out of another and get a different answer, so you have to decide, 'What is the source of trust? How will I define these metrics? What are my policies around using and interpreting data?'" says Deborah Gash, vice president and CIO at Saint Luke's Health System, Kansas City, Mo. "That doesn't require technology; it's something that you need to do regardless of what solutions or systems you put in."

Gash advocates creating an IT governance structure to address those bigger-picture questions before any advanced dashboard applications are rolled out. She also notes that advanced metrics pull from multiple disparate sources, so a single data warehouse is key.

"It's a complex endeavor, and for an organization of our size, it's a pretty substantial investment," Gash says. "For most organizations, I would imagine it's a pretty sizable investment no matter what their size."

As with any technology that relies on clinical data, dashboards require some serious thought about data security: maintaining HIPAA compliance around protected health information, de-identifying patients where appropriate. "You have to have a good structure and a good process in place, and the best time to do that is on the front end," Gash says.

While the IT component involves quite a bit of planning and investment, Gash notes that moving to more advanced performance measurements is critical in today's environment. "If you're going to be in a risk-type reimbursement model or a reimbursement environment with bundled payments, I don't know how you could survive if you didn't have the ability to view your performance metrics," Gash says. "You wouldn't be able to reduce costs because you won't know where the costs are, you won't be getting reliable information on outcomes. Without this, it would be difficult to remain competitive."

Meaningful Measures

Beyond narrowing the number of metrics, health systems need to make sure that the metrics they use accurately reflect the performance they are trying to measure. This can lead to some rethinking of classic measurements, such as FTEs per adjusted occupied bed, which Cleverley cites as the No. 1 metric used by hospitals to represent productivity.

"The dilemma with using this is that if you bring your length of stay down, your FTEs per adjusted occupied bed will actually worsen even though you're being more productive," Cleverley says.

Cleverley has crafted a new metric, cost per equivalent discharge, that more accurately reflects actual productivity.

"You can't just look at metrics that you think might be interesting, or that you think represent your goals when they actually don't," he says. "You want a measure, like cost per equivalent discharge, that's going to more accurately relate to key goals such as productivity and profitability."

At the Cleveland Clinic, meaningful metrics like this are crafted carefully based on a general mandate from senior management.

"The leadership identifies such key strategic initiatives as clinic access, and we set about ways to better measure that than we had been doing before," Proctor says. "What we do here is very specific—project-based, tied to an executive or strategic initiative, carefully built over time to accurately measure what we're trying to measure."

In isolation, even the best measurements are meaningless. They need to be tied to a performance goal, whether it's a specific targeted number, a percentage of internal improvement, or a benchmark that's tied to the local competition. A good dashboard will highlight the areas that are not measuring up. This spurs leadership to dig deeper, often through further charts and metrics that can be accessed from the main dashboard, to understand the reasons for the failure and possible courses of action.

Cleverley compares a hospital with its local competition, and uses a one-to-five-star rating, from "poor" to "excellent," for each measure. The Cleveland Clinic uses a green-yellow-red scale, where metrics in the yellow range need to be monitored, while those in the red demand immediate attention.

"When one of those red flags comes up, you want to look at other indicators that lie below the red flags—why cost is up, why length-of-stay is down," says Sussman of Kaufman, Hall. "We could see the red flags 10 or 15 years ago, but the technology today makes it easier to explore why those red flags are moving."

What's Next?

Originally, executive dashboards were heavily loaded with financial and operational measures. Now, clinical measures are increasingly prominent, especially those surrounding quality.

The next generation of dashboards will retain the important financial metrics, especially those surrounding costs. But they will include even more focus on quality, as mandated by the federal government.

"With health care reform and the evolution of the insurance market, we will see value-based reimbursement models that reward for quality and cost-effectiveness," says Mark Grube, managing director with Kaufman, Hall & Associates. "We will see more of those on dashboards as the types of indicators people use start to change."

The Cleveland Clinic has incorporated several specific quality measurements into its unit-level dashboards, in areas that health reform is mandating: pneumococcal vaccination rates, smoking cessation counseling, heart failure education, beta-blocker administration. In all these areas, the awareness of the measurements drove significant performance improvements—in some cases to 100 percent. Other initiatives have centered around patient-experience improvements that are part of health reform's value-based purchasing mandate.

"If we fall off our current performance, we could lose a percentage of our reimbursement," Proctor says. "But if we improve our performance in these measures, then we can increase the dollars that are paid to us.

Proctor notes that the dashboard approach works well for quality improvements at the unit level. "We have an audit dashboard where we can see who's viewing which metrics and how frequently," he says. "Those who use the dashboards frequently have consistently better numbers than those who don't."

Other quality and cost measurements are just starting to emerge, and consultants feel they will grow in importance as the pace of health reform increases. Down the road, more sweeping changes could forge measurements of a much different kind.

"Today, measurement is all about financial outcomes for the delivery of care, but at some point financial outcomes will be linked to the wellness of the population," says Frederick Hessler, managing director of Citigroup Global Markets in New York City.

Hessler notes that such improvements in metrics as population obesity rates not only are easily measurable, but also are directly linked to cost avoidance. He hesitates to predict exactly which metrics will be linked to reimbursement, but he believes several measurements can indicate whether a hospital will remain sustainable in the coming era.

Some of Hessler's key questions include: Are your administrative costs less than 15 percent of total costs? Does 85 percent of your community live within 15 minutes of an affiliated primary care provider? "These may or may not translate into dashboard metrics down the road, but they are good areas for executives to track now if they want to be ready for the still-undefined next era of measurement."

"If you start addressing wellness in your community, one of the key benefits is keeping people out of the hospital, which is the best way we know of keeping costs down," Hessler says. "The whole point is not to figure out exact measurements, but to begin a dialogue about the effectiveness of health, not just the effectiveness of health care."

Cleveland Clinic: How One System's Dashboard Works for Its Executives

  • Senior executives, at both an individual hospital and overseeing the entire system, would look at a "quarterly review" slide for a brief overall glance. On the upper left, users choose to view quality, patient experience, access, readmissions, safety or mortality measurements at their hospital. Each chosen field then links to a few key metrics, listed in the upper right. The metrics may be chosen because they are strategic initiatives, or because they are areas in which that institution could do better. The executive here has chosen to view "Core measuresappropriateness of care," a CMS-mandated reporting area which is in the "yellow" range for this sample hospital. The chart on the bottom left shows that hospital's quarterly trend against the goal, and the chart on the bottom right shows year-to-date performances against both the previous year and against the goal.
  • Senior leaders and quality-improvement managers within a hospital can drill down further to explain variations or shortcomings in a metric like appropriateness of care. (Maintaining good metrics in these core measures and improving bad ones will make up the majority of value-based reimbursement payments under health reform.) In the upper left, a user can see how the hospital stacks up in several different areas against a national average and against its goal, which is the national 90th percentile. We can see that this sample hospital exceeded its goal overall, as well as in three of the four individual areas. If the user clicks on the metric for surgical infections, the chart on the upper right shows how the hospital stacks up against several comparative hospitals. The bottom graph maps the hospital's appropriateness-of-care scores for surgical infection patients against both the national mean and the 90th percentile over the previous year.
  • This slide maps a hospital's patient-experience scores against its targets. (These metrics, as part of Hospital Consumer Assessment of Healthcare Providers and Systems, or HCAHPS, make up a portion of value-based reimbursement payments under health reform.) On the upper left, senior executives as well as quality or patient-experience managers can check the hospital's patient-reported satisfaction scores in a number of areas; this sample hospital is in the "green" in two areas, and in the "yellow" on seven others. If a user clicks on "Pain Management," the specific components of that metric appear in the upper right. A chart on the bottom measures patient-reported pain management against the hospital's goal.