Hospital Outsourcing-broad criteria for decision making

A hospital administrator always faces questions on services outsourcing in a hospital. It is difficult to take the decision as there is no common rule or criteria to identify what to outsource and what not. Currently most common prevailing practices are followed and these are driven by financial concerns. Other important factors come into picture once the service gets outsourced. At that time, it has its own challenges to revisit the decision. for eg. for a hospital decides to outsource pharmacy services on the basis of desired outcome of keeping no stock hence no capex & manpower.  But as a super-speciality hospital it’s running a medical oncology department where most chemotherapy drugs are required. In such case it’s important to maintain a control on stock, look at financial viability for hospital as well as patient and overall patient satisfaction. this can be better achieved if pharmacy is in-house.

There can be multiple criteria to consider while identifying such areas for outsourcing. There is nothing better then mother nature to provide the approach. Let’s consider a very simple colony of honey-bees. Honey bees have well defined system based upon the task to accomplish that ensures survival of the colony i.e. purpose. Members work in groups to fulfil needs of the colony. If we consider Queen as focused and result oriented leader then other members i.e. worker bees and drones are the groups to whom specialized work gets allocated by the leader in a very systemic way. Thousands of Worker Bees assume responsibility for feeding; cleaning, nursing, defending & Drones assume responsibility of mating with queen for colony growth. The distribution of tasks is on the basis of its characteristics. These characterises can be decoded and can be consider as criteria for outsourcing decision making.

Hospital Outsourcing concept

Goal- It’s very important to identify the Goals of the hospital which gives the clarity about the short & long term achievements.  Eg. For the hospital low cost treatment as one of the goal, leaders should isolate all the areas that lead to reduction in the cost thus impacts on the service delivery pricing. These areas can be non-clinical services, consumables or pharmaceutical products. If hospital has a goal to provide high end diagnostic service then all the areas like MRI, CT, and medical equipment procurement should be considered.

Critical Services– it’s important to identify criticality of the area considered for outsourcing. These critical services may be super-speciality associated services as defined by a hospital. Ideally such services are the differentiating factor for a hospital & should be in-house. For a level 1 trauma centre, ambulance service is critical and should be in hospital control. The delivery of such services will directly impact the patient care and satisfaction.

Value of services– in case of bees, drone is important for specific time period but doesn’t add value to other tasks done by worker bees. In a healthcare organization, support services like housekeeping or parking are important services but not a major value addition services to hospital mission. Some services are for specific time periods but are important and can impact operations any time. Equipment maintenance is one such example. Hospital has to keep a team in house or can outsource the maintenance. Up-keeping is the important activity and assurance to minimize sudden downtime.

Future plans– Drone bees are only useful as future assurance.  In the same way Organizations should identify the future plans. It’s important to understand whether they wanted to focus only on the hospital(s) core services or wanted to develop some services as separate business units. To develop separate business units organization should develop the expertise and develop them with in-house. These areas can be clinical areas like dialysis or imaging service and non-clinical as F&B department, Patient Care Services.

Operational Risk– bee colony is limiting their risk of ‘not having their offspring’ by sheltering a group of drones. Operational risk including cost, process, quality impact is the important component to consider while outsourcing. It’s better to have options to fall upon. Eg. IT infrastructure maintenance can be handled by an in-house team but because of the nature of issues and dependency, it’s a good idea to keep a highly skilled team as backup and outsource few selective activities like IT hardware maintenance.

Setup Complexity– in a colony of bees setting up the honeycomb, prepare food, taking care etc. tasks are taken care by the worker bees this is same as complexity linked with initial setup.  In hospital it’s important to identify these complexities like initial cost, operational challenges in setting up the services etc. for example it’s very important to check the setup cost for rehabilitation dept. with operational challenges as its different from focus areas (Ortho or Neuro) for a specialized hospital. It will require larger space with different set of equipment. But on other hand by combining rehabilitative services with the specialities can provide end to end care for the patients.

Skill Set– required skill set and its availability is also a major criterion to be considered while outsourcing. In a super speciality hospital setting up Dental department requires different kind of doctors and skill sets. Hospital branding & campaigning required exclusive skill set which belong to different sector.

Resources– in bees’ colony, the activities require high resource but having low or medium value proposition are taken care by the worker bees. In a same way in hospitals activities require Hugh manpower or consumables but the value addition to our goal is not much but supportive, it can be considered for outsourcing.  e.g. Housekeeping services, security services etc.

Hospital Outsourcing matrix

Quality, Cost & service efficiency are the part of the desirable outcomes and common in above said points but not the only criteria for decision making. These points should be covered while negotiations & preparing SLAs.

Disclaimer: The views expressed in this post are purely the thought of the author and are not meant to be derogatory to any institution or organisation. The author is open to further discussions. Thank you for your patience and tolerance.

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Defining your KPI’s – What is your Hospital Measuring ?

KPIs what are you measuring

Ill start with a  Cliche  – “What is not measured is not done”, but  i truly believe  in the power of measurement  and that’s why measuring all that you have envisioned for your hospital becomes critical.  But then how good are our hospitals at measuring?

Before we can really answer that question we need to identify what it is exactly that we our measuring.  I have come across a few discussions which were based entirely around what hospitals should measure and honestly every individual seems to have his / her own response.  Yes there are some basic KPIs such  as  ALOS , Occupancy, Revenue etc that keep cropping up from time to time however  I haven’t really come across a  really well defined KPI directory that you can choose from .  And sadly enough some  rare  managers and administrators that I have come across  are not  even aware of  the  entire  implication that a  particular KPI has  on the  functioning  of the  hospital.

My attempt here is not to define a directory for you but rather to set a direction to our way of thinking about KPIs

So what do hospitals measure?

Our entire KPI classification is based around

 Clinical Quality  – e.g. Medication errors, outcomes, mortality, hospital acquired infection , repeated surgeries, readmissions etc

Operational Quality – e.g. waiting times,  Going  above  estimates, Consultation quality, Discharge times, Admission times etc

Operational efficiency – e.g. ALOS, Volume growth, Cost per bed, Material cost  %, utilization rates, Your basic time motion studies regarding process efficiency etc

Financial health – eg. EBITA, Debtors outstanding, Case mix, Revenue source mix, Cash to debtor’s ratio, Cash flow etc.

This is definitely not all inclusive in terms of KPIs or categories but basically top of the head stuff. I have  also seen people merge Operational quality and efficiency but id rather keep them separated.

Wow that’s quite a lot of things to measure  if you think about it and  we haven’t even quite scratched the surface yet.  How will I keep an eye on the ball when I’m being bombarded with balls? The answer my friend is simple identify what’s important for you

So what is important for you? Prioritise

The KPI dashboard that you are most concerned about is directly related to the level / nature of involvement that you have with the organization.

If you are a C level executive your KPI dashboard might be entirely different from let’s say someone related solely to Operations which might be different from the individual heading Quality. When i say different it doesn’t mean there is no overlap there will be overlaps but functionalities are different.

So a CEO would have some of these things on his / her  mind  –  EBITA , Material Expenditure, Volumes for critical procedures , Case Mix , ALOS, Debtors , Utilization etc.

And then this further would percolate down to departmental levels.  Eg OPD would have different Performance indicators such as waiting times, doctor punctuality, material consumption, Staff attendance, Overtimes, Complains, average consultation times, volumes,  etc .Marketing would have measures  like – call volunmes, sector wise revenue, cost per  customer  acquisition ,  doctor wise  performance, activity vs conversion etc

I would say define your parameters well at the departmental levels to drive true quality and efficiency.

Ideally a C level manager should look at about 30 – 50 selected indicators on a daily basis and then selectively look at indicators from departmental levels which show huge discrepancy from the expected values or unusual results. Focus can also be shifted while working on specific projects. Please note it’s difficult to keep an eye  on 170 parameters so prioritise and reorganize your dashboard  on regular intervals

At the departmental level each department should be encouraged to develop their own KPI bout 20 – 30 against which they measure themselves. Please remember while defining your KPI it’s important to understand why you are measuring it and whether you need to include it, be specific and be selective.  Also VOC (voice of customer) must  be imbibed into your Dashboard structure. Lastly  identify the correct method to measure the KPI you are defining a lot of times time is wasted on goose  chases with either  the  wrong  data or  erroneous  data  collection.

Implementation 

This is the tough part here is where you record, review and correct and this is not only for a particular phenomenon that you  are  measuring  but also your dashboard structure add omit and refine the  dashboard as  you go along. But before  that  i can not stress on the  importance of getting the  message across to your entire hospital team. The  grass root level must understand the  importance of  an entry they make or the data they capture to ensure the quality of data and the  success of the system.

What would be the benefit?

The answer is simple consistent quality service provided with efficiency and accuracy.

HIS / BI Tools

I am certain there are quite a few HIS systems as well as Business Intelligence tools which integrate with your HIS systems to raise alarm and to bring things to your notice. However treat them as tools but don’t be over dependent on them. Because solutions which come in a tin are not necessarily the solutions we need.

Authors note:

My overall experience with KPI mapping in hospitals in India is that we are inept at measurement.  Most hospitals basically follow a basic set of indicators that are commonly predefined and taught in Hospital Management courses, however creative development of newer indicators seems rare.  A problem that is causing this is that management professionals are not necessarily keen at sharing their knowledge,  and the knowledge share which happens is mostly of data which is already out there in the  public domain.  Also as an industry there is a lot to learn from the Manufacturing sector and we must keep our minds open to newer possibilities through cross industrial / sector learning. In the end Collective Cognition is the need of the hour.

Disclaimer: The views expressed in this  post are my own and  are  not meant to be derogatory  to any institution or organisation. These are just my thoughts and  these are open for further  discussion and  development. Please do comment and  share and  let’s get some universal cognition into this. Thank you for your patience and  tolerance.

Value Based Healthcare Delivery

I recently came across this talk by Michael Porter about healthcare that he had delivered at Harvard  Business  School though the  talk was  generally about the healthcare system in the US  however  i felt that  it was quite  relevant  to healthcare  systems in general across the globe.

One  of the  most  important things that he talked about was  Value Creation and  improving the  Value delivery system. But then the question which arises is what is the  true value.  How do we  define Value becomes  critical , is it just patient outcomes , is it cost of delivery , could it be a  generalised figure and  he defines  it quite comprehensively  he says that it the patient health outcomes achieved  relative to the money spent to achieve those outcomes.  Which becomes a  simplified outcomes as numerator and cost as denominator.

This is  quite  a shift  in our existing way of  measuring success  which are either  based around profit maximisation, or Volume  delivered, or  access to healthcare in general. Quality as  it stands currently is  based entirely around the  process definition and  improvement. Be it any guideline we  follow NABH or JCI its  mostly process based. Process improvement  is very important  however outcomes  are  even more important.  And  are we really measuring the  clinical outcomes. If the  system is to improve  then the competition has to move from being profit or  process based to becoming outcome based and then to value creation and thats the  only way we can get a  handle on the spiralling costs of healthcare delivery.

So how do we really shift the  focus to value.

Lets Look at Outcomes outcomes need to defined per  patient and  his / her medical condition. We need to look at survival,  functional status, independence, residual defect / illness. Yes it is an intensive  exercise  but the  results would truly be  enlightening and  a true move towards the  goal  of quality. Define the  Outcome parameters for any surgery / medical treatment that is meted out including survival rates, extension of survival period, dependence of medication etc etc.

Secondly identify your costs. For some strange reason healthcare seems to shy away from a  practice which is so commonly followed in the manufacturing  sector and this is ABC (Activity based Costing ) .For Healthcare i would suggest a  time related Activity based  costing. Whats even more  specific is that it will  be a  patient based time related activity based costing.  We tend to see ourselves as distinct departments and subunits and we tend to do our costings similarly too(that  is if we do our costings). However a  true costing exercise must capture the entire cost related to the  patients  journey through  care  pathways. And through this way we should be able to define  the true value of a  patient outcome. The focus needs to be on the  Outcome , and  existing technology in terms of HIS  systems must integrate these costing parameters  but  the  end result could truly be transformational .

I personally look  forward to a  day where  we will focus on the right performance indicators though that  is a  different post in itself. But  i think this could very well be a move  in the right direction be it for a private hospital, a charitable trust or a  public trust.  Efficiency , effectiveness  both would be  effectively measured and  documented and  true value would lead to better profits / access/ volumes so this is a  win win no matter  which way you take  it.

Here is the  Video if you are  interested , apologies for the poor sound quality.

Disclaimer: The views expressed in this  post are my own and  are  not meant to be derogatory  to any institution or organisation. These are just my thoughts and  these are open for further  discussion and  development. Please do comment and  share and  let’s get some universal cognition into this. Thank you for your patience and  tolerance.

Quality for Hospitals, are we there yet?

Quality in hospitals seems to be one of the  most talked about issues  of today. I can understand why it is so important with consumers being more  aware, with competition being as high as  it is  and  expected to increase  further  in the  future and  with legislation being the  way it is for hospitals. Process  improvement  , documentation and  SOP creation seem to be a bare essential for hospitals in the world of today . Honestly speaking i don’t quite know how the  past was in  an era before 2003 , however  the  impetus that  is laid on quality  ever since  that era  has  only  grown manyfold over the  years.

No ifs and buts about the importance of quality, However what bothers  me the  most is that quality seems to be the means  to an end for most administrators. Historically if we are to look at quality in hospitals , Initially it was the  selected few going in for JCI accreditation who sought the  ghost of quality, in the  lucrative  pursuit of medical tourism. Then there  were the  local champions seeking ISO and Crasyl  ratings, remember   those  times, when we had  representatives of accreditation firms shooting quality down our  gullets, and  of course the  most  recent  turn is NABH. This now  seems to be our  gold measure  for quality and  standardisation at least nationally .

But think about it if these are the reasons we seek quality then isn’t  the quality itself limited by these  reasons. What are  we  checking for  what  comes under the  purview  of quality is it just those 638 parameters  defined by NABH 2011 (which might be  revised to 736 unofficial sources)that an organisation is assessed against. Is that  all there is to quality then aren’t we  constraining quality in stray jackets of limited vision.

Quality when taken up  as  an end  in itself is more beneficial to an organisation. Yes i would be wrong in saying  go against the  norms  forget  NABH its not quality, because it is and  is very important . All I,m saying is that just don’t  limit yourself to these parameters. Quality is  about  consistency, its about clinical outcomes , is  about processes , but in the  end its about (includes but  is not limited to)Patient experience, Consultant  relation, Employee  experience, and  well about anything and anyone  that comes in contact with our organisation.

I think  a newer approach is required to quality  where quality supersedes everything and is  not subservient to accreditation. And that  is where  creativity, innovation, progress and  differentiation will come  in.  I think quality departments  need to evolve , they need to expand their visions and  grow. Quality parameters must be developed reassessed and  re-envisioned intrinsically. Newer methodology other  than the existing  reaccreditation inspections must  be  used to assess quality. Innovative cross industrial methods  like the  Mystery patient a  once  talked  about concept could be re looked at. Seeking VOC (Voice  of customer) to define these parameters could be  experimented with. Opening  channels of communication are  essential. Newer technologies  such  as  social media could  be experimented with not just  for Branding but also  to define quality. Its high time we as administrators redefined our quality rather  than just measuring it.

In the end Creating  freely communicating open organisations that seek quality  for the sake of quality is the  step forward  not just for your Organization but for the industry as a  whole. And yes  we might not quite be there  but surely it would be a move in that direction.

Disclaimer:

The views expressed in this  post are my own and  are  not meant to be derogatory  to any institution or organisation. These are just my thoughts and  these are open for further  discussion and  development. Please do comment and  share and  lets get some universal cognition into this. Thank you for your patience and  tolerance.