This article is the second in a multiarticle series on a key business intelligence (BI) theme—that all BI initiatives require more than just technology to succeed. This series will focus on thoughtful metric design and selection, processes that allow your BI team to continuously adapt to business needs, and targeted people strategies as key elements required for organizational success. Read the first article.
Healthcare leaders face a dizzying number of metrics. Ideally, these metrics would tell you how to improve your organization. In reality, they often cloud the story of organizational performance because of their sheer numbers. How can anybody keep it all straight?
Of course, there is no single right answer. However, one method of managing metrics is to organize them into a tiered structure that aligns goals and incentives throughout the organization. Once your organization defines its most important goals, and what metrics align with those goals, it can gain efficiency by knowing the right flavor of metric to evaluate.
Most organizations are inundated with metrics with a wide variety of scope and detail. But few have organized them in a way that allows the right individual to see the right metric at the time business decisions are made. Tiers of relevant and timely metrics can streamline this process, allowing the organization to act on the right information at the right time.
Defining the Metric Tiers
Figure 1 below illustrates three general tiers of metrics that your organization can use to streamline daily management and decision making.
Keep in mind, if an organization’s mission and goals are poorly defined or if the reported metrics do not align with these goals, or both, then establishing these tiered metrics is unlikely to be beneficial. It is critical to first achieve goal-metric alignment for this process to yield desirable results.
Figure 1: The Three Metric Tiers
Tier One Metrics: Evaluating Outcomes
These metrics tell the story of your organization’s outcomes compared to its mission and goals. Typically, they are reviewed monthly or quarterly by members of the executive team and Board of Directors. They help answer questions such as:
- Is our organization financially sustainable?
- Are our patients happy with our services?
- Are our employees engaged with the work they do?
Typically, there are relatively few tier one metrics; otherwise, they can bog down the story of organizational performance.
Tier Two Metrics: Diagnosing Variation
This group of process-based measures helps explain the causes of variation in tier one performance and are typically key drivers of results. These metrics are typically reviewed weekly or monthly by leaders reporting to the executive team, such as senior directors or directors. Tier two metrics help answer questions such as:
- Why did our net income drop?
- Why did patient satisfaction increase this year?
- What is the cause of fluctuation in year-over-year employee engagement?
Given the rich relationships that often exist between departments, tier two metrics are sometimes most appropriately grouped with cross-functional metrics. For example, an increase in operating margins could be explained by an increase in revenue for a particular service line, but that in turn may be driven by high patient satisfaction or employee engagement scores in that department.
Tier Three Metrics: Understanding Daily Operations
These metrics align with detailed daily operations that drive performance and ultimately build up to tier two and tier one results. These metrics should be reviewed daily or weekly by local managers and operators. Tier three metrics help answer questions such as:
- How many services did we provide this week?
- What was our average response time to patient complaints this week?
- What was our employee productivity last week?
While metrics in any tier can be born into or age out of relevance, detailed metrics typically evolve more frequently as an organization develops an understanding of which factors influence tier one performance and adapts operational plans based on that understanding.
Determining a Metric’s Tier
Not all metrics necessarily fit into a single tier, and in some cases the tier to which a given metric is assigned may depend on your organization’s goals or even on its maturity.
Table 1 below lists some questions to consider when determining the tier to which a metric should be assigned:
Table 1: Guidelines for Categorizing Metrics into Tiers
|Tier One||Tier Two||Tier Three|
Benefits of the Tiered Metric Model
As illustrated in figure 2 below, breaking organizational metrics into different tiers has four main benefits:
- Enables an outcomes-based approach and provides direction as to which details to concentrate on and when to do so.
- Guides leadership to identify a path to influence the desired outcomes.
- Drives the development of daily operational plans for achieving the desired outcomes and for monitoring progress.
- Facilitates who should review which metrics and when to review them. It also provides clarity to leaders about what really matters for their role and prevents them from worrying about metrics outside their scope of responsibility.
Figure 2: Benefits of the Metric Model
Implementing the Tiered Metric Model
ECG was recently engaged to facilitate the merger of three health system medical groups representing over 800 providers. As part of the alignment process, ECG was asked to conduct a comprehensive current-state assessment, present recommendations for shared improvement, and define an operating approach to support sustained improvement within the newly aligned group. A key component of this process included the development and deployment of a robust management reporting approach that closely aligned operating goals at all levels of the organization and facilitated the group’s strategic vision.
ECG supported the client in creating a logical organization of metrics into the three tiers and aligned these metrics with the newly formed organizational structure and its shared strategic goals. Each work group analyzed and refined its individual scorecard, and IT and data analytics resources evaluated the data and initial results from each category.
As a result of ECG’s recommendations, leadership gained insight into which factors were driving key outcomes and was able to refine both its strategic and operational plans to be relevant to its current state and future opportunities.
How Do Your Metrics Stack Up?
Now that you know the metric tiers ask yourself: Where does my organization get the metrics right and where is there room for improvement? When you evaluate the way you define and utilize your metrics you will be better positioned to make strides towards your goals. Get started today!