0728 3a Show-Me Summer Conference_Scorecard

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HFMA SHOWME Summer Conference Scorecard and Variance Analysis John Chastain, CoxHealth July 28th, 2016

My Background  B.S in Finance  MHA (Health Administration)  CoxHealth, System Director of Budgeting – 6 years  Implemented Enterprise Performance Measurement & Management  Oversee System variance reporting process

Today’s Journey

Our Little Scorecard Adventure

CoxHealth Objective

Issues

Goals

Too Many Measures

Centralize Data Reporting

Low Visibility

Publish Openly and Regularly

High Compensation/Trailing Performance

Link Compensation and Performance

Pre-work • Why do we measure something? – Determine performance – Track progress – Meet regulations – Gain Knowledge

Step 1. Scorecard Design • “Balanced Scorecard” vs. Performance Scorecard – Equal weight in every pillar vs. Weight based on strategic priorities • • • • •

Quality – 33% Service -22% People – 20% Business -20% Community -5%

– Strategy should determine resources, resources should drive success

Step 2. Metric Selection • Cascade from Senior Leadership and Strategy • CoxHealth Measurement Rules: (Ask why we are doing this) “To get Better” – Benchmarkable – Reportable – Available (Quarterly Frequency or better) – Improvable

Goal Cascade

Mission, Vision, Values Strategy

Pillars

Tactics vs. Outcomes Vice President/Senior Leader (??)

0% Change the Business

100% Run the Business

Director/Change Agent

75% Change

25% Run Manager/Operations Leader

25% Change

75% Run

Step 2: Metric Selection • Scale down the noise – Focus only on what matters • EX: We’ve been at 100% for 5 years…. • EX: Anything less than 10% weight

Measurement Selection: Rules of Thumb 1. Fewer goals = less confusion of priorities No more than 5 goals

2. Goals should align to daily work effort Ex: Extra 80 hours of work

3. Alignment with Strategic Priorities 4. Prioritize the next 12 months Longer horizon = > external influence

5. Weight by personal priority & need

Step 3. Link to Compensation

We are all going to run this race, except you can choose where you start and where you end, and then your boss determines whether you won or not.

Compensation Strategy • • • •

Historical – 100% Competency Based Appraisal Year 1 – 50% Scorecard, 50% Competency Year 2 – 75% Scorecard, 25% Competency Year 3 – 100% Scorecard, 0% Competency

• History of false starts • Allows you to test and adjust measurement strategy

Step 5. Target Setting • Why create a target without incentive? – Annual Target – Tied to Annual Comp Increase – Stretch Target – Bonus Incentive @ achievement – Rules of Thumb • Avoid broad system targets – neglects the real world people live within – Ex: Every department must be at 75th percentile in employee satisfaction » Executives vs. Clinics vs. EMS vs. Med Surg.

• Be careful not to create disincentive with annual targets – Ex: Annual targets should be part of budgeted market based comp. strategies, therefore, attainable.

Step 6. Publish and Report • Create one source of truth • Definition book – ALOS • Communicate Data Timelines • PG Reports, Audited Financials

• Share Best Practice Performance • Build reviews into meeting and leadership structure • Monthly Meeting Model • Rounding for Outcomes • Department Head • Huddle

Our Little Scorecard Adventure

How Things actually felt……….

WORKING SMARTER: BUDGET VARIANCE AND DESIGN THINKING

CoxHealth Working Smarter Initiative • Started in 2013 as a partnership with Berkeley Research Group • Goal was to drive $60m in bottom line improvement • Transitioned to CoxHealth initiative in 2015

Budget Variance Reporting • Traditional Variance Reports – Focus on current state vs. historical expectations • In some cases the budget was set > 12 months ago

– Very little information provided • Provided the “what” • EX: Salaries were over budget by $1.32 per visit due to extra shift bonus.

• DID NOT: – Provide a root cause, the “why” – Spread solutions or best practices – Ensure bottom line integrity long term

Determining the best tool

Designing Care Delivery

Design Thinking Intro – Problem Statement • Broken Pen

Scientific Method

Design Thinking

Budget Variance Process

Previous

Future

Check a box

Drive Working Smarter Initiatives

Focus on the “what”

Focus on the “why”

Ask for an adjustment OR action plan to meet YTD budget target

Improve performance of long term forecast

HFMA SHOWME Summer Conference Scorecards and Variance Analysis John Chastain, CoxHealth July 28th, 2016