Performance Indicators in Health Care


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General hospitals’ strategic responses to performance indicators in health care:
an exploratory study
Thesis
MBA Health 2007-2009
Erasmus Centre for Management Development in Healthcare Institute of Health Policy and Management Erasmus University Rotterdam The Netherlands
Thea Vliet Vlieland
Supervisor: Prof.dr. A.A. de Roo
April, 2009

CONTENTS

Page

3

Summary

5 Chapter 1

Introduction

8 Chapter 2

Quality improvement and performance indicators in

health care

17 Chapter 3

Hospital organization and performance indicators

28 Chapter 4

Methods

34 Chapter 5

Results

44 Chapter 6

Discussion and recommendations

53 Acknowledgments

54 References

60 Appendix 1

Interview Questions

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SUMMARY Background and aim: Until now, little is known on hospitals’ strategic responses to the growing number of initiatives of external stakeholders to assess the performance of their operations. The aim of the study was therefore to make an inventory of general hospitals’ strategic responses to the usage of performance indicators, in particular with respect to (1) the linking of performance indicators with internal quality improvement priorities, (2) the hospital’s competitive position and (3) the setting of priorities, budget and staffing levels for performance data collection, analysis and reporting. Method: For this exploratory, qualitative study 2 board members and 4 quality managers of 6 general hospitals in The Netherlands were interviewed between January and March, 2009. Interviews were semi-structured and comprised 14 questions, related to the 3 research topics. Results: In general, a positive impact of performance indicators on the internal quality system was perceived. The application of performance indicators in hospital operations management was in some organizations found to be hampered by various factors, including the relevance, reliability, analysis and reporting of current performance data, as well as their acceptance. Concerning the competitive position, all hospitals gathered performance data specifically for contracting with health insurers. Half of the respondents mentioned initiatives to develop performance indicators within areas that were found important in the competition, yet underrepresented in current sets of performance indicators. Active reporting to consumers was not employed, and its usefulness questioned by most of the respondents. Hospitals varied with respect to the development of a comprehensive policy and the current and future allocation of resources for performance indicator management.

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Conclusion: Organizations varied with respect to the integration of performance indicators in quality systems and/or hospital operations management systems. In addition, some hospitals played a more active role than others in their presentation of performance data to health insurers and the establishment of performance indicators that could contribute to their competitive position. To optimize the usage of performance indicators, they should be part of a comprehensive hospital strategy which is focused on operations management. Within that strategy, measurement of operational performance is one of the leading principles.

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CHAPTER 1. INTRODUCTION
Over the past decades, there is a growing acknowledgement of quality and safety concerns in health care and the need to close the ‘quality gap’ [1]. Many stakeholders, including health care providers (individual professionals and organizations such as hospitals or nursing homes), consumers, insurers/payers, health services researchers, quality improvement organizations and government entities, have become engaged in the movement towards improvement of health care quality and safety [2]. Understanding progress in quality improvement is however hampered by an insufficient ability to consistently assess the quality of health care, or to compare performances among individual health care providers or organizations. The need for a level of standardization has led to the external endorsement of sets of performance indicators and their reporting for accountability. These performance indicators may pertain to a specific medical condition or profession or an area of health care (e.g. mental health care, rehabilitation, nursing home or hospital care). Concerning hospital care, sets of performance indicators may be used by various institutions, including national regulatory boards, health care insurers and consumers’ organizations. Besides quality improvement alone, the usage of performance indicators may facilitate consumers’ choices for specific providers and health care insurer’s decisions on purchasing of health services. In The Netherlands, a mandatory set of national performance indicators (Basisset Prestatie-indicatoren) [3] has been implemented in hospital care since 2003, and this

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set is currently being extended with condition-specific sets of performance indicators [4]. Based on the results obtained for these sets of performance indicators, a considerable number of improvement projects have already been initiated in Dutch hospitals, either or not on the instigation of the Netherlands Health Care Inspectorate (Inspectie voor de Gezondheidszorg) [3]. Apart from the obvious advantages on the organizational level, the usage of performance indicators may give rise to a number of managerial issues. Hospitals are confronted with a rapidly growing number of externally imposed sets of data to be gathered, leading to increasing registration activities and costs, with the impact on patient outcomes being to a considerable extent unknown [5,6]. A major issue is therefore the harmonization of the sets of national hospital performance indicators with other, externally imposed initiatives to assess and monitor the quality of hospital care. Moreover, harmonization with internal quality management systems and planning and control cycles of individual hospitals is needed. It has however been noted that harmonization may be only in part feasible and desirable [7]. Strategic choices are therefore needed, to balance on the one side the efforts needed to comply with externally defined performance indicators and on the other side their potential benefits on the organizational level. These strategic choices pertain to: a. the linking with the internal quality management system of the hospital; b. the role of performance indicators in the hospital’s competitive position; and c. the infrastructure needed for the registration, analysis and internal and external reporting of information related to performance indicators.

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This thesis focuses on Dutch hospital board members’ and quality managers’ views regarding these strategic options.
Chapter 2 gives a general overview of the development of quality improvement and performance indicators in health care. Chapter 3 describes the managerial issues associated with the usage of performance indicators on the hospital’s organizational level and the ensuing research questions of this thesis. Chapter 4 gives a description of the research methods employed. As the study was conducted in The Netherlands, this chapter includes an introduction to the development and usage of performance indicators in Dutch hospital care. In Chapter 5 the results of the research project are presented. Chapter 6 includes a general discussion and recommendations for hospital board members and quality managers and others interested and involved in quality management in hospitals, as well as suggestions for future research.

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CHAPTER 2. QUALITY IMPROVEMENT AND PERFORMANCE INDICATORS IN HEALTH
CARE
2.1. Definition of quality of health care As it has been consistently shown that quality of health care needs improvement all over the world, the issue has been high on the national and international political agendas for decades. The Institute of Medicine (IOM) in the US has defined health care quality as “the degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge” [1,8]. An often used method to describe the attributes of quality of health care includes its structure, processes and its outcomes [9]. The structures are the innate characteristics of providers and the system, whereas the processes pertain to what health care providers do in delivering care, and the outcomes to what happens to patients, particularly with respect to their health [9,10].
2.2. Strategies to improve the quality of health care Currently, various strategies to improve quality of health care are applied, involving four levels in health care: 1). individual health care providers; 2). health care processes; 3). health organizations; and 4). health care systems. On the level of individual health care providers, strategies to improve quality include systems for continuing medical education, accreditation and certification, and the development and implementation of evidence-based guidelines and practice recommendations.

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Health care delivery is in many cases far more complex than the execution of one or more activities by a single professional. More commonly, multiple health care providers, supporting staff and extensive technical equipment, sometimes at various locations, are involved. For this reason, health care delivery is more and more seen as a collection of operations, with quality systems being developed for health care delivery processes. These methods involve a commitment to identify opportunities for improvement and to test alternative processes in small pilot cycles of change, called plan-do-study-act (PDSA) cycles [11,12]. On the organizational level, a specific quality level for all health care delivery processes being carried out within that organization is required. Therefore, overarching quality management systems have been adopted in e.g. hospitals, mental health organization, nursing homes and primary care centers on a large scale over the past decades. These quality systems usually concern methods for total quality management (TQM)/continuous quality improvement (CQI), and are derived from business and industry, based on the pioneering work of Deming [11,13,14]. They are mainly focussed on the consistency with which providers follow processes that have been shown to improve outcomes.
Quality of health care is however no longer left exclusively to the responsibility of individual health care providers and organizations themselves. In addition to internal quality and safety management systems, external monitoring and regulation of health care performance and public reporting on the health care system level are implemented on a large scale.

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This development is prompted for various reasons, including: a. The slow pace of improvement of quality of health care [2]. b. The demand for accountability for the way in which collective resources are spent in the health care system [15], with on the other hand the need to ensure that quality is not adversely affected when health care utilization and costs are increasingly constrained [16]. c. The increasing technical and logistic complexity of health care delivery [15]. d. Health care insurers’ needs on information for purchasing health services and for the provision of rewards or penalties for health care providers concerning quality, efficiency and innovation (financial or non-financial incentives). With respect to the latter, in many countries provider reimbursement has been (re)organized, in such a way that the provision of incentives is now permitted. Examples of incentive models for health services include bonuses, allowing health care providers to keep the surplus or parts of the savings from efficiency, grants to promote and share best practices and performance funds, payment for services that improve performance and public recognition [11,17]. e. The growing societal anxiety about the variation in quality of health care (including equity in access to high quality care)—an anxiety that may further heighten as the results of more measurements reveal even more problems [18-20]. f. Consumers’ growing assertiveness and independence, with increasing needs to have access to standardized information to allow direct comparisons among health care providers with the aim to facilitate health care decision making [15].

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Performance Indicators in Health Care