How to Measure Leadership Impact on Hospital Performance

In a Nov. 19 webinar hosted by Becker's Hospital Review, Jean Chenoweth, senior vice president at Truven Health Analytics who is responsible for the 100 Top Hospital programs, explained that leadership can be measured and has a huge affect on a hospital's performance.

"There are as many definitions of leadership as there are management books on Amazon," Ms. Chenoweth stated at the beginning of the presentation. "Evidence-based leadership standards are few and far between, and that's a major challenge."

One of the few programs that provides a framework for leadership process and measurement is the Malcolm T. Baldrige program, offered through the National Institute of Standards and Technology. It was established to encourage U.S. companies to focus on leadership processes to strengthen global competitiveness through higher quality and strong financial results, according to Ms. Chenoweth.

In 2011, Truven Health was asked by the NIST to conduct a comparative analysis of performance of Baldrige Award applicants and recipient hospitals versus peers using the 100 Top national balanced scorecard. Truven found that after hospitals won the Baldrige, they improved five times faster than peers over the next three years and they were two times more likely to reach 100 Top performance levels — top 3 percent on the balanced scorecard.

"What that means is better leadership, through the adoption of standardized leadership practices from the Baldrige program, results in a higher performing organization," Ms Chenoweth said. "Use of standardized leadership practices not only work, but the continued use of them results in a continuously improving organization.

What do 100 Top Hospital leaders have in common?

Leaders at hospitals on the Truven 100 Top Hospitals list have various things in common with one another, according to a study. Some examples Ms. Chenoweth provided:

• Larry Prybil, PhD, found that boards at 100 Top Hospitals are more engaged, tend to have more physician members and hold fewer committee meetings because they insist on having substantive discussions during the meetings.
• CEOs at 100 Top Hospitals are more likely to promote from within, have more advanced degrees and communicate clearly.
• Leaders in the top hospitals invest in new technology, but only to the extent it supports organizational goals.

Measuring hospital leadership

According to Ms. Chenoweth, research has shown that leadership can be measured objectively by looking at the organization's relative balanced performance based on publicly available data. Two dimensional measurement is essential to reflect the leaders' impact on the organization's relative success or failure to improve, as well as their relative rate of improvement and resultant performance against national benchmarks.

If a hospital's performance and rate of improvement compared to peers is ranked at the 25th percentile, for example, that is a leadership failure. "The board, executive team and medical staff leadership simply aren't doing their jobs," Ms. Chenoweth said. "They are not focused on the core business. They're not setting and supporting clear goals for achieving a high performing organization."

Hospitals with low rates of improvement and low resultant performance usually have leaders that are focused elsewhere. When this happens, it can mean the leadership is distracted by other issues, such as an acquisition, building a new wing or installing an electronic health record. "Whatever it is that is distracting them from basic blocking and tackling, they need, as a leadership team, to come together and to set consistent goals to improve performance," she said. If they do this, the rate of improvement will rise.

In contrast, if a hospital is in the 90th percentile for both performance and rate of improvement, this means executives are doing their job successfully in establishing a culture of performance improvement. "To stay there, leadership must drive higher," Ms. Chenoweth said.

Scaling leadership measurement

"Leadership measurement of balanced high performance does not have to be — nor should it be — limited to the hospital level alone. It can be scaled to the state level, the health plan or accountable care organization level, or even down to the service line level within a hospital," Ms. Chenoweth said.

In terms of measuring healthcare leadership at the state level, one of the more stunning examples Ms. Chenoweth gave compared hospitals in New York and Michigan in 2009.

For decades, New York hospital leadership focused on cost reduction mandates and incentives of the state government and the major insurers. Prioritization of cost reduction by state and insurance leaders and the resultant focus by hospital leaders has taken a toll on the financial strength and quality performance of those hospitals compared to peers nationally, according to Ms. Chenoweth.

Michigan hospitals, on the other hand, had strong performance. This is because, Ms. Chenoweth said, the hospital and health system CEOs and the state hospital association leaders had come together and agreed to "collaborate on quality." The end result of that collaboration had "a huge impact on both quality and costs which drove high and very consistent statewide value," she said. "Leadership and collaboration made a difference."

"In summary, as we move into healthcare reform, we should recognize that evidence-based leadership is both possible and becoming a reality. It is a powerful tool for leadership teams to set strategy and goals as well as generate faster results. We can measure leadership and it does matter. We've also learned that collaboration across hospitals or within an organization produces the fastest results and the most consistent performance. And that comes through leadership's articulation, communication and measurement of common goals and use of two dimensional, reliable data," Ms. Chenoweth concluded.

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View the presentation slides.

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