Leadership Strategies for Reaching Top Performance Faster

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Solucient, part of Thomson Healthcare

It is not an easy task to move an average-performing hospitalforward. Encouraging signs, such as the success of the 100,000Lives Campaign and optimism on the part of hospital leaders,suggest that progress is being made. However, an objective analysisof publicly available data suggests otherwise, showing that nearly2,000 boards and CEOs still face the problem of demonstrating anymeasurable improvement in performance during their tenure.

It is not an easy task to move an average-performing hospital forward. Encouraging signs, such as the success of the 100,000 Lives Campaign and optimism on the part of hospital leaders, suggest that progress is being made. However, an objective analysis of publicly available data suggests otherwise, showing that nearly 2,000 boards and CEOs still face the problem of demonstrating any measurable improvement in performance during their tenure.[1]

Other than improving patient survival, hospitals in the United States have not demonstrated sustained improvement in expense control, patient safety, incidence of complications, operational efficiency and financial performance. National comparison of actual improvement on nine measures reflecting hospitalwide performance shows that the vast majority of hospitals failed to significantly improve performance over five straight years (see Figure 1).[1] These results suggest that in the vast majority of hospitals, management’s impact on frequently used hospital performance measures was equal to chance.[2]

Leadership That Matters

While transformation of an organization from average to top performance is an ongoing journey, research is beginning to identify useful actions for leaders to shorten the trip and increase their impact on their organization. Several organizations have begun to study the attributes of high-performing hospitals compared to average-performing ones for clues. For example, two recent studies compared attributes of hospitals designated one of Solucient’s 100 Top Hospitals® for at least three of the past five years with hospitals that had consistently performed between the 40th and 60th percentile on the same measures during the same period and never earned a 100 Top Hospitals designation.[3,4] Hospitals in both groups were selected based on composite performance measures that included clinical outcomes, patient safety, efficiency, financial stability and growth, based on records derived from publicly available Medicare data.[5] This methodology has been previously demonstrated to reliably afford a way to evaluate relative hospital performance.[6]

The research showed that the quality of organizational leadership of the hospital does matter. These studies have demonstrated that actions of the board of trustees, executive team and medical staff are directly correlated with higher performance.

Board Leadership That Matters

Boards of trustees in high-performing hospitals lead differently. They are more proactive and embrace responsibility for quality and patient safety as well as financial performance.[4,7] These boards also use dashboards to monitor performance and favor active over passive review.[8] Boards in high-performing hospitals strategically use traditional board powers to drive hospitalwide operating improvement and clinical performance. Furthermore, high-performing organizations are more likely to tie executive incentive compensation to explicit clinical results and patient safety.[9]

Additionally, boards of high-performing organizations actively use credentialing guidelines for medical staff appointments, reappointments and privileging to encourage higher clinical quality.[9] And while more than 80 percent of all boards review dashboards, the board and management in highperforming hospitals are significantly more likely to use dashboards to follow up results of efforts used to improve both operational performance and quality of care.[8,9]

Executive Leadership That Matters

Leaders in consistently high-performing hospitals, as measured by a composite score on hospitalwide measures, are champions of frequent performance measurement.[3,9] The CEOs in high-performing hospitals tend to encourage earlier adoption of new clinical practices and technology that simultaneously improve patient outcomes, reduce costs and strategically support other key goals.[10] For example, there is a consistent relationship between hospitals that are “wired,” and good clinical outcomes as measured by in-hospital mortality rates.[11] Leaders in top-performing hospitals define improvement multidimensionally and are disciplined in insisting on simultaneous improvement in both cost and quality.[2] They are earlier adopters of new business practices that improve efficiency and quality, such as greater use of hospitalists and intensitivists.[12,13] They tend to be quicker to act upon new requirements imposed by external forces such as regulatory or accreditation agencies or the economy. Taken together, these findings suggest that leaders in the highest-performing hospitals expect change to take place routinely and have acted strategically to build responsive infrastructures that facilitate change quickly and often.

CEOs in high-performing hospitals have similar size management teams. However, high-performing organizations are more likely to create senior teams with broader domain expertise, including chief medical officers, chief information officers, public relations and fund-raising executives.[3] Cross-functional representation on senior leadership teams is a common practice in other industries and is viewed as a means to increase alignment, more effectively implement organizationwide strategies and achieve more permanent results.Moreover, the CEOs of high-performing hospitals were significantly more likely to add the chief nursing officers, vice president of strategic planning and vice president of fund-raising to their senior leadership team within the first two years of assuming a leadership role of the hospital (see Figure 2).

On the other hand, average-performing hospitals were in the process of adding chief medical officers – a position that already existed in many of the high-performing hospitals. This suggests that adding a chief medical officer is an early step in the maturing of a leadership team. These findings are very consistent with Jim Collins’ findings in Good to Great – that one key feature that distinguishes great organizations is putting the “right people on the bus.”[14]

Chief executives in high-performing hospitals also view higher levels of registered nurse staffing as a strategic goal and a significant differentiator. They are significantly more likely to use magnet status, nurse pay for performance and governance sharing as strategies to recruit and retain RNs.[3,15]

Physician Leadership That Matters

Physician leadership is another crucial differentiator in highperforming hospitals and can be measured with a quality scorecard. Boards of trustees in higher-performing hospitals have more physician representation on their boards than comparable hospitals exhibiting average performance (30 percent to 21 percent).[4] More importantly, Solucient’s preliminary research results show that higher hospital performance on a pure clinical scorecard, as defined by a composite of patient outcomes, patient safety and lengths of stay measures, is correlated with more active physician engagement in setting the agenda for board discussion of clinical quality. These hospitals also report providing quality reports to the full board by the chief of staff or chairman of the board quality committee more often than average-performing peers.

Lessons Learned So Far

The impact of leadership can be measured, and a number of findings dispel the myth that a CEO alone can drive the highest levels of performance. Rather, the key lies with the whole leadership team. High-quality leadership is required from the board of trustees, the management team and medical staff as a triumvirate. Active engagement and collaboration of all hospital leaders will drive real improvement and deliver greater value to the community.

Much of day-to-day management is tactical. It is often difficult for leaders at any level to keep long-range strategy in mind while putting out day-to-day fires. This evolving body of work suggests that good results – which are the consequence of good execution – really depend on the structure of leadership and governance, the skill set available at that level, oversight priorities and awareness and adoption of innovations. All of these approaches are available at some level, to every hospital in America, big or small, rich or poor.

Endnotes

1. Solucient 100 Top Hospitals, Performance Improvement Leaders, 3rd Edition, 2006, http://www.100tophospitals.com.
2. Wilson, L. “High Octane Hospitals.” Modern Healthcare, May 1, 2006, p. 24-26
3. 2005 CEO Leadership Survey, Cejka Search and Solucient, LLC, http://www.cejkaresearch.com/ceosurvey/.
4. Prybil, L., R. Peterson, J. Price, S. Levey, D. Kruempel and P. Brezinski. “Governance in High-Performing Organizations: A Comparative Study of Governing Boards in Not-For-Profit Hospitals,” HRET, October, 2005.
5. Solucient 100 Top Hospitals, http://100tophospitals.com/studies/ national05/methodology.asp
6. Griffith, J.R., J. A. Alexander and R.C. Jelinek. “Measuring Comparative Hospital Performance.” Journal of Healthcare Management, January/February 2002, 47 (1).
7. 2005 CEO Leadership Survey, Cejka Search and Solucient, LLC, http://www.cejkaresearch.com/ceosurvey/.
8. Vaughn T., Kroch E., Foster D., Koepke M. et al, Engagement of Leadership in Quality, Improvement Initiatives: executive quality improvement survey results, J Patient Safety, 2006; 2(1):2-9.
9. “Best Practices in Board Oversight of Quality,” Quality, Governance Institute, p 37-50.
10. “100 Top Clinical Research Program,” Modern Healthcare Supplement, February 26, 2001, p. 30-38.
11. Solovy, A., A Measure of Quality: Improving outcomes is a key source of IT value; try to prove it, Hospital and Health Network, July 2006, p 35.
12. “The Best of the Bunch,” Modern Healthcare Supplement, September 30, 2002, p. 8-22.
13. “Hospitalists Make a Mark.” Modern Healthcare Supplement, July 24, 2006, p. 8-28.
14. Collins, J. “Good to Great: Why Some Companies Make the Leap and Others Don’t,” Harper Collins Publishing, New York, NY, 2001.
15. “A Matter of Life and Death,” Modern Healthcare Supplement, September 30, 2002, p. 16-20.