Wednesday, August 18, 2010

Reaffirmation of CHRISTUS Health’s Balanced Scorecard

In December of 2006, three CHRISTUS Health Associates published an article in hfm, the journal of the Healthcare Financial Management Association (HFMA), entitled, “A search for the ‘Holy Grail’ of Healthcare: A Correlation Between Quality and Profitability.”

In the article, CHRISTUS sought to ascertain whether there is a favorable, statistically verifiable relationship between quality and financial performance. This effort echoes an industry-wide search for what might be labeled “the Holy Grail of health care”: statistical documentation that improvements in quality, patient safety and clinical vigilance are significantly correlated with profitability and measures of financial success. CHRISTUS Health sought validation that spending on quality care and patient safety constitute a genuine investment in improved profitability and viability.

Our results clearly showed the correlations between quality and financial performance. The findings thus gave hospitals strong evidence that well-executed clinical quality initiatives will contribute to improved financial performance. The article concluded that,” As an industry, we cannot claim to care for patients if we are unwilling to make an unwavering commitment to quality. But neither should we be expected to compromise our organizations’ financial well-being for the sake of clinical quality.”

Recently, a reaffirmation of our findings which support the use of a balanced scorecard to monitor our Journey to Excellence was published on HFMA’s Website with the headline, “Higher Hospital Margins Distinguished by Higher Patient Satisfaction.”

According to data from the Centers for Medicare & Medicaid Services (CMS), there is a distinct relationship between a hospital’s profitability and its level of patient satisfaction. CMS collects and reports measures of patient hospital experiences based on the Hospital Consumer Assessment of Healthcare Providers and Systems survey instrument. Data are collected for all patient types (i.e., not just Medicare patients). Currently, measures reflect patients’ responses to 10 questions regarding their experiences with an overnight hospital stay.

This analysis looked at patient responses regarding hospitals’ overall ratings and whether patients would recommend a facility. The percentages of patients answering “High” as to the overall rating (options were High, Medium and Low) and answering “Definitely” as to whether they would recommend the facility (options were Definitely, Probably and No) were calculated for each facility for the survey period ending March 31, 2009.

Hospital margins were then calculated for each reporting hospital from Medicare cost reports for periods ending in CY08. The results showed a clear relationship between higher margins and higher ratings. The median operating margins were positive only with higher satisfaction ratings. Using the same approach, the study found the same relationship between profitability in perceived quality in that higher profitability was seen in hospitals where a patient said they would recommend the hospital to others.

Because the Journey to Excellence, its four Directions and the results of the balanced scorecard have been an integral part of the CHRISTUS Health brand since we began in 1999, it is most reassuring from both of these studies to know our focus has been a key critical factor in our success.

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