Performance Management System in a Network of Hospitals - Case Study Example

Name : xxxxxx Tutor : xxxxxxx Title : REPORT Institution : xxxxxxx @2010 Executive Summary This paper aims at examining a performance management system in a network of hospitals (Option I). In doing so, it will look at the following: discuss factors that are to be considered in the design and implementation of a performance management system in a network of hospitals; discuss the merits and demerits of various options, and how the diversity of staff roles and functions in hospitals can be addressed by a performance management system; and encompass recommendations regarding the design and implementation of a performance management scheme that is appropriate. The recommendation will provide assessments, remedies and outcomes of a performance management system. This report will employ both qualitative and quantitative methods while assessing performance management in hospitals. Table of Contents Executive Summary 2 Table of Contents 3 1.Introduction 4 2.Design and Implementation of a Performance Management System in a Network of Hospitals 5 2.1.Factors to consider in the Design of a Performance Management System 5 2.2.Factors to consider during the Implementation of a Performance Management System 7 3.Advantages and disadvantages of different options of designing and implementing a performance management system in a network of hospitals 8 3.1.Advantages 8 3.2. Disadvantages 9 4. How a performance management system might address the diversity of staff functions and roles in a network of hospitals 10 5. Recommendations 12 6. Conclusion 14 7. References 16 1. Introduction Issues that are vital to persons at a nationwide level may include productivity and performance measurement in hospitals. A number of health care organizations in the United Kingdom are escalating their awareness with regards to the benefits, which are associated with the implementation of the performance management system, so as to make sure that their patients are receiving services that are of high quality. There is a continuous increase in the rise of medical costs. Ways of controlling spiralling costs are being searched by the federal government, primarily through caps on the rates of reimbursement. There is an intense competition amid hospitals. This is because as they grow, they compete with the health facilities of the public. To that effect, the hospitals are likely to close their facilities, lower their prices or downsize. Furthermore, many hospitals are cutting their services by refusing to attend to Medicaid and/or Medicare patients due to insufficient rates of reimbursement. The main challenge faced by the federal government of UK is shifting the performance priorities of hospitals in a many areas. In the past, hospitals aimed at attracting many patients, but nowadays, they aim at minimizing costs so as to meet the demand of patients. In doing this, they put their emphasis on improving the quality of service. Nonetheless, medical costs ought to be balanced basing on patient outcomes (Alexander 2006). As a result, patients receive treatments that are less expensive. Also, hospitals aim at attracting patients from care plans that are managed. They support only limited novelty in administration as well as the delivery of services. Hospitals ought to adopt a performance management system so as to attain cost controls. Nonetheless, hospitals have been slower in designing and implementing a performance management system of their managerial, cultural and organizational practices, which are inconsistent with a business that is competitive. Moreover, hospitals have been slow because of: lack of workers participation; hospital services are regarded by many individuals as being improbable to measure and elusive; and inexperienced members being contained in the board. Thus, quality of care as well as relations by the medical staff is a vital attribute to the performance of the hospital, which might be hard to evaluate, measure, and understand (Alexander 2006). 2. Design and Implementation of a Performance Management System in a Network of Hospitals 2.1. Factors to consider in the Design of a Performance Management System It is dangerous to put emphasis on fiscal evaluations of performance while responding to cost pressures that are an obstacle to creating a financial value in future (Wells 2006). A balance scorecard (BSC) can be of value to the hospital if it is employed to measure productivity as well as performance. The BSC translates management’s policies into evaluation of the performance that employees can comprehend and implement. Thus, it is of necessity to consider a balance scorecard during the implementation. Idyllically, all the vital elements of the hospital ought to be covered by the performance management system, and they also ought to be reflected in both its mission and vision statement. We should consider key performance indicators and success factors that are critical regarding the network of hospitals, that is, the hospital’s client group, history, culture and geography. The key performance indicators are likely to be driven by the success factors that are critical, and which will be used to measure and supervise the attainment of these factors. These factors ought to measure probable outcomes, activity, and service outputs with regards to the quality of service (Wells 2006). Ideally, the stakeholders should be involved in the design and implementation of a performance management system. Leading health care organizations in the United Kingdom have recognized the merits that are correlated with involving Board members and staff in the implementation of a performance management system. Typically, the aim of involving staff is to: elicit the views of the staff; make sure that the framework is owned by the staff, which will be capable of working within it; and expound the understanding by the staff on how the delivery can be impacted by their performance. Every staff member ought to have a clear view on how the hospital’s goals can be attained by their contribution. The hospital’s board members have a major role to the performance management system. For instance, the board members of the hospital are interested in the management system that is capable of reporting the performance. Also, we ought to consider setting targets. Levels of performances that are acceptable are defined by targets and thus, if they are set above the levels that are in existence, they can raise the standards of the service. If used internally, targets can measure performance against goal, and if used externally, they can measure performance against the attainment of others (Pointer 2002). Comparative data is used by many associations to determine the levels of target, whilst the performers who are deemed to be better seek a top-quartile performance. Targets ought to be: timely; precise; pragmatic; attainable; and measurable. At all times, targets should be regulatory, qualitative, and time-bound, and should be set: basing on the trends of past-performances, in terms of the hospital performance; and in relation to objectives and goals. In fact, target ought to be balanced and should reflect the requirement of the health care organization. Even if the performance management system has been properly designed, it can fail if not properly managed (Pointer 2002). The following factors out to be considered so as to make the system work during its implementation: 2.2. Factors to consider during the Implementation of a Performance Management System The staff of the hospital ought to understand how the performance system operates and how it correlates with individual performances. A manual explaining the operation of the performance management system ought to be produced. Senior members of the staff ought to be trained with regard to performance management All members of the staff should be capable of understanding and interpreting information regarding performance Performance management of employees ought to be carried out with steadiness and should be equivalent to all managers. The performance that has been deemed to be poor ought to be tackled in a manner that is timely. It is of necessity for the human resource managers of the hospitals to take action against an employee who is a poor performer. Managers ought directly account for their individual performance as well as team work performance, and should conversely record and reward good performance. The ought to be an episodic external authentication of performance information We ought to regularly review working practices, especially if they seem to limit the improvement of performance in some areas. The board members of the hospital should review the efficiency of the performance management system on a yearly basis. The recruitment of the staff should be effective, so as to maximize the performance management system of the network of hospitals. 3. Advantages and disadvantages of different options of designing and implementing a performance management system in a network of hospitals 3.1. Advantages A balance scorecard is useful because it benefits the network of hospitals, in essence that: it offers a continuous feedback on the policy; it promotes alterations the regulatory factors as well as to the changing environment; it allots responsibility for performance at all hospital levels; it gives a means of collaborating and communicating; it evaluates, facilitates, and supervises the overall implementation of the strategy; and it aligns the network of hospitals around a strategy that is more patient-focussed. Also, a balance scorecard guarantees that every aspect of the performance management system is given an equal importance. If a balanced scorecard has been developed properly it can act as a way of evaluating the performance of the organization, as well as act as a means of expounding aims, and managing success factors that are critical (Margolin 2006). The approach involving the balanced scorecard will permit the hospitals in a network to devise a performance management scheme, which will set prioritized and proper aims and objectives Nevertheless, performance appraisals a vital source of know-how that managers require while making decisions on aspects like: pay rise on the basis of job performance; getting better the work performance of employees; selection, termination, and assigning workers; identifying those workers who are capable of advancing; and planning for the future requirements of the Human Resource ((Margolin 2006). Idyllically, a performance appraisal system is able to play a critical role to the effort of the hospitals to achieve a competitive advantage. 3.2. Disadvantages If a balance scorecard has not been developed properly, it will be incapable of acting as a way of assessing the performance of the organization, as well as be incapable of acting as a means of expounding objectives, and managing those complex success factors (Margolin 2006). In view of the fact that the balance scorecard was developed from the idea that it will only rely on the fiscal performance measures, it is inadequate in the management of organizations that are complex, specifically when the organizations put more focus on their customers and want to gain from the human capital, which is knowledge-based. Performance appraisal is the foundation of substantial dissatisfaction as well as the shove of various jokes. There are a number of problems concerning the performance appraisal in a network of hospitals, and they include the following: performance systems normally waste times as no one looks at them; the things that we get rated differ from what we do in the job; pay increase is not on the basis of job rating, that is, not basing on what someone does or know, but on whom he/she knows; in most cases good ratings. 4. How a performance management system might address the diversity of staff functions and roles in a network of hospitals A performance management system escalates the stake of staff members in hospital leadership. This enables them to play a substantial role in the fiscal health of the organization. However, it is critical for the hospital to understand the correct option that will be used to successfully design and implement a performance management system, which will prepare it to adequately position itself in the health-care market. The hospital boards together with their staff have a role of adopting the performance management system, so that they will be capable of balancing their omission role of economic performance, as well as fiscal accountability. The fiduciary functions and roles of the hospital boards are easier to understand in comparison to other tasks, but with queries on their role in the fulfilment of various performance aspects. The manner in which the board interpret their duty on fiscal omission, and the manner in which they use monetary information in making decisions can have an effect in the financial performance of the hospital are not effective. The performance management system can assist to identify whether the staff as well as the board of the hospital have proactively adopted normative and hypothetical strategies for the monetary omission process, and thus, are expected to attain a better fiscal performance for the network of hospitals. A hospital board that is efficient is correlated with a higher hospital monetary performance (Brezinski 1999). The financial functions of the hospital management staff include: Specifying fiscal objectives Aligning and reviewing the management fiscal plan with objectives that have been stated Enhancing credit-worthiness Ensuring effective allocation of capital Monitoring fiscal performance, and Verifying monetary statements Indeed, it is the responsibility of the hospital’s staff to assure fiscal health in the hospital, and the performance management system will be used by the staff to set up strong procedures of progress reporting and supervision, and of budgeting and effective planning. In fact, it is the duty of the hospital’s staff to comprehend the discrepancies in the fiscal performance, and then come up with mechanisms of correction. This will depend on the fiscal literacy of the staff together with their participation in continuing their education. Typically, the hospital’s staffs is composed of diverse members, the majority of them are not fiscal experts. As a result, the board will rely on its monetary committee to supervise fiscal performance. It is of necessity for the finance committee members to have background knowledge in business, and specific tasks should be assigned to trustees so as to get a management that is effective. Annually, staff members ought to review capital projects, monetary planning, and fiscal conditions, like credit-worthiness. Also, it is the responsibility of the staff to assess the management activity, so as to attain financial success. It is their duty to determine whether the strategic plan is correlated with the financial plan, and then periodically assess running costs as well as re-examine financial metrics that are quantitative. As the hospital board is availed with information in large amounts, the hospital should be transparent and thus, it is the responsibility of the hospital board to publish fiscal reports and give them to their stakeholders on a monthly basis. The dynamics and decision of the board should be in terms of interaction and selection of the members. The management staff ought to frequently meet and permit time for accumulation of those performance indicators that are critical, and which needs to be reviewed. The membership of the board should not be tenured, and the positions of the board ought to have a number-of-terms that is limited for each staff member. If the turnover of members of the board is greater, an escalated sense of accountability will be created towards the society. As a result, the staff members of the hospital will highly account their doings. In general, it is the duty of the staff to have a performance management system, which is more detailed, into the procedures of monetary oversight that is usually carried out by the board, so as to identify the kind of information they have, and how that information is used by the board to make decisions that can have an effect on the fiscal performance of the network of hospitals (Brezinski 1999). In order to carry out future investigations, it is the duty of the hospital staff to consider the following monetary measures: total expenditure per patient discharge; the ratio of total expense to uncompensated care; and an amalgamated score that is composed of total assets, total margins, expenses, and operating margin. 5. Recommendations For the design and implementation for an appropriate performance management scheme in a network of hospitals, one can recommend that an action plan be put in place (through a partnership procedure) with a representative of the hospital stakeholders. This action plan will establish specific actions that will be undertaken by the hospital so as to attain the required performances (Orlikoff 2005). It ought to be understood that the service developments, which require flexibility and modernization, need to be addressed by the hospital. To that effect, one can recommend the following: The performance management system should be implemented fully The hospital should review and revise the current performance management system through: reviewing of the current performance management system by consultants; designing and implementing the performance management system that has been revised basing on the review; agreeing on the implementation and design of the performance management system; piloting the scheme of developing a performance management system; rolling out the scheme of the system to all support units of the hospital; agreeing fully on the implementation of the performance management system and including workshops for all staff members of the hospitals; implementation of processes that have been revised; and training of the hospital staff on the implementation of procedures that are new. The performance management system should be embedded, refined, and ordinary The board of the hospital should meet regularly so as to: renew their membership; develop joint-projects for the board and the human resource management; escalate the awareness of staff members through training; establish a staff committee so as to improve their performance and give an alternative of resolving disputes; discuss the implementation of the performance management system and its effect on the health care organization; and identify the need of training staff members that are new. Improvement of the financial and the management information systems The payment of staff expenditures should transforms cheques to credit transfers. This can be done through: implementation of a new system for budgeting, which will be more effective and interface with data; and upgrading the performance management system to E-financials. This will be advantageous because the system will be web-enhanced, and thus enabling an invoice and ordering payment procedure that is more effective, encompassing an improved fixed-asset function, as well as a debtor’s ledger that has been improved. Nonetheless, the hospital management should transform from a manual distribution to an electronic distribution. This will result to substantial time-savings. Also, we can recommend that a document imaging system should be installed, so as to either capture pages that have been printed or invoices that can be retained online. The hospital management should set patient service objectives, came up with measures of evaluating their success, and providing reports on the hospital’s performance. Promoting equal opportunities to staff members and widening access to the performance management system. Promoting opportunities as well as implementing codes of practice that have been agreed for the performance management system, specifically for individuals who are disabled. The performance management system should encompass initiatives that involve cross-functional working and team work, organizational change, and techniques that are new, which cooperate with the design and implementation of a performance management system. Improving of the performance management system, so as to deliver care that is appropriate to those patients who no longer need sensitive hospital care 6. Conclusion A performance management system that has been designed and implemented effectively is able to provide precise critiques of the workers productivity, as well as the quality of work. To that effect, it is capable of motivating hospital workers to higher performance levels by providing them with a useful feedback. Nonetheless, trends in the work force of the hospitals shows that, progressively, their work force diversity is composed of the disabled, women and ethnic minorities in large numbers. This is important because it addresses the diversity of the roles and functions of the staff in hospitals with no discrimination. That is, the performance management system should mainly put its focus on the aspects of the job that are really essential, and should be on the basis of the performance criteria that is apparent and measurable. Thus, the increasing usage of teamwork in hospitals along with the resultant emphasis on team-management needs workers to critically think with regard to how the performance of employees is rewarded and assessed, and if the recommendations are followed, the resultant performance management system will be more efficient. 7. References Alexander, J 2006, Performance and configuration of the Board: Non-profit hospitals, The Milbank Q. Pointer, D 2002, Principles of Health Care Organization Governance: Getting to Great, San Francisco, U.S.A. Margolin, S 2006, Initial Summary Report of and Board Chair and CEOs: Hospital Governance, Chicago, U.S.A. Wells, J 2006, Health Care Systems and Nonprofit Hospitals Outlook: Health Care Special Report, viewed 28 April 2010 < http://www.fitchratings.com/>. Brezinski, P 1999, ‘A Comparative Study of Governing Boards in Not-for-Profit’, Hospitals Governance in Organizations with High-Performance. Vol. 12, no. 43, pp. 4–23. Orlikoff J 2005, Developing Better Boards in the New-Era: Accountability, Health Services Management, Britain Read More