Performance management in the hospitals

improving the patient experience 

Sat Dec 25, 2021

Healthcare organisations operating in today’s global economy are faced with increasing competitive and regulatory pressures, and a heightened level of public scrutiny. In such a market environment, there is a pressing need for shrinking decision cycles where improved, faster and more accurate decision-making enables organisations to create a competitive advantage.

Hospital management has seen a drastic change over the years. Traditionally, hospitals were managed by select stakeholders like doctors, entrepreneurs and trusts, who had a say in the decision-making at an operational and board level. With more professionally managed hospitals coming up, stakeholders like private equity players, strategic advisors and financial institutions, too, have a say in the running of a hospital.

There is a paradigm shift in the priorities of managing a hospital today compared to those in the past—from focussing not only on the growth story but also more on the performance of the hospital in terms of clinical, operational and financial parameters.

Focus on the bottom line has increased and so have the efforts to improve patient experience by providing quality patient care and treatment. Hospitals have become more conscious towards performance. Professionalism in management and better cost control can help the hospital in achieving better results as well as offer cost-effective treatment to patients, thus providing a winwin outcome for investors, medicine practitioners and patients.

Indicators like return on capital employed (ROCE); earnings before interest, tax, depreciation and amortisation (EBITDA); internal rate of return (IRR); and price earnings (PE) multiples are tracked to see how healthy an organisation is. Operational parameters like patient satisfaction index, patient turnaround time and clinical management information system (MIS) data are also tracked regularly.

Earlier, hospitals were not considered as good investments by corporates and private equity firms as they were not wellmanaged and organised. Physician entrepreneurs did not have much exposure to the management side of the hospital and were more focussed on the clinical aspects, which should ideally be the case. Today, hospitals and the healthcare industry, because of the way they have transformed and evolved, have become one of the key investment destinations for investors.

The challenges faced by hospitals have also changed. Increased competition, pressure on margins, departmental costs and profitability, etc., are some of them. This combination is forcing the industry to implement aggressive measures to boost efficiency and better manage funds while ensuring superior quality of care and patient satisfaction. Inadequate and inaccurate data collection, analysis and presentation restrict the management from taking appropriate short-term as well as long-term decisions, thus affecting their strategies. The performance of a hospital has to be measured and managed efficiently to achieve the desired outcome.

To overcome these challenges, it is imperative for the management to have the right perspective in all matters concerning the hospital. Enterprise performance management (EPM) will help the management in achieving this.

Overview of EPM

EPM consists of a set of management and analytic processes supported by technology that enables businesses to define strategic goals and then measure and manage the performance against those goals. An effective EPM results in active participation of all levels of managers and employees.

It provides a closed-loop mechanism to understand whether end-to-end process flow improves the performance and enables the management to take necessary measures to meet the target. EPM solutions bridge the gap between high-level strategy and daily execution. They align and connect the entire organisation so that every employee knows how daily actions impact corporate goals.

EPM Cycle / Components

A repeatable process is required—one that sets goals, measures success and takes the action needed to improve performance. Whether costing or budgeting will come first will depend on the maturity of the organisation’s operations. If the organisation is in a commissioning phase, then it will be prudent to begin with the budgeting exercise, followed by costing. On the other hand, if the organisation is mature, based on past trends and performance, the costing exercise can be carried out and budgets can be revised accordingly. If the budget and costing elements are in place, then the organisation should be technologically sound and backed up for EPM implementation and vice versa. In the classical model, the EPM framework comprises three main components.


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