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Board Development and Leadership: The Road to Performance Management. Terry Hill, Executive Director Rural Health Resource Center Duluth, Minnesota. Technical Assistance & Services Center (TASC). Federally designated resource center Funded by HRSA’s ORHP

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Board Development and Leadership:

The Road to Performance Management

Terry Hill, Executive DirectorRural Health Resource Center

Duluth, Minnesota

Technical Assistance & Services Center (TASC)
  • Federally designated resource center
  • Funded by HRSA’s ORHP
  • Supports Flex Program/CAH implementation in 45 states
  • Located in Duluth, Minnesota
Current Federal Contracts
  • Technical Assistance & Services Center (TASC)
  • Small Hospital Improvement Program (SHIP)
  • Delta Rural Hospital Performance Improvement (RHPI)
  • Rural HIT Project
  • Rural Hospital Education
Developing PerformanceImprovement Projects
  • Medicare Flex Program emphasis on Quality & Performance Improvement
  • Performance improvement/BSC initiatives underway in most states
  • Supported by state offices, QIOs and hospital associations
State CAH

Performance Improvement Projects

  • Mississippi Delta Rural Hospital Performance Improvement Project
    • 120 hospitals in 8 state region
    • Components
      • - Comprehensive performance assessment
      • - Targeted performance and strategic planning initiatives
      • - Balanced Scorecard initiatives
State CAH

Performance Improvement Projects

  • Nebraska P.I. Initiative
        • 32 hospitals in BSC initiative
        • CAH Executive Leadership initiative
  • State Balanced Scorecard Initiatives
  • - Alaska - Hawaii
  • - Pennsylvania - Oklahoma
  • - North Dakota - Arkansas
  • - Montana - Illinois
  • - Missouri - Kansas
What We’ve Learned
  • Hospitals often operate in a crisis management mode and don’t think strategically
  • Strategic planning is done but strategy execution is not maximized
  • Most rural hospitals lack ongoing board leadership and management education
  • CAHs are already collecting much information
Data -------------Information

Action Steps

CAH Data CollectionStrategic Purpose

Data Collection

Data Reporting

Data Analysis

Typical Effort

Desired Effort

  • Hospitals make significant investments in collecting data for regulatory or accreditation purposes, which limits the value.
  • The goals are to push the Effort Curve to the right.
“Even small health care institutions are complex, barely manageable places…large health care organizations may be the most complex organizations in human history.”
  • ~ Peter Drucker
In the years ahead…
  • Rural health organizations will undergo profound change:
    • To meet new consumer and payer demands
    • To implement HIT
    • To be successful in P4P and new insurance models
  • This profound change and increasing complexity will require performance management systems
Performance Management


“A set of processes that help organizations optimize their overall performance. It is a framework for organizing, automating and analyzing methodologies metrics, processes and systems that drive business performance…

Performance management is seen as the next generation of business intelligence, and helps businesses make efficient use of their financial, human, material and other resources.”


Performance Management


“A framework for getting people, processes and resources aligned and moving in the same direction to achieve strategies that benefit the customer and the bottom line and result in organizational excellence.”


Performance Management


  • Performance Management Systems have 3 distinct dimensions:
    • Strategies- Make strategy the central organizational agenda
    • Focus and Alignment- Have resources and activities aligned with strategies
    • Organization- Provide the logic and architecture to link all departments and employees behind strategies.
  • Kaplan and Norton
  • Harvard Business School
The Journey to Performance Management
  • Quality Assurance
  • Quality Improvement
  • Performance Improvement
  • Performance Management
System for Managing Performance and Change in Rural Hospitals
  • Performance Management Framework
    • Studor Pillars
    • Balanced Scorecard
    • “It is rare to find companies without some form of balanced Scorecard. The difference is that more organizations now understand that the balanced Scorecard is a strategic management system, not just measurement. Strategy maps are the catalyst for that shift.”
      • --James Creelman, Senior Research advisor, the Hackett Group
understanding the balanced scorecard
Understanding the Balanced Scorecard

“A successful Balanced Scorecard program starts with a recognition that it is not a metrics project…


Robert Kaplan

Balanced Scorecard Collaborative’s

Government Summit. Sept. 2004

Understanding the Balanced Scorecard
  • It’s more than most people realize
    • Not just a measurement system
    • Not primarily about the four “quadrants”
    • Not primarily a benchmarking tool
  • Proven Best Practice for achieving strategies and breakthrough results
  • Successfully adapted for Rural Hospitals
Definition of the Balanced Scorecard

“The Balanced Scorecard is a framework that helps organizations put strategy at the center of the organization by translating strategy into operational objectives that drive both behavior and performance”

The Balanced Scorecard Collaborative, 2004

Top 5 Reasons to Implement the BSC
  • Provides Focus
  • Creates alignment of resources and strategy
  • Makes strategy “real”
  • Facilitates organization-wide communication
  • Tells an organizational story
Brief History of the BSC

Strategic Management



bsc perspective
BSC Perspective


Key Question

As financial stakeholders, how do we intend to meet the goals & objectives in our hospital mission statement?

As customers of our hospital’s services, what do we want, need or expect?

As members of the hospital staff, what do we need to do to meet the needs of our various customers?

What type of culture, skills, training and technology are we going to improve in order to support our key processes?

HIT Valley of Despair

Implemented and Supported

Implement EHR

Good Choices and management determines level of productivity and satisfaction

Preferred Future

Leadership and Management Determines how long you’re in the valley of despair.


Little or No HIT

Choices, Planning, Execution Determines extent of Slide

Possible Future


HIT Theme Strategy Map

Increased cost efficiency

Ensure a skilled workforce

Increased revenue

Ongoing education

Acquire needed HIT systems

Clinical processes

Acquire HIT expertise

Increased market share

Operational processes

Establish an empowering work culture


Instill change management

Business processes

Increased margin to fund mission

Patient safety outcomes

Patient satisfaction

Community health outcomes

Physician satisfaction


As financial stakeholders, how do we intend to meet the goals and objectives in the hospital’s Mission Statement?

Customers & Community

As customers of the hospital’s services, what do we want, need or expect?

Internal Processes

As members of the hospital staff, what do we need to do to meet the needs of the patients and healthcare community?

Learning & Growth

As an organization, what type of culture, skills, training and technology are we going to develop to support our processes?

System for Sustaining Performance and Change
  • 2. Empowering Culture
    • a. Change oriented
  • b. Customer Centered
  • c. Collaborative
  • d. Designed for retention
  • 3. Ongoing Education
  • a. On site
  • b. Online
Systems for Sustaining Performance and Change

4. Skilled Workforce

a. Nurses and technicians

b. Medical Staff

c. IT expertise

5. Ongoing Process Improvement

a. Clinical

b. Business

c. Operations

6. Leadership Development

a. Board

b. Executives

c. Middle Management

d. Physicians

Systems for Sustaining Performance and Change
  • 7. Technology
  • a. HIT
  • b. Medical
  • c. Management and Systems
  • 8. Partnerships
  • a. With physicians/clinicians
  • b. With other hospitals and health providers
  • c. With the Community
  • d. With educational institutions
  • Access to Capital
    • For improvements to plant
    • For investment to infrastructure
  • Outside Technical Expertise
The Board’s Role in Performance Management
  • Often overlooked
  • Crucial to long range success
  • Will require investments of time and resources
Seven Deadly Sins of Ineffective Governance
  • Lack of mission, vision, strategies and focus
  • Resisting change and failure to make strategic investments
  • Making do with irrelevant, useless information
  • Lack of hospital board and management alignment
  • Hiring unqualified or ineffective leaders
  • Failure to spend meeting time on strategic priorities
  • Inability to understand or relate to physicians
Board Member Selection
  • Start with a plan
  • Recruit motivated people with needed skills
  • Nominating search committee
  • Develop selection criteria
  • Consider conflict of interest
Effective Use of Consent Agenda
  • Consent Agenda:
    • The process of grouping routine items into one agenda item for a single vote, aimed at saving valuable time for critical issues.


- Frees time for focus on what is important strategically and operationally

- Much more rewarding experience for members

Effective Use of Consent Agenda


- Places responsibility (and risk) on members doing their homework before meetings

- Non-board members can perceive “railroad”

- Requires more work upfront

- Can be counterproductive if members are reading advanced materials during the meeting

Acceptable Consent Agenda Items
  • Committee minutes and reports
  • Board minutes
  • Financial statements
  • Operating statistics
  • Quality reports
  • Medical staff reports and minutes
  • Medical staff credentialing and appointments
  • Management/CEO reports
  • Resolutions (background information in advance)
Terry J. Hill, MPA

Executive Director,

Rural Health Resource Center

600 E. Superior St., Suite 404

Duluth, MN 55802

218-727-9390, ext. 232

[email protected]