knowledge-effective management in hospitals

8/7/2019 Knowledge-Effective Management in Hospitals

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2020 perspectives on healthcarewww.2020delivery.com

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Introduction

Service Line Management is one o the latest approaches to improving hospital management, and is being

strongly promoted by Monitor. Based on our experiences in implementing Service Line Management, we

believe that it has potential to be a powerul approach or the health service. However, while many hospitals

have attempted to implement Service Line Reporting (SLR) as a pre-cursor to SLM, ewer have embedded the

Service Line model successully. Through helping hospitals overcome these barriers, we have identied a number

o potential actions to guide the leaders o any hospital embarking on the service line management journey.

What is service line management?

Our view is that SLM comprises the our key elements set out by Monitor1 (below) plus a th and requentlyoverlooked element – that o business management capabilities. Together they orm an integrated ramework.

Organisation structure1. Trusts identiy their service delivery units and move towards an organisation structure

based on service lines.

Strategic and annual planning process2. A planning process is established. This enables clinicians and managers

to identiy the opportunities and threats in their specialist area and work towards agreed objectives.

Perormance management3. A system is put in place to link each service’s objectives to team and individual

perormance. This is monitored through a cycle o perormance review meetings at each level o the trust.

Service-line inormation4. Service line-reporting (SLR) provides timely, relevant inormation, giving the nancial

and operational picture or each service line.

Business management capabilities5. A structured approach is taken to develop the knowledge, skills, and

behaviours required to maximise the benets o the new organisational design that refects the change in roles

or clinical leaders, managers, and inormation and nancial support sta.

Our experience supports Monitor’s view that SLM has the potential to bring about at least our important benets2:

Better patient care• By bringing clinicians to the oreront o service development and promoting a culture o

continuous improvement, SLM improves services and results in better patient experience.Providing the big picture• Looking at cost and protability as a portolio o service lines, rather than or the trust

as a whole, means trusts can make inormed decisions about how to manage existing services, prioritise new

developments, or plan investments.




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Empowering clinicians to take the lead• SLM puts clinicians at the heart o service-line operations. They can

take charge o the development, perormance, and quality o their services, reshaping service delivery to meet

direct patient needs.

Maximising scarce resources• The robust reporting systems that underpin SLM give clinicians and managers the

inormation they need to maximise the productivity o scarce resources and increase overall eciency. 3

Only a minority o hospitals have ully adopted SLM. Although the potential benets o SLM are clearly articulated,

the challenge is to increase both the speed and breadth o implementation and its impact on perormance.

The escalating need to deliver higher standards o care in a nancially challenging environment increases this

imperative.

What are the obstacles to implementing service-line management?

There are a number o pitalls which can hinder the successul implementation o SLM within a hospital. These

include:

Over-ocus on communicating the fnancial benefts o Service Line• Reporting – the development o SLR was

predominantly concerned with helping hospitals to understand the protability o dierent service lines. Whilst

this is an important aspect o SLM, it created a situation where the change to service lines was seen as ‘Finance

led’. For implementation to be successul, SLM needs a Finance Director who is prepared to champion a

major change in a hospital’s approach to nancial management as well as a set o nancially interested clinical

leaders. This narrows a hospital’s potential pool o ‘early adopters’ and role models. Where Patient-Level

Costing systems have already been implemented, requently the inormation has not been widely used or

understood by clinical teams. As a result, data quality may have remained poor, undermining levels o trust in

the new ‘reporting driven’ approach which SLM depends on. The nancial aspect o service line reporting is

only one part o what should be a balanced approach to perormance, incorporating saety and quality, patient

experience and access, operational eciency, and sta capacity and capability. Unless a rounded view o perormance is adopted, poor decisions may be made and sta groups may be alienated by the process.

Lack o organisational design expertise• – SLM requires a undamentally dierent organisational structure and

set o underpinning processes or most hospitals and this is a complicated endeavour. There are a large

number o design choices in any organisation and the complexity and interdependency inherent within

most healthcare provider organisations mean that implementing a new organisational design requires

particular expertise as well as time, eort, and consultation to maximise the likelihood o success. Hal-

hearted eorts or simplistic redrawing o boxes on an organisation chart without considering the critical links

and interdependencies, the supporting governance processes, and the re-aligning o clinical and corporate

support services all act as a barrier to successully embedding SLM. The ability to dene service lines at a

meaningul level or clinical groups, whilst at the same time attempting to construct a manageable number o business units is one such tension that has to be managed.

Insufcient support or new Clinical Directors• – successul SLM requires a whole new set o skills, knowledge

and behaviour across much o the organisation. A lack o investment in the necessary capabilities means

that even i Clinical Directors are convinced o the benet, and an eective organisational structure and

underpinning processes are in place, there are three major challenges where Clinical Directors oten need

support: leadership development, business management and the provision o timely, reliable inormation

covering all aspects o perormance. Capability gaps in any o these areas will limit the eectiveness o SLM,

and may lead to Clinical Directors eeling insecure and becoming deensive in their reactions to the new

reporting outputs.

Unclear defnition o perormance expectations and a lack o incentives• – eective SLM typically provides a

completely dierent view o organisational perormance – oten the rst complete view o perormance at

a level o detail that teams can engage in. As a result, it takes time and eort to understand what is within



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a service line’s direct control, what lies within their sphere o infuence and what is beyond their control

or infuence. Agreeing targets or plans and then carrying out perormance reviews without this shared

understanding between the Executive team and the Service Line leadership team can lead to unproductive

conversations and an unwillingness to ‘own’ the plan or establish any clear incentives. All this diminishes the

potential o eective SLM.

Poor data quality • – a lack o condence in the data that is used to monitor and manage service lines

undermines the whole endeavour. Even ater data quality has improved, memories are long and small

anomalies can lead to a tendency to doubt the data and defect attention rom the core perormance

challenges. The use o Patient Level Costing systems to support SLR and act as ‘enabler’ o SLM can be

particularly challenging due to the level o data quality that is required to produce a credible ‘product’.

What action can Executive teams take?

The level o organisational and behavioural change needed to achieve successul implementation o SLM is

signicant and should not be underestimated. Change is needed both at the organisational and individual level.

Work on adult learning suggests that or a behavioural change to have most chance o being made and sustained

requires our levers to be pulled simultaneously:

Figure 1. “Levers for successful change programmes”. Adapted from Drew et al.,Journey to Lean: Making Operational Change Stick (Palgrave Macmillan: 2004).

In light o the barriers to change and the behavioural analysis set out above, a hospital’s leadership team play

a crucial role in shaping the implementation o SLM, and hence in its ultimate success. Using the our levers o

change set out above, a hospital’s implementation plan should include:

1. Communications to oster understanding and commitment

Conducta. a stakeholder analysis to understand the level o support and assess the willingness to adopt

SLM among both management and clinical sta – including: Clinicians, Specialty Managers, Directors o

Operations, Matrons, Inormation Departments, as well as within the nance and support areas. In a number

o cases it may well be the ront line operational stakeholders who will embrace the benets o SLM as it

plays to their natural, patient-ocused ‘multi-disciplinary teams’, whereas Finance team members may see itas a threat to nancial control or an extra burden to support a larger number o service lines with ambitious,

demanding and empowered Clinical Directors and their teams. This stakeholder analysis should be used to

drive the hospital’s communications strategy and should be revised periodically to track progress.

Role models andleadership

Credible individuals amongst theleadership of the organisation whodemonstrate the new skills,knowledge and behaviours required

Communications tofoster understanding

and commitment

The case for change needsto be made in a clear and

compeling way that connects with theindividual and explains the

implications for them

The right skillsand capabilities

The organisation needs toinvest in building the skills,knowledge and behavioursrequired to operate effectivelyin the new structure

Aligned processes,structures, and systems

The formal elements of the trust ’sorganisational design need to

support and incentivise the new waysof working required for SLM

Changedmindset &

behaviours




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Focusb. on communicating the holistic benets o service line management – the perception o service line

management as a Finance-driven concept needs to be addressed. Drawing on case examples rom other

hospitals where the benet o SLM has been as much about tackling poor inection control or hand hygiene,

emergency readmission rates, and patient experience as it has about supporting nancial decision-making

would be one aspect o this. Also explaining how services have reinvested their nancial gains in improved

patient care or state o the art clinical practice will also build support and understanding.

Positionc. the newly available perormance data as a tool to enable better decision-making, not a weapon or

identiying poor perormance. There is a danger that new perormance data is not seen as “interesting” but

instead as a threat or mechanism or central management to take tighter control over a hospital’s clinical

perormance. It is thereore important to strike the right balance and communicate how the new perormance

management mechanism will empower service-line managers with greater decision-making responsibility,

thereby enabling them to make more inormed (and better) decisions. This will require strong positive

messages at the outset to build the condence o the Specialty Business Unit (SBU) leaders while they adapt

to the new system.

2. Role models and leadership

Establisha. a core team o senior leaders who are strongly committed to implementing SLM. Without the vocal

support o the Executive team or SLM, there is a risk that the resistance o Senior Managers and Clinical

Directors o new Business Units will undermine the change programme during the time it takes or them to

get used to the new data reporting.

Leverageb. the most infuential early adopters – through stakeholder analysis, potential role models should

have been identied. Once this is established (subject to regular updating and revision), a systematic plan

should be established or how these individuals can be deployed most eectively to convince, support, and

coach others on their journey. This could include clearly identiying ‘exemplar’ specialties (acknowledging the

cultural barriers to adopting others’ best practice)

Supportc. the role models and leaders to take service line management to the next level. This is crucial tothe development component. This may involve providing additional support or encouraging networking

and knowledge sharing with hospitals where SLM is already in place. In addition to supporting the ethos o

continuous improvement around service line management, it might also act as a reward and incentive to the

early adopters and ast ollowers.

3. Aligned processes, structures, and systems

Ensurea. the trust’s business perormance management process is ‘t or purpose’ – providing regular and

robust management inormation that brings together data on activity, nance, saety and quality, patient

experience, operational eciency, and sta capacity. Ensure that the process is suciently resourced not

only to provide the management inormation but also to work with service line teams to identiy and tackle

data quality issues, help interpretation, develop new metrics, and help structure eective perormance

conversations. In particular, it may be necessary to produce detailed data on certain areas (e.g., the specics

around patient complaints or incidents), in order to build levels o trust in new quality metrics.

Considerb. how incentives can be used to improve perormance. There are numerous ways in which individuals

and teams can be motivated to deliver improvements. This may not immediately have a direct nancial

component such as an SBU being able to reinvest all o their own accrued surpluses, but can be more broadly

linked to SBU perormance. For example, SBUs which make cost savings will be looked upon avourably

when the time comes to allocating overall accrued surpluses towards urther capital expenditure. Incentives

also need to be air across both support and service delivery areas – or example by imposing similar annual

eciency improvements or both. A system without incentives designed to encourage virtuous behaviour willnot deliver the expected benets, as the key participants will ght against the new approach.



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Acknowledgec. and manage ‘dicult links’. There is a risk that ‘silo working’ could develop (or deepen) through

the new service line structure and this risk needs to be acknowledged and mitigated. Service line teams will

requently need to share resources (e.g., beds) with other service lines and they will also depend on clinical

support and other support services to deliver their outcomes. Improving the level o dialogue across units,

especially during strategy and planning processes can dramatically improve the useulness o the plans and

promote a sense o shared ownership. Additionally, the new organisational design can be used to mitigate

this risk by linking the business units through senior managers. For example, there could be confictinginterests between the surgical business units and the Theatres & ICU clinical support area, but being managed

by the same associate director could avoid any problems.

Balanced. the number o autonomous units with a sense o scale and ability to manage. It is a ne balance

between a large number o very specic service lines (e.g., at sub-specialty level) and a smaller number o

more aggregated service lines. Even i a move is made to smaller, sub-specialty service lines (e.g., Breast

surgery vs. General Surgery), it is important that the relative time and eort spent supporting the running

o the business units is proportionate to the ‘value at stake’. It is also important not to be too rigid in the

approach and to be prepared to adjust mid-course i aspects o the design are clearly not working. For

example, it may be easier to start with aggregating medical activity into a “General Medicine” SBU, while

separating surgical activity into distinct business units because they are more easily dened. The GeneralMedicine SBU can then be sub-divided at a later stage once the practical implications become more deeply

understood. Eventually SLM needs to go to sub-specialty level to become a useul tool or the management

team to see where the opportunities are to improve eciency / perormance, although initially this would be

very tough to do.

Treate. nancial / accounting data with due caution – there are many ways to apportion shared costs, and

ultimately, the actual method or allocating these across SBUs may be somewhat arbitrary. Additionally, where

accounting data is unsupported by other operating metrics (e.g., sta numbers) it can be dicult to establish

the veracity o the nancial numbers being reported. To avoid this having an undermining impact on SLM, it is

important that the reward / consequence mechanisms are designed to take this into account and accounting

data is not used too literally when assessing perormance.

4. The right skills and capabilities

Sponsora. / support the leadership development o Clinical Directors. The leadership challenges o eective

SLM should not be underestimated. Firstly, there is managing the broader consultant body as a ‘rst amongst

equals’. This has parallels with how the most eective proessional service rms and academic institutions

develop their internal leaders. Secondly, Clinical Directors need to have a detailed understanding o

their business not dissimilar to that o a business manager. This may require a new skill set analogous to a

‘mini-MBA’ to enable them to be eective business leaders. Finally, Clinical Directors need eective multi-

disciplinary leadership teams, possibly including a Matron, a senior NHS manager, a senior therapist or

other allied health proessional. This is likely to require a less ‘command and control’ style o leadership anddecision making than may be the case with their clinical work. In some cases, the right answer may be to

encourage partnerships between Clinical Directors and General Managers to act together as a driving orce,

and the Executive Team should be open to alternative SBU leadership models to suit their own sta’s skills sets

and interests.

Raiseb. the bar on analytical and business management expectations. By denition, Clinical Directors are

proessionals who are highly trained and have demonstrated signicant commitment to proessional

development. They deserve (and should demand) to be supported by equally proessional business and

analytical support. This in many instances may require very major up-skilling, some o which may only be

possible by a new breed o specialty managers. It will be important to identiy these role models and promote

their impact on SLM, as well as helping trusts to source or build this capability.Supportc. HR Directors to lead the organisational design to support SLM. As largely people-driven

organisations, it is vital that HR & OD Directors are able to support the Executive Team and Boards eectively




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with the challenge o organisational development and talent management. Too requently this is an

undervalued position and the Chie Executive can play a role in increasing the importance and development

o individuals in these posts.

Conclusion

As outlined above, Service Line Management is potentially a very eective approach to improving hospital

management. However, successul organisational change o the type and scale required to deliver the benets

o SLM needs equal attention to each o the our major change levers. All parts o the organisation should be

aected by the move to service line management and so it is vital to lay out a balanced set o actions across

communications, leadership, organisation design, and skill building to address the barriers to change. The journey

towards successul implementation o SLM is likely to be lengthy, potentially involving a number o iterations

beore the system is ully working and or benets to be realised. However, it is a journey worth starting as the

transparency, engagement and accountability it can deliver will be vital in the coming years as hospitals are

required to deliver higher quality or less.

For other related articles see:http://www.2020delivery.com/Knowledge/Knowledge.aspx including “Outline approach to implementing service line scorecards”

Footnotes

1 Service Line Management: An Overview – Monitor, March 2009

2 Ibid.3 In our experience, SLM has been particularly useul at highlighting wasteul practices, previouslyunidentied as their consequences were unmonitored e.g., not recording all treatments being conducted, orprolonged retention o patient notes

knowledge-effective management in hospitals

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