Benchmarking is the process of comparing your own performance against peer organizations with the purpose of understanding differences that may suggest opportunities for improvement. A defined set of metrics allows for peer comparisons across various Functional Centres in the hospital.
The data source for comparisons is the MIS Trial Balance Data files submitted by all hospitals to the provincial governments. This source provides a readily available standardized dataset. The performance benchmarks are derived from the statistical distribution (range) of peer performance:
- Best Quartile: 25% perform better; 75% perform worse
- Median: 50% perform better; 50% perform worse
- Worst Quartile: 75% perform better; 25% perform worse
- Theoretical savings opportunities are calculated assuming a functional centre is performing at the Median or Best Quartile performance benchmark of peers. The opportunities are therefore based on the actual performance of peers, and not an arbitrary target or “best practice”.
It is important to note that these are considered “theoretical savings” for two reasons. First, because in practice, no hospital can be efficient in all areas. In some cases, a choice to strategically invest in one department (for example Human Resources) may result in efficiencies in another department (for example reduced recruitment costs). We also need to consider reporting differences: the same expenses may be recorded in different departments in different hospitals. Moving expenses and recording them in different departments seldom improves overall efficiency; it can change which departments are above or below any given target.
Second, theoretical savings must be interpreted in the context of an organization. Certain characteristics of an organization may prevent a functional area from achieving efficiencies, for example geographical isolation. Such characteristics must be taken into consideration to identify what realistic performance might be for a given organization.
Theoretical savings calculated through benchmarking provide an understanding of the magnitude of potential savings and act as a “directional driver”, but do not represent stand-alone and absolute savings targets. It is one look at the overall assessment of an organization and is helpful in a review as one of multiple tools.
How do the BIG tools help?
The BIG tools help organizations quickly identify functional areas where performance is inefficient relative to peers. They also help organizations understand the underlying drivers of performance to allow for data driven discussions with clinical and administrative managers.
- Graphical Functional Centre Performance: All Members receive access to graphical reports that identify how their performance by functional centre compares to other hospitals.
- Functional Centre Summaries: Subscribing Members receive reports that provide a consolidated view of quantified savings opportunities by each Functional Centre. The quantified representation of opportunities by dollars and FTEs allows for focus on material opportunities without wasting time on minimal savings.
- Drill-down detail: Subscribing Members receive detail into the mix of skilled staffing (for example RN vs. RPN or Technologist vs. Assistant) and management resources in clinical Functional Centres. The data is transparent for all organizations so that managers gain meaningful insight into how their staffing mixes and levels compare to peers.
- Access to underlying Trial Balances: We have a simple to use Query Tool available to our Subscribing Members that provides access to secondary and primary accounts within our members’ Trial Balances. For example, if you are interested in knowing the legal expenses of your peers, simply search ‘legal’ in the Query Tool and you can view your expenditures against peers.
How often should an organization perform Benchmarking?
BIG collects annual Trial Balances from its Member hospitals every June after hospitals complete their submissions. Results are released in the Summer (typically the beginning of July) and can be used to inform hospital annual planning processes that typically occur in the Fall. Since benchmarking opportunities are identified at the Functional Centre level, savings targets can be incorporated into annual operating budget plans.
Most of our Subscribing Members now also submit their Quarterly trial balances beginning with Q2. Hospitals are encouraged to submit their Trial Balances every quarter to monitor their progress and update the benchmarking results more regularly.
We are assessing the interest of all of our Member Hospitals to submit Quarterly TB files.