An Introduction to Benchmarking of Nursing Inpatient Services

Nursing inpatient services include the range of clinical areas pertaining to the provision of care for admitted patients. A common question from hospitals is how to benchmark inpatient services given that the size and specialty of services can vary both within and across hospitals.

The following sections outline how to benchmark inpatient services with consideration for specialty programs and services, and how to interpret results in the context of patient acuity.

Selecting Your Peers

(also see An Introduction to Peer Selection for Benchmarking)
When selecting peers for clinical benchmarking, a reasonable starting point is to select a range of 12-20 peers that have a similar level of activity to your own organization. Factors of similarity can include (but are not limited to) any of the following:

Total Direct Care Expenses
Total Inpatient Acute Patient Days
Mix of Programs and Services (e.g. ED, ICU, Rehab)
Type of Organization (for example Teaching, Large Community, Small Community)
Location of Organization (for example Northern Rural vs. Urban Central)
Multi-Site vs. Single-Site Organizations

Within the BIG tool under Reference Reports, there is a report titled Workload by Functional Centre. This report outlines the activity (workload) that is used to calculate each indicator by Functional Centre. This report can be used to identify peers that have similar activity to your organization when comparing Direct Care Costs, Inpatient Acute Patient Days, ICU Patient Days, ED Patient Days, etc.

Hospitals with specialty programs and services are encouraged to separately benchmark those respective areas. The Workload by Functional Centre report can be used to identify peers with similar sized services, so as to benchmark against the most relevant group of hospitals. For example, a hospital with an Inpatient Mental Health program can find peers with a similar range of Inpatient Mental Health Patient Days indicating a similar level of services and resources. A separate peer group can then be created in the tool to benchmark the Mental Health program.

There is no limit to the number of peer groups that can be created in the tool. Distinct peer groups can be used for each functional area that you are investigating to ensure you are comparing your hospital to the most relevant set of peers.

Hospitals are encouraged to collect and report Trial Balance data at the level of detail that best provides useful information for internal decisions. For example, reporting at the detailed level of IP Surgical – Oncology within the overall IP Surgical Inpatient Services framework allows for better comparison of similar patient care areas with peers where they exist and improves the potential management information gained from benchmarking; it can also present a more accurate reflection of results for funding agencies and oversight bodies that rely on reporting for decision making.

Identifying your Top Opportunities

If there is a specific Functional Centre of interest, the most direct approach is to navigate directly to the graphical summary for that functional area. However, in many instances you may be wondering which inpatient services show the greatest savings opportunity so that you can focus your investigation.

Subscribing Members have access to the Functional Centre Summary Report that provides a quick look at potential opportunities for each Functional Centre. This report can be used as a starting point to understand which areas you should focus on. The final tab in the report identifies the Net Savings Opportunity by Functional Centre. The downloadable version breaks out the opportunity into FTEs and supplies savings (referred to as Variable Non-Labour Non-Drug Costs).

Once you’ve selected the areas that show material savings opportunity, the next step is to better understand the underlying data that is driving the opportunity in each Functional Centre.

Understanding the Drivers of Savings Opportunities

The Functional Centre Detail Reports provide insight to how savings opportunities are calculated. The reports include trends on staffing and supplies expenses, and the range of peer performance relative to your organization.

The calculation of savings opportunity is based on what resources could be saved if your organization’s performance was equivalent to either the Median (50th percentile) or Best Quartile (25th percentile) performance of your selected peer group.

Performance indicators used in the calculation of savings opportunity are:
Worked Hours/ Patient Day: This measure calculates the efficiency of the labour component in a functional centre by looking at how many worked hours (UPP, NP, MOS) are spent per patient day.
Variable Non-Labour Non-Drug Cost/ Patient Day: This measure calculates the efficiency of non-labour and non-drug expenses, which are generally considered supplies expenses. The indicator calculates supplies expenses per patient day.

Performance indicators available for comparative analysis are:

Drug Costs/ Patient Day: This measure calculates a functional centre’s drug costs per patient day. It is used for comparative purposes but isn’t used in the calculation of savings opportunities since it is a relatively new field in MIS and is not consistently reported across all organizations.
Sick Hours as a Percentage of Full-time Worked Hours: This measure calculates sick time as a proportion of full-time staff total worked hours.
Overtime as a Percentage of Worked Hours: This measure calculates overtime as a proportion of total worked hours.
Orientation as a Percentage of Worked Hours: This measure calculates orientation as a proportion of total worked hours.

To better understand savings opportunities, it is important to look at both the supplies and labour components that drive expenses in a functional centre.

The Operating Room (OR) is a good example of how to understand savings opportunities in both supplies and labour. Suppose a hospital spends 12.7 worked hours per case in the OR, and the median of their peers spends 11.5 worked hours per case. The hospital’s savings opportunity in labour is calculated as the potential reduction in FTEs if they were spending 11.5 worked hours per OR case instead of 12.7 worked hours per OR case.

The savings opportunity in supplies is calculated in the same way. Suppose the same hospital spends $500 per OR case, and the median of peers spends $400 per OR case. The savings potential is calculated as the reduction in supplies expenses if the hospital spent only $400 per OR case.

Skill-Mix in Inpatient Services

Many hospitals use a mix of skilled staff in their inpatient units to optimize care at a lower total cost. The goal is to use lower-paid staff to perform less complex tasks, freeing up more highly qualified staff to focus on tasks only they are qualified to undertake.

The Nursing Skill Mix Report identifies the worked hours per patient day of RNs, RPNs, and Other UPP staff by functional centre for each hospital in the peer group. The report also identifies the “% RN vs RPN” and “% MOS” mix of each hospital by functional centre.

This information allows a hospital to compare its labour efficiency by skill mix to peer hospitals and identify which category of staffing has the greatest opportunity for savings.

Considerations in Analysis

The BIG calculations of savings potentials are meant to be directional, and to point an organization towards opportunities for further investigation. Considerations when analyzing Inpatient functional centres include:

Specialty Surgical Programs: A hospital with a specialty surgical program, e.g. Orthopedic Surgery, may require more expensive supplies to treat higher acuity patients. The finance department can work with the program to understand the extent of additional supplies used by the specialty program relative to the supplies’ savings opportunities in the OR functional centre. The finance department can also seek to understand whether the staffing model in the OR increases for orthopedic surgeries or remains consistent, with the latter indicating there is an overall opportunity for labour efficiency in the OR.
Specialty Medical Programs: A hospital with a specialty medical program, e.g. Obstetrics, may require a higher ratio of skilled nursing staff to treat higher acuity patients. The Skill Mix Report can identify the ratio and efficiency of higher skilled nursing staff in the program compared to peers with similar programs.
Program Mix: Program mix is another variable that can impact benchmarking results, particularly because the focus of benchmarking is on individual functional areas. Weighted cases cannot be used as an output measure to adjust for differences in program mix, since the allocation of weights to functional centres would be arbitrary. That is, weighted cases represent activity and expenses across multiple functional areas in the patient journey. Despite this challenge, with proper peer selection and understanding of operations, benchmarking to a cohort of similar organizations can be usefully applied to identify improvement opportunities that require further investigation.
Reporting Choices: Differences in reporting across organizations can impact benchmarking and skew the comparability of results. The BIG Benchmarking approach adjusts for anticipated reporting differences by creating unique functional centres. These roll-ups are intended to allow organizations to view results for a particular service, such as Birthing, in its entirety and take into account the way staff often rotate through various areas of a service. Unique functional centres are also created for significant cost items, such as Prostheses, to avoid skewing comparisons of supplies expenses in other functional centres. In practice, not all differences can be anticipated and recognized. To ensure useful analysis it is necessary to understand operating contexts and reporting choices.

There may be many such considerations to take into account when looking at your benchmarking results. The numerical results are only the first step in benchmarking. Understanding the detailed operations of your individual functional areas is essential to interpreting results.

We would encourage your comments on such considerations that you found most helpful or problematic.