Governance in Healthcare: Leadership for Successful Improvement

governance in healthcareWhat separates healthcare organizations who excel at consistent and continuous outcomes improvement from those who do not? It’s a thought-provoking question; one that has been asked of me many times; and one that has caused me great reflection on this journey I’ve been on for the past ten years to fundamentally transform healthcare.

What’s the biggest contributing factor to success when it comes to outcomes improvement? Superior technology? Really smart people? Dumb luck? While these all play a role, none strikes me as the most important. The one thing that stands out to me as the single greatest predictor of success is effective governance.

By “governance,” I rely on the definition from Weill and Ross in their book, IT Governance: the framework of decision rights and accountability that encourages desirable behavior and utilization of scarce resources in the achievement of a shared objective. This entails organizational structures and the processes of decision making, communication, and information flow. And by “effective,” I mean appropriately allocating scarce resources to their highest and best use within the context of clearly stated and well-understood objectives. Given the right parameters and the empowerment to make decisions within those parameters, individuals are generally good at making decisions that optimize resource utilization. The primary function of governance, therefore, is to establish these parameters and create the structure and space for individuals to appropriately allocate scarce resources. Make it easy for people to make prioritization decisions.

If the rubric for making these decisions is unclear, then teams will unintentionally inject waste into the outcomes improvement efforts. That is, instead of spending time improving things, team members will spend time wondering or debating about what to improve. They will constantly feel a tug of war between shifting priorities—satisfying many but not excelling at any. Sound familiar? If team members are feeling this, it may be time for some introspection and adjusting.

The following four principles provide a framework for evaluating the current situation:

  1. Engage the right stakeholders.
  2. Establish a shared understanding of objectives.
  3. Align incentives and rules of engagement.
  4. Practice disciplined prioritization.

Getting There: The Steps Behind the Four Principles of Effective Governance in Healthcare

Whether an organization has recognized room for improvement in its executive governance approach or the need for a more comprehensive overhaul, these four guiding principles, and the steps behind them, will lay the foundation to transform healthcare at that organization.

Principle 1: Engage the Right Stakeholders

Step #1—Make the Call to Action

The call to action initiates an outcomes improvement strategy within the organization. It establishes the point on the horizon to become the destination for all team members. This destination is generally established by the recognized leader, a CEO, or a visionary within the institution accountable for its strategic vision. Often, this communication is prompted by some sentinel event, sparking a desire for excellence: a patient harmed, a legal action, a miss on company targets or national benchmarks, etc. This call to action, or statement of vision, should be established in writing and communicated via one-on-one meetings, leadership huddles, mass communication, and posted announcements (electronic and hard copy). This communication should flow upwards and downwards through the organization, from the boardroom to the cubicle.

Step #2—Form the Leadership Team

Recruit the right mix of people (multidisciplinary representation) to serve on the Leadership Team. Effective executive governance depends on a balance of executive roles. By including a variety of stakeholders, leaders ensure that everyone responsible for aligning with and executing on the vision has a voice. Include stakeholders benefiting from the initiative in addition to those feeling the burden of the expense. Include owners of scarce resources too, whose buy-in is critical to success.

In addition to multidisciplinary representation, consider the core competencies of the individuals who will lead—the innovators, first followers, and early adopters. Do they have what it takes? The innovator needs to stand alone and take risks to present a new idea. If it’s a breakthrough concept or major shift, they need take this first step without concern for what others might think. They also must keep early processes easy to follow, so that the first follower can jump in effortlessly. The first follower also needs to be comfortable taking risk and so confident in the movement that they invite more people (early adopters) to join. Soon, most the organization is following the innovator’s lead. The new idea is no longer an anomaly or risk, but a standard part of operations.

This team of innovators and early adopters is the linchpin of executive governance. The innovators are the torchbearers of key initiatives—disrupters willing to confront skeptics head on and stand behind the vision. Look for the “Paul Reveres” (those with the courage to take initiative and think creatively) and then put them in the places that enable them to be most effective. Early adopters bravely follow the innovators, working to sustain and grow their work. Effective executive governance understands the critical roles innovators and early adopters play in permeating the vision and protecting priorities. They realize the role of innovators and early adopters in generating momentum and build strength—to create a snowball effect for the organization’s strategic and operational vision.

Principle 2: Establish a Shared Understanding of Objectives

Step #1—Identify High-Level Opportunities

Identify the organization’s high-level opportunities for outcomes improvement.  Then prioritize those in a data-driven, strategic way to target areas for early and meaningful change where the highest value proposition exists. This way, the work is deep and effective in a few areas of greatest opportunity, rather than ineffectively in too many. The Leadership Team will agree on where to start, on broad areas of focus, and consider whether these opportunities align with the organization’s overall strategic objectives. A key process analysis (KPA) tool (such as the Health Catalyst Key Process Analysis tool) can help generate insights into improvement opportunities by combining clinical and financial data to determine need, impact, and cost savings potential.

Step #2—Assess Organizational Capabilities and Readiness

The organization might be ready and able to take on some areas of change, but need more preparation in others. Determine capabilities and readiness early so that the work isn’t stalled once in progress. Perform a self-assessment or structured interviews with a third-party improvement expert to carefully examine these areas: processes, methodologies, infrastructure, skills, and cultural factors. This audit will identify potential weaknesses and help ensure that the organization is prepared for improvement work and able to manage risk.

At the end of the day, governance is all about the allocation of scarce (valuable) resources. As an organization, the capability and readiness will be largely defined by the scarce resource on which they’re relying for data-driven quality improvement. Typically, this will include analytical resources—data analysts and architects—as well as business subject matter experts (whether clinical, financial, operational, or other).

Principle 3: Align Incentives and Rules of Engagement

Step #1—Adopt a Consistent Improvement Methodology

The improvement methodology is the framework by which leaders organize teams, assign accountability, and empower individuals in improvement work. The methodology will include responsibilities from reconciling conflicts of interest among stakeholders to making sure everyone is aligned with and supportive of the organization’s top priorities.

Think of the methodology as the improvement training plan. The process of establishing and adopting a common methodology throughout the organization does, in fact, require formal training for the Leadership Team. Whether they bring in experts to do this on site or send team members to an off-site program, the goal of this training is to build confidence in the improvement methods and develop the skills and practices to implement it. These skills and practices include effective collaboration, a shared language, common messages and principles, a plan to anticipate hurdles, and common understanding of possible team structures.

Step #2—Align Incentives

Effective executive governance aligns everyone within the organization around the same vision, goals, and accountabilities. Make outcomes improvement goals part of the compensation framework. Look for and eliminate scenarios where individuals feel conflicted when engaging in outcomes improvement because their opportunity costs are too high. In other words, “put your money where your mouth is.” An established compensation or incentive structure encourages clinicians, data experts, and business leaders to participate in improvement while keeping balance with their other responsibilities. In the case of clinicians, this means making it possible, and appealing, for clinicians to participate in improvement work while not compromising patient care. This can be done by making improvement work and goals part of job descriptions at all levels, rather than work that may appear additional or optional. Aligned incentives (rewards) helps manage tensions of competing demands for scarce resources and ensures systemwide shared risk and reward.

Step #3—Keep Polarities in Balance

In the context of healthcare governance, polarity refers to a pair of values that we tend to see in adversarial terms—this VERSUS that—but are, in fact, interdependent and mutually valuable. For example, in improvement work, strive for quality AND low cost. These do not need to be competing priorities. Keep polarities in the organization balanced by identifying the ones that could impede improvement and then developing a plan to foster their coexistence.

Principle 4: Practice Disciplined Prioritization

Step #1—Analyze Opportunities and Determine Priorities

In a previous step, they have already identified the high-level opportunities of focus for the organization.  Now that these are selected and leadership is mobilized around those areas, it is time to operationalize the vision by prioritizing desired, measurable outcomes within those strategic areas. This will require some deeper analysis to identify specific areas of opportunity. This becomes a fantastic leverage point for engaging front-line stakeholders in shaping and understanding the shared objective. In turn, they will identify passionate individuals for leading the charge of outcomes improvement—they become the most valuable leaders.

Step #2—Allocate Resources

The owners of resources (those who make allocation decisions) throughout the institution need a consistent rubric for making resource allocation decisions (clinical care versus process improvement, for example). To help make the investment successful, leaders need to manage investment allocation across properties. If there’s one thing that maximizes ROI, it’s effective governance.

Identify the key resources the health system needs for improvement work, particularly those high-value assets for which supply doesn’t meet demand. For example, if the organization is committed to data-driven quality improvement, then it might be short on analytics resources (systems, tools, staff, etc.). If I am a director in one of these areas, then I need to know how to process and prioritize requests for my scarce resources. In other words, I need to know how to effectively say “no” and feel supported by defensible, and broadly understood, prioritization criteria. Few things are more frustrating to owners of scarce resources than feeling beholden to more masters than can be reasonably satisfied with limited resources. Effective governance can and should do the favor of establishing the decision-making rubric to protect these often-overburdened resources.

Step #3—Establish Prioritized Teams

Improvement teams comprise the innovators and early adopters who drive improvement and inspire others to follow. These team members play critical roles in permeating the vision and protecting priorities. They build strength and create a snowball effect for the organization’s strategic and operational vision.

The Leadership Team starts with the guidance team and subteams responsible for aligning improvement goals and incentives across the organization. Separate teams take responsibility for specific areas, including oversight, coordination, and direction. Members of the guidance teams are the influencers, champions, and true leaders from each level of governance structure. They support participation in improvement at all levels of the organization and keep the work in check by communicating with the Leadership Team and within their own team with regular meetings and updates.

Step #4—Extend and Sustain Improvement

Outcomes improvement needs to become a way of life at the health system, rather than an isolated project. To ensure that improvement work becomes and stays an integral part of the health system, they’ll need to put practices and processes in place to operationalize and grow ongoing improvement work. They’ll do this by establishing standardized ways of reporting among improvement teams, setting times and methods for communicating to the whole organization, and planning regular re-assessment to monitor ongoing value and accountabilities. And, importantly, they’ll create opportunities to share success, such as having teams present positive outcomes and methods to the guidance team, Leadership, and executives.

Additionally, consider eliminating the term “project” from their vocabulary when talking about improvement efforts. Projects connote a start and an end, whereas these efforts should be ongoing, with dedicated focus and consistent team membership. Many “lean” efforts fail to be sustained because they lead up to some big improvement event that achieves a major goal, but then everyone goes back to their day jobs and the improvements are not sustained.

Why Every Health System Must Prioritize Executive Governance

Effective executive governance lays a strong foundation for decision making, resource allocation, and prioritization that can weather the storm and withstand the unexpected. Just as it’s unwise to invest in high-end finishes on a home with too weak a foundation to protect them, healthcare leaders shouldn’t organize around priorities without the structure to ensure they are successfully implemented and sustained.

The governance structure won’t happen on its own. With the right leadership, however, systemwide understanding of objectives, appropriate rewards for work towards improvement, and strategically driven priorities, organizations can form the structure needed to succeed in outcomes improvement work.

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