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IS YOUR DEPARTMENT “SPECIAL”?
NORMALIZATIONS MATTER.

How Data Accuracy Significantly Impacts Benchmark Comparisons

Our team of Healthcare Industrial Engineers created this newsletter to share the industry’s best practices with leaders who can apply operational efficiencies in their daily work.

If you’ve worked in healthcare operations leadership for more than 18 months, you have likely heard the term “Benchmark.” If you’ve led a department for more than 5 years, you’ve likely been on the wrong side of a benchmark comparison (or know a poor soul who has).

Benchmark data submission

This newsletter explores the data review required to ensure accurate submissions, ultimately supporting useful performance comparisons for all participants.

Top Tip: All hospital departments should participate together in ensuring benchmark submissions accurately reflect their operations. “Dirty” data can inadvertently cause poor staffing decisions from leadership that ultimately impact patient care.

Data accuracy drivers

Psst...Has COVID impacted the accuracy of the information your hospital submits quarterly? Does your unit care for more acute patients? Did you transfer worked hours to a COVID cost center for reimbursement, falsely understating your hours used for the volume? Do you think your peers have asked themselves this question?

Vendor Agnostic Benchmark Submission Tips for Data Accuracy

1) WHAT IS A BENCHMARK?
Benchmark is a term that references a standard by which others are measured. In healthcare, benchmarks come in the form of multiple metrics fed from data submitted by similarly sized participating hospitals for peer comparison. They are typically expressed in a percentile format which identifies how different a participating hospital or department is from their peers, where the 50th percentile is the most common, the 25th percentile is a low outlier, and the 75th percentile is a high outlier.

Performance distribution

Benchmarking vendors compile staffing hours and workload volumes for similar sized departments into peer groups based on quarterly data submissions from participating hospitals. Consolidated peer group comparison information is then distributed to participating hospitals to review.

Benchmark data submission and distribution

The most commonly referenced benchmark metrics in healthcare tend to be in the area of labor, as labor represents 50% of expenses for hospitals and is widely considered the most controllable expense. Many hospital finance leaders purchase data from benchmarking vendors to identify savings opportunities.

Benchmark data can impact budget

When setting a productivity target for a department, it is common to ask the question, “How is everyone else staffing this type of department?” Labor benchmark comparisons can help us answer this question.

2) IS YOUR DEPARTMENT “SPECIAL”? NORMALIZATIONS MATTER.
Each functional area in the hospital is provided a benchmarking definition by the benchmarking vendor. The process of ensuring that all FTEs in each department are categorized based on the benchmark definition is called “normalization.” Accurate normalizations are critical to ensure we are not comparing apples to oranges. When data is not normalized or is normalized incorrectly by a submitting hospital, peer comparisons are skewed.

Skewed peer comparisons

Examples of common normalizations include transportation FTEs in the radiology department, embedded EVS staff members in the OR or ED, embedded specialized IT staff members, and registration staff embedded in the Emergency Department.

Common normalizations

Overlooked normalizations may result in a department appearing overstaffed compared to its peers, while the department that should have reported the FTEs according to the definition appears understaffed. Bottom line, if you do not complete department normalization reviews according to your vendor’s functional area definition (and if your peers do not complete normalizations), the comparison data is not very useful.

3) REVIEWING "UNBENCHMARKED" FTEs
During normalization activities, it is common to find that not every hospital FTE fits perfectly into one of the functional areas provided by benchmarking vendors. Examples may include Nurse Navigators, Physician Assistants, or any other type of FTE that is not necessarily standard in all hospitals. When FTEs do not have a functional area “home,” we typically assign these FTEs to an “unbenchmarked” or “other” department during normalization activities. It is important to regularly review these FTEs to capture any areas that may have an available functional reporting groups and assign them appropriately.

4) STATS MATTER
Each functional group has a statistic definition for volumes: what to count and how to count it. It is important that all submitting hospitals adhere to these definitions to ensure “apples to apples” comparisons.

For example, a hospital department may count patient visits as well as patient procedures in their area. One patient may have multiple procedures, which means the procedure count is higher than the visit count. If the hospital submits the procedure volume, when the benchmark statistic definition requires number of visits, their department will appear artificially understaffed compared to peers. Conversely, if the required statistic is procedures but a hospital submits visits, they will inadvertently show as a poor performer in the benchmark labor comparison.

It is important to review and cross check the stats your hospital submits to the benchmark vendor’s definitions for the functional area annually.

5) ALTERNATIVE OR SECONDARY STAT SELECTION
Different statistics can tell very different staffing stories for a department. As a result, many departments measure secondary or alternative statistics – Environmental Services is a great example, using either Adjusted Patient Days or Square Footage to measure their workload. Pharmacy often has even more choices: Adjusted Admissions, Adjusted Patient Days, and Doses Dispensed, to name a few.

Some benchmarking vendors offer alternative statistic selection to allow hospitals more flexibility in their comparisons. It is a good idea to review secondary statistics for departments who may be falling out of their peer groups (either high or low) to get the full picture of performance.

Alternate statistics

For example, L&D at one hospital may do many gynecology procedures, where another hospital may do these procedures outside of L&D. If the benchmark comparison is total births, the facility who is performing gynecology procedures may look overstaffed when comparing hours/birth. In this case, it is important to select a secondary stat that would provide another slice of the data.

We hope these benchmarking tips will help you make the most out of your next staffing review. For more information about benchmarking, follow us on LinkedIn!

Issue #13: Is Your Department “Special”? Normalizations Matter.

Our team of Healthcare Industrial Engineers created this newsletter to share the industry’s best practices with leaders who can apply operational efficiencies in their daily work.