What is Benchmarking and How are Performance Metrics Used for Benchmarking in the Context of RT Department Productivity?
In a previous blog, I went into detail about various metrics and how to assess the validity of metrics when examining Respiratory Department Productivity. Here I’m going to review commonly used metrics in our hospitals and define each, discuss the validity of each, and how to best capture and use these metrics so that you can effectively establish safe and effective staffing levels to ensure high quality, cost-effective, and patient-centric care.
What is benchmarking?
The general definition of benchmarking is the practice of comparing business processes and performance metrics to those organizations considered to be best performing companies, as per predetermined dimensions. Like other business, hospitals utilize organization-level performance dimensions. These performance components typically measure are labor and non-labor expense and then are combined into total expense. I want to note that these performance dimensions when utilized to compare your hospital to other hospitals are reported at the organizational level and at the division or department level. While these are worthy of understanding and tracking by RT leaders, not all of these organization-level performance are relevant and/or translatable at the department level. RT leaders should understand their performance for each of these metrics within their department and understand how they contribute to the organization-level performance.
The questions you might be asking are this: “If my organization operates in a continuous improvement manner and we have shown improvement, why do we need to benchmark?” Secondly, “Can I trust that my department’s operations will be accurately compared to other ‘like’ RT departments?” My response to the first question is that it is important to examine current practices and improve performance, but you really don’t know how well you are doing unless you compare your department to those acknowledged as the ‘best performers’. My response to the second question is to reference an ancient proverb, “Trust, but verify”. For most RT leaders, you’ve had experience with benchmarking and may have been frustrated with the process. The main reason for the frustration is that if inappropriate metrics are used to benchmark, the results cannot be used to benchmark your performance against other RT departments.
To understand how executive leadership and consultants utilize benchmarking, let’s take a look at the various metrics. I’ll examine these as determined, defined, and compared at the organizational level and department level, and discuss what these mean to RT leaders and our services.
Performance metrics are typically addressed by measuring and comparing the domains of labor and non-labor performance and then are combined to create a total performance metric. The metrics typically used include financial performance and productivity. Since I’ve addressed RT clinician productivity in other blogs, I’ll focus on financial performance metrics commonly used and provide comment as to their utility.
As previously discussed, the only validated metric to determine labor and non-labor performance is total procedural time. However, while we as RT leaders understand this, it’s critically important that you understand how the other metrics are utilized to compare your financial performance to other RT departments. Your ability to communicate the validity or lack thereof of each of these metrics, will be essential to understand performance and make decisions to optimize both labor and non-labor resources.
How are performance metrics utilized by hospitals?
- Labor Expense Per Procedure
While we as RT leaders understand that ‘procedures’ are not valid for measuring productivity, the same is true for attempting to measure labor expense per procedure for benchmarking. “Procedure” methodology counts every procedure (whether billable or non-billable) as a ‘1’. RT leaders understand that the labor required to provide an effective nebulizer treatment is a fraction of the time required to care for a ventilated patient for one day. The best performance metric would be achieved if procedural hours are used and labor costs are adjusted based upon geographical differences in wages. RT leaders might discover opportunities when examining their labor costs per procedural hours, with regard to how they utilize regular time, premium pay, and agency staff.
- Labor Expense Per Patient Day
This metric spreads RT labor expense over total inpatient days. It should be noted that most organizations also convert outpatient services to an ‘equivalent inpatient day’ and add this to inpatient days to create total ‘adjusted patient days’. Patient days or adjusted patient days are not valid for use in our profession because of the differences in patient types, acuity etc. Even by adjusting patient days with an acuity modifier (e.g. case mix index), this performance metric is not valid since RTs do not provide care to all patients. Additionally, the time spent by clinical RTs for inpatient and outpatient services varies dramatically between organizations and thus ‘adjusted patient days’ in not appropriate for comparison purposes.
- Non-Labor Expense Per Procedure
Non labor expenses represent all costs other than salaries, (e.g. total expenses minus labor expenses). This includes supplies, equipment, maintenance, training, and administrative overhead costs. It should be noted that capital expenses (e.g. mechanical ventilators, ABG machines, etc.) are not included in any of these performance metrics.
Some believe there is value to use this metric within a department to track and trend performance over time. I’ll suggest to be cautious and to ensure that you have done internal validation. If your mix of procedures (e.g. SVNs, patient-ventilated days) is consistent period to period, you could use this to track and trend your performance. However, this is rarely the case and not illuminating this and communicating to your leadership could result both in errors and inappropriate expectations of performance.
- Non-Labor Expense Per Patient Day
This also reflects the cost of our practice in terms of supply costs and spreads the cost over total patient days. Since not all patients have the same acuity or medical/surgical needs, this is simply not a valid performance metric. The reason for this is not only the difference in patient types and acuity, but also how respiratory care services are ordered for each institution. Some have suggested that this metric could be replaced by ‘total expense per CMI-adjusted patient days or CMI-adjusted patient discharges’. While this may provide better insight into performance at the organization level, it still does not accurately predict respiratory care service utilization within a hospital. As such, this metric is certainly not valid to compare performance between RT departments at two hospitals.
- As for clinical productivity, only ‘procedural time’ based on nationally validated research should be utilized for comparison between organizations.
- While the various financial metrics have value at the organization level for comparison between organizations, these have no value for comparing performance between RT departments.
- Benchmarking can be a valuable tool with regard to comparing your organization and department to other organizations and departments, but only if validated metrics are utilized.
- Based on validated metrics, benchmarking can identify ‘best performers’, and as such, can reveal opportunities for improving your RT department.
- AARC Position Statement: Best Practices in Respiratory Care Productivity and Staffing https://www.aarc.org/wp-content/uploads/2017/03/statement-of-best-practices_productivity-and-staffing.pdf
- AARC Benchmarking: http://www.aarc.org/resources/tools-software/benchmarking/
- AARC Uniform Reporting Manual: http://www.aarc.org/resources/tools-software/standards-development/
Meet The Expert
Garry W. Kauffman, RRT, FAARC, MPA, FACHE
Garry W. Kauffman, RRT, FAARC, MPA, FACHE is a registered respiratory therapist with over 40 years of experience. Garry was selected for the AARC Fellow (FAARC) based upon his contributions to the profession at the national level.
Garry received his MPA from The Pennsylvania State University, and achieved the distinction of board certification in health care (FACHE) from the American College of Healthcare Executives.
Beginning his career as a bedside clinician, Garry has served in clinical, educational, and administrative roles in a variety of healthcare organizations and venues from short-term acute carehospitals, physician practice, ambulatory services, and long-term acute care hospitals. He formedKauffman Consulting, LLC and is the manager of this health care consulting company.
Garry is recognized for numerous journal publications, author/co-author of respiratory care textbook chapters, and as a frequent speaker at the state and national level. Garry has served his profession at the district, state, and national level where he has served in the AARC House of Delegates, AARC Board of Directors, and AARC President. Garry has served his profession in various volunteer roles as the AARC Chartered Affiliate Consultant; AARC Benchmarking Committee; AARC Advanced Practice RT Task Force; AARC Strategic Planning Committee, Respiratory Care author/reviewer; AARCTimes author/reviewer, AARC Uniform Reporting Manual, and ARCF Education Recognition Award Judge, among others.
Garry’s focus continues to be on communicating the value of respiratory care services delivered by Respiratory Therapists by connecting the science of respiratory care, documenting outcomes secondary to our services, and communicating our value to key stakeholders in the health care system.
Garry Kaufmann is a paid consultant of Vapotherm.