Value measurement in health care: a new perspective

Healthcare Financial Management, August, 1999 by Jeffrey E. Michelman, Patricia E. Rausch, Thomas L. Barton

In addition to reorganization around core business processes, teams must be self-managed, and have proper support and training, team-based rewards, and empowerment. Empowerment allows employees to take ownership of processes and be responsible for process performance. Quality and a value-adding focus become individualized rather than the next person's responsibility.

Self-managed teams further move the organizational structure away from command and control. In a command-and-control structure, employee rank provides power within the organization; however, this mentality is no longer desirable. Instead, the focus is shifting to employee responsibility and contribution. This new mentality can be fostered by allowing teams to participate in setting their own performance targets.

Of course, teams must be supported by management, who should behave more like coaches. For example, employees must have training to facilitate an understanding of how each employee's job skills fit along the continuum of care, and how value is provided by their work efforts. After providing training, the managers coach the employees toward continuous process improvement along the continuum of care. For successful teams, the coach serves to align individual work efforts to meet team-based targets. Individual motivation to participate and function as a team results from team-based rewards rather than individual recognition.

Conclusion

Defining success in terms of customer satisfaction ensures that decisions will take the long view rather than focus on short-term profitability. A horizontal information system is a tool that can provide information on value- and non-value-adding work activities. By understanding and eliminating the processes that create non-value-adding work, a healthcare organization can focus on success-oriented decision making and continuous process improvement.

a. This analysis is based on an adaptation of: Hope, Tony, and Hope, Jeremy, Transforming the Bottom Line, Boston, Massachusetts: Harvard Business School Press, 1996.

b. Cf. Institutes of Medicine, The Computer-Based Patient Record, Washington, D.C.: National Academy Press, 1991.

ABOUT THE AUTHORS

Jeffrey E. Michelman, PhD, CPA, CMA, is associate dean and associate professor of accounting, College of Business Administration, University of North Florida, Jacksonville, Florida, a member of HFMA's Principles and Practices Board, and a member of HFMA's Florida Chapter.

Patricia E. Rausch, MBA, CPA, is a senior accountant, KPMG LLP, Jacksonville, Florida, and a member of HFMA's Florida Chapter.

Thomas L. Barton, PhD, CPA, is Kip Professor of accounting, College of Business Administration, University of North Florida, Jacksonville, Florida.