THE ART OF

BENCHMARKING
Best practices and bottom line success

Ankur Verma - 40707006

Bhavya Pabby - 40707009
AGENDAS TO DISCUSS
 I. Introduction
 II. When Should You Benchmark?

 III. Evaluating Department Performance

 IV. How Do You Benchmark?

 V. Benchmarking Examples

 VI. Keys to Success

INTRODUCTION TO BENCHMARKING
 A means of comparing performance based on critical success
factors. In medical group practice, benchmarking activities range
from comparing financial and utilization data to clinical and quality
indicators.

 A strategy used to quantify existing performance factors and

compare them against competitors’ practices.” (Raymond
Manganelli and Mark Klein,The Reengineering Handbook, 1994)
ALSO
 A well-defined technique or methodology that, through
experience and research, fosters performance
improvement.

 The continuous systematic process for evaluating the

products, services, or work processes of organizations
that are recognized as representing best practices for
purposes of organizational improvement.
IMPLEMENTING BENCHMARKING
 Total Quality Management (TQM) – Reduce variation
within processes.

 Continuous Quality Improvement (CQI) – Reduce variation

across processes/systems.

 Plan, Do, Check, Act (PDCA) – Redefine processes to

significantly improve performance while reducing variation.

 Six Sigma: Define, Measure, Analyze, Improve, Control,

Replicate – Employ a strict methodology and rigorous
statistical analysis to achieve breakthrough performance.
WHEN TO BENCHMARK?
3 reasons to benchmark performance-

 Verification

 Negotiation

 Performance Improvement
VERIFICATION
 Are our contracts performing as anticipated?

 Are our employees performing as expected?

 Are we in line with budget?

 Are our patients satisfied with our service?

NEGOTIATION
 At what rate should we compensate physicians?

 What productivity expectations should we associate with

compensation?

 What third-party reimbursement level is appropriate?

 What value does our partner (e.g., hospital, health center,

school) derive from our service?
PERFORMANCE IMPROVEMENT

 How can we improve physician productivity?

 How can we improve collections?

 How can we reduce expenses?

 How can we improve facility utilization?

A WORD OF CAUTION!!
 Be cautious in selection of benchmark

 How was the benchmark data collected?

 What errors might exist in the benchmarks?

 How applicable is the benchmark to your circumstances?

 Is the benchmark meaningful?

DEPARTMENT
PERFORMANCE

The potential objectives are-

 Solving operational and management problems.

 Ensuring appropriate management controls.

 Improving organizational performance.

 Setting standards for performance monitoring.

COMPONENTS OF
EVALUATION PROCESS
 Organizational structure.

 Operating procedures.

 Management considerations.

 Financial management.
ORGANIZATIONAL STRUCTURE
Review techniques Potential Issues
Organization charts Formal versus informal
reporting relationships

Job descriptions Span of control

Interviews Efficient grouping of

duties

Surveys Matching duties with

job skills
 OPERATING PROCEDURES
Review techniques Potential issues

Work flow analysis Work load backlogs

Internal controls

Time and effort Duplication of effort

measurement

Surveys Adequate written

procedures

Work load Adequacy of office

throughput automation
measurement
Policy and procedure Physical environment
analysis limitations
MANAGEMENT
CONSIDERATIONS
Review techniques Potential issues
Interviews Morale of management
and staff.

Surveys Employee turnover

Internal Regular, effective staff

Communication Meetings

Training programs

Performance
Evaluation

Strategic vision
FINANCIAL MANAGEMENT
Review techniques Potential issues
Overall organization Unstable financial
financial situation
environment
of operation
Evaluation of costs Adequacy of management
reports

Comparative Trends in operational

Analysis performance

Trend analysis

Review of Reasonableness of cost of

management reports operations
HOW DO YOU BENCHMARK ?

Essential characteristics of a benchmark-

 Integrity
 Consistency
 Validity
 Measures are meaningful
 Sample size is adequate
 Adequate time period
 Similar organizational characteristics
 Transferability
ESSENTIAL OBJECTIVES
OF A BENCHMARK
 Discover the inputs (causes) of a poor quality outcome

 Remove those inputs from the process

 Institute controls so the inputs and poor outcomes do not

return

 Share knowledge regarding specific improvements

across the organization

 Continue the improvement cycle

KEY STEPS TO BENCHMARKING
 DEFINE a serious performance problem or concern
 MEASURE the level of performance (outcomes)

 COMPARE current outcomes to selected benchmarks

 ANALYZE root causes (inputs) of poor performance

 IMPROVE by removing root causes through developing

and implementing redesigned processes/systems
 CONTROL by designing and implementing systems to
prevent root causes/poor outcomes from returning
 CREATE a best practice that fosters ongoing
performance improvement
BENCHMARKING EXAMPLES
Sources of benchmarks-
 Internal

» Comparing against internal benchmarks.

 Competitive

» Comparing against competitors’ practices and/or

performance
 Functional

» Comparing a specific process with a similar one within a

broad range of your industry or business line
 Generic

» Comparing a specific process from unrelated industries or

business lines
ISSUES WITH BENCHMARKING
 How do we differ a benchmark from a trade secret?

 The case of Shanta Biotech Ltd. and Smithkline Beeclan

Co.

 Hepatitis B vaccine-a surface antigen-THE PRODUCT

 Genetic Engg- THE PROCESS

CONTINUED…
 Parameters of the process are:

 Type of yeast

 Environmental conditions

 Maturation period

 India has laws governing process patency, not product

patency
KEYS TO SUCCESS-WHAT
WE’VE LEARNT
 Evaluate departmental issues to identify problems or
concerns
 Select benchmarks that can be used to guide physician or
employee performance and ensure the data can be
meaningfully translated into action
 Translate benchmarking into methodologies and
techniques that create best practice
 Change performance is the essential key, not to grade
performance
 Monitor the results, and if desired outcomes are not
achieved, intervene
 Y O U
A N K
TH