CHAPTER 12

CONTROLLING AND
IMPROVING PERFORMANCE

Management of Healthcare Organizations: An Introduction

Third Edition
Peter C. Olden

Copyright © 2019 Foundation of the American Colle

ge of Healthcare Executives. Not for sale.
Learning Objectives
Studying this chapter will help you to
 define and describe control;
 identify types of performance managers control;
 explain how managers control performance using a
three-step approach;
 describe control tools and techniques; and
 understand how Six Sigma, Lean, and high
reliability improve performance.

Copyright © 2019 Foundation of the American

College of Healthcare Executives. Not for sale.
What Is Control?
Control: Monitoring performance and
taking corrective action if performance
does not meet expected standards

Managers do three things in a continual cycle:

1. Set performance standards
2. Measure actual performance and compare to
standards
3. Improve performance if it does not meet
standards
Copyright © 2019 Foundation of the American
College of Healthcare Executives. Not for sale.
Three Dimensions of Performance
 Structure measures: Resources, staff, equipment,
competencies, inputs, facilities; how HCO is set up

 Process measures: What work is done, how work is

done, which activities are done; the HCO in action

 Outcome measures: What happens as a result of

the structures and processes; the results, effects

Copyright © 2019 Foundation of the American

College of Healthcare Executives. Not for sale.
Step 1: Set Performance Standards
 Managers set and use standards when planning,
organizing, staffing, and leading

 Standards based on internal and external factors

 Standards expressed using metrics (numerical

measurements) of things that can be measured

 Standards shown in strategic plans, budgets,

staffing plans, job descriptions, policies, rules,
inventory stock levels, Gantt charts, elsewhere

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College of Healthcare Executives. Not for sale.
Step 2: Measure Actual
Performance and Compare to Standards
Many ways to measure and present data
 Quantitative measures: Counts, frequencies,
percentages, ratios, rankings
• Presented visually in charts, graphs, tables,
scorecards, dashboards
 Qualitative measures: Opinions, feelings, ideas
• presented in focus groups, interviews,
conversations

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College of Healthcare Executives. Not for sale.
Data Sources and Data Capture
 Internal
• Medical records, financial accounts, client registration files
• Departmental records (e.g., workloads, resources used,
staff hours worked, activities, outputs produced)
• Often automatically captured by barcode scanners, mobile
devices, electronic information systems
• Some data not easily available—confidential, scattered
among many departments, not routinely collected
 External
• Licensure inspections, searchable databases, supply chain
records, customers’ feedback, Medicare ratings
• Social media, phone calls, surveys of customers, online
digital databases, town hall meetings, focus groups

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College of Healthcare Executives. Not for sale.
Step 3: Improve Performance
if It Does Not Meet Standards
 Ensure standards still appropriate; perhaps adjust
 To improve performance:
• Apply management tools, methods, theories
• Change structures, processes, or both:
 Job design  Motivation techniques
 Work design  Training
 Organization design  Staffing ratios
 Decentralization
 Work processes
 Performance appraisals
 Standardization
 Project planning
 Team coordination  Leadership style
 Organization culture

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College of Healthcare Executives. Not for sale.
Cause-and-Effect Diagram

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College of Healthcare Executives. Not for sale.
 Process Map

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College of Healthcare Executives. Not for sale.
Root Cause Analysis
 Structured problem-solving technique
 Tool to find and fix underlying cause of problem
 Repeatedly ask “Why?” until cause of problem found
A patient received the wrong medication.
• Why?
The doctor prescribed the wrong medication.
• Why?
Relevant information was missing from the patient’s chart.
• Why?
The patient’s lab test results were not entered in the chart.
• Why?
The lab technician sent the results, but they were in transit.

Copyright © 2019 Foundation of the American

College of Healthcare Executives. Not for sale.
Six Sigma
Six Sigma: A performance improvement program to
reduce variation and defects in work processes and
outputs to meet customers’ quality requirements
 Extremely high performance standard:
No more than 3.4 errors / 1,000,000 opportunities
 Six Sigma uses five-step DMAIC cycle
• Define
• Measure
• Analyze
• Improve
• Control

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College of Healthcare Executives. Not for sale.
Lean Production
Lean production: Design of work processes
to reduce waste, increase efficiency and speed,
and thereby produce more value for customers

 Focuses on what is valuable to customers

 Work analyzed to find and reduce waste such as:
 Unnecessary motion  Overproduction
 Idle time  Underprocessing
 Transition time  Wait time
 Defects  Transit time
 Inventory

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College of Healthcare Executives. Not for sale.
Value Stream Mapping
Value stream mapping: A visual diagram of all steps
in a process used to transform inputs to outputs
when creating a product or service for customers

 Lean examines processes and workflows (value streams) that

provide service to customers
 Each step in a value stream (e.g., patient registration)
analyzed using value stream mapping tool
 Value stream map identifies waste in workflow
 Lean team then redesigns value stream to:
• Reduce waste
• Add value (e.g., efficiency, speed, quality) for customers

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College of Healthcare Executives. Not for sale.
High Reliability
 High reliability organizations operate. . .
• In complex, high-hazard domains
• For extended periods
• Without serious accidents or catastrophic failures

 High reliability
• Not a project that begins and ends
• A continual way of thinking and behaving
• Five essential characteristics
 Preoccupation with failure
 Reluctance to simplify
 Sensitivity to operations
 Deference to expertise
 Commitment to resilience

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College of Healthcare Executives. Not for sale.
Controlling People
Controlling organizational performance
requires controlling people’s performance
 How do managers control people’s performance?
• Mission, vision, goals, plans
• Job descriptions, procedures, rules
• Organization structure
• Training
• Performance appraisals
• Progressive discipline
• Leadership, supervision
• Motivation
• Power, authority
• Culture, values, ethics

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College of Healthcare Executives. Not for sale.
For Your Toolbox
 Three-step control method
 Structure, process, outcome measures
 Standards, targets, key performance indicators
 Cause-and-effect diagram
 Process map
 Root cause analysis
 Six Sigma
 DMAIC cycle
 Lean production
 Value stream mapping
 High-reliability organization

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College of Healthcare Executives. Not for sale.
One More Time
 Managers at all levels control performance of workers, work
units, departments, and entire organization.
 Three-step process:
• Set performance standards.
• Measure performance and compare to standards.
• Improve performance if it does not meet standards.
 Data collection and visualization systems are needed for
internal and external data.
 Cause-and-effect diagram, process map, root cause analysis,
and value stream mapping help analyze problems.
 Six Sigma, Lean, and high-reliability approaches help control
and improve performance.

Copyright © 2019 Foundation of the American

College of Healthcare Executives. Not for sale.