Key Performance Indicators (KPIs)

Achieving the future state requires developing and instituting accurate, reliable, responsive, sensitive, valid, consistent, and cost-effective Key Performance Indicators (KPIs) that are seamlessly aligned with the established strategic goals. Carefully selected and manageable KPIs support evidence-based decision making, facilitate methodical evaluation and improvement of organizational performance and enable continual monitoring and timely adjustments to the rapidly changing external and internal business environment. KPIs provide a foundation for managing operations, controlling operational costs and monitoring other aspects of organizational performance including the quality of patient care, access to services, innovation, patient experience, staff engagement, environmental sustainability, and many others. The scope of measurement, feedback loops, continuous evaluation methods, and KPI presentation formats should be tailored to the target audiences that may have diverse aims and needs. Providing guidance on the appropriate interpretation of KPIs, communicating limitations of data analysis and securing staff engagement in development and data quality assurance activities can significantly reduce the risks of misapplication. To take full advantage of KPIs, it is essential to establish a capable measurement system with clear roles and responsibilities and precisely defined processes for systematic collection and management of data. Ongoing effort is required to enhance the accuracy and precision of measurement methods, manage evolving risks and ensure appropriateness, security, confidentiality, and integrity of data. The measurement system and associated KPIs need to be flexible and able to provide accurate, objective, and timely information that can be used to positively and proactively influence results.

Balanced Scorecard, originally introduced by Kaplan and Norton (1996), is a valuable performance management tool used to align strategic initiatives, convert strategic goals into a logical set of performance indicators, facilitate constructive feedback, monitor progress, and communicate results. It needs to be customized to track overall organizational performance from different perspectives that include not only traditional financial measures, but also a combination of other types of indicators that are important to the organization’s success including internal processes, clinical care, learning and growth. A seamless integration of Balanced Scorecard with Business Intelligence (BI) technical infrastructure, technologies and applications, capacity to analyze, interpret and leverage the massive amounts of data and ability to make data-driven decisions are some of the critical success factors to achieve the desired future state. Balanced Scorecard also provides the vehicle by which organizations can integrate the Donabedian framework to facilitate informed decision making and drive continuous improvement. The Donabedian framework is a classic conceptual model that uses the triad of structure, process, and outcome indicators to measure, evaluate and improve the quality of care. Structure Indicators capture various organizational factors that affect delivery of care such as physical facilities, information technology systems, equipment, human resources, financial resources, staff to patient ratios, operating times, and staff training programs. Process Indicators reflect key organizational processes, standards and evidence-based clinical practices that are necessary for the effective, timely and safe delivery of care. There is a large number of processes of interest, for instance, patient identification, medication reconciliation, administration of medication, infection control, preventive maintenance, medical device reprocessing, diagnostic imaging, verification processes for high-risk procedures, incident reporting, disclosure of adverse events, and many others. Outcome Indicators are used to identify and evaluate an observable change, both positive and negative, in the health status of patients and populations that is attributable to the course of medical treatment, intervention or surgical procedure. For example, healthcare organizations often measure surgical mortality rates, procedural morbidity rates, hospital-acquired infections, time to recovery, pressure injuries, ventilator associated pneumonia (VAP) rates, adverse drug events per 1,000 doses, readmission rates, peripheral intravenous infiltrations and extravasations (PIVIEs), unplanned extubations, etc. These and other similar indicators have to be carefully interpreted because it is rather difficult to establish conclusive causal relationships between healthcare processes and outcomes. The outcome indicators may be confounded by the impact of time lags, small sample size, existing co-morbidities, and other issues related to association, correlation and causation. Balancing Indicators are used to ensure that changes designed to improve one part of the system are not causing unexpected problems in other parts of the system. An example of a balancing indicator would be measuring unplanned hospital readmission rates following implementation of the project to reduce length of hospital stay.

Strategic Indicators help organizational leaders monitor progress towards achieving strategic goals and understand where an organization is now in relation to the desired future state. Operational Indicators are developed to measure specific areas of organizational performance on an hourly, daily, weekly and monthly basis, monitor key process inputs and outputs, recognize trends and patterns, take corrective actions, and adjust processes to eliminate special causes of variation. It is imperative to align the lower level operational indicators with the higher level strategic indicators and make it possible for people to see how they contribute to the organization’s success. One aspect of the strategic planning process is defining short-term and long-term performance projections for the KPIs and comparing them with the current or projected performance of similar organizations. Any existing or projected gaps in performance, compared against performance of similar organizations, should be carefully reviewed and addressed in the strategic plan. Using the right comparative data from a balanced mix of both Internal and External Indicators can stimulate learning and innovation required to make quantum leaps in performance. The underlying rationale for establishing Leading Indicators is that organizations need information on probable future outcomes and identify areas where timely, proactive and direct leadership intervention is possible in order to achieve desired outcomes. On the other hand, Lagging Indicators draw attention to outputs and provide information about what has already happened. They are relatively easy to identify, measure and compare but hard to influence or directly improve. According to Solberg, Mosser and McDonald (1997), Research Indicators require enormous effort to verify that the measures and data systems are precise, reliable and valid. This should not come as a surprise because the purpose of the original research is to produce new knowledge of widely generalizable or universal value. There is the need to control all possible variables other than those being studied; therefore, research subjects are selected by strict adherence to explicit criteria for inclusion and exclusion and are usually a small subset of all potential subjects. The research indicators tend to be too slow, too expensive and too elaborate to be useful for improving processes within a single healthcare institution. Improvement Indicators are generally used to identify opportunities for improvement, obtain baseline measurements and evaluate outcomes after a new and improved process has been implemented. Organizations must ensure that the research and improvement indicators are fit for their intended purposes with careful consideration of the potential implications. The right mix of quantitative and qualitative indicators is important to get a better overview of the organizational performance. Quantitative Indicators capture useful numerical data and provide a basis for statistical analysis. Qualitative Indicators complement quantitative data and help explain why people act in certain ways by providing context, deeper insights and better understanding of the factors that influence behaviours, perceptions, attitudes, and feelings. Finally, it should be noted that there is a great deal of overlap among the different types of indicators. For instance, depending on the organizational context and application, surgical mortality rates and procedural morbidity rates could be categorized as outcome, strategic, internal, lagging, improvement, and quantitative indicators.