The Hidden Costs of Performance Benchmarks
Facing declining revenues and donations and rising costs, hospitals through the country are struggling to turn a profit. To assist, many hospital executives and boards of directors purchase performance improvement benchmarks to pinpoint their highest costs and to find potential savings. These benchmarks compare the cost structure of different hospitals nationally at various levels of detail.
Applied properly, hospital benchmarks are effective in targeting specific high-cost drivers. Administrators can see how their individual hospital’s costs are out of line compared to their peer group’s costs.However, before purchasing a particular benchmark, the buyer should consider the hidden costs involved and weigh them against the other available tools:
The hidden costs of benchmarks
HMC competitors may offer benchmarks for the same base price as we do. However, the competitors often charge extra for the special features and analytical offerings that are essential for a successful performance improvement initiative. HMC’s benchmarks include these features and analyses with the base cost of the product: There are no hidden costs or post-purchase up-sell surprises.
The cost for a hospital’s own staff to load, map, and validate data is very high. Frequently, the data preparation costs even exceed the benchmark tool’s own price tag. However, HMC already has sophisticated and proven tools, with the requisite expertise, so a hospital staff doesn’t bear the data burden. HMC offers these tools and skills at a competitive price.
Another frequent problem arises when benchmark companies take unvalidated data from hospitals. Using unreliable data results in errors when generating cost data and improvement targets. This causes confusion among hospital staff, who won’t have faith in the benchmark numbers. In turn, managers will consider the benchmarks unreliable and won’t commit to the performance improvement goals, resulting in yet another huge hidden cost.
HMC loads, maps, and verifies the data submitted by all our hospitals. This results in a trusted single version of the truth the staff will believe in, and take action on.
The hidden cost implementation delay
Each day a hospital continues its low-quality or inefficient processes costs it money that could have been saved. Any implementation delay for the performance improvement benchmark tools is just another hidden cost for the hospital. A hospital usually requires a month of data preparation work before it can submit its data to a benchmark provider. In turn, there will be no actionable benchmarks for at least three months after the initial purchase of the tools. For example, if a hospital benchmark identifies $1.2 million in savings opportunity, a two-month rollout delay equals a hidden cost of $200,000. That amount far exceeds the price tag of the benchmarking product.
In contrast, HMC’s efficient data preparation systems and processes shave time to benchmark delivery. Benchmarks arrive at your fingertips in one month and enable you to start saving money immediately. HMC’s benchmarks provide all required features in the base cost of the products, have very low cost of data preparation costs, and are delivered without implementation delay.
The result: even if HMC’s competitors charged nothing, HMC’s overall costs would still be much lower than theirs. Moreover, HMC offers more features and capabilities than any other provider in the market.