Why Health Care Needs Baldrige

There are at least two reasons health care organizations account for roughly half of all Baldrige Award applications: Health care in the U.S. is expensive and the quality is poor. Health care organizations that recognize the need to lower their costs while improving quality see the Baldrige model as a systemic tool for accomplishing both.

The scope of the problem is brilliantly described in two 10-part series by Aaron Carroll on The Incidental Economist.

In the first series, “What makes the US health care system so expensive,” Carroll makes the point that, indeed, health care in the United States is very expensive when compared to the 30 countries in the Organization of Economic Cooperation and Development (OECD). Those 30 countries are bunched together between spending 6 and 11% of their Gross Domestic Product on health care. The one outlier, at 16%, is the United States.

Some argue that we should be spending more on health care. Carroll agrees:

“We are richer, and it is appropriate that we therefore spend more. We would expect to get better outcomes for that extra spending, which would also be appropriate. But as you can see [in Figure 1—click on “continued” at the end of this article to view it], every other country lines up on an almost straight line. There is a very stable relationship between how much money a country has in terms of GDP per capita, and how much it spends on health care.”

Thirty countries line up along the line. The U.S. doesn’t. One could easily argue that the…

Creating a Balanced Scorecard

Performance measurement improved significantly with the advent of the balanced scorecard. Before that, no matter what an organization did, it tended to emphasize one set of measures at the expense of all others. Businesses focused on financial performance. Schools targeted test scores. Government concentrated on…I have no idea.

Each set of measures was important but just part of a bigger picture, and each a lagging indicator of performance on all of the processes that produced these results.

The balanced scorecard directs leaders’ attention to how their organization operates, and how it operates determines how it will perform. A scorecard is also a powerful tool for aligning the activities of an organization with its vision, mission, goals, and objectives. Most Baldrige Award winners rely on balanced scorecards, along with their strategic plans, to focus everyone on what the organization must do to succeed.

I recently sat in on a Webinar by Stacey Barr, a performance measurement expert, in which someone asked a basic question about how you figure out what to measure. The Baldrige Criteria put it this way: How do you select data and information for tracking daily operations and overall organizational performance?

Barr suggested asking a different question. Rather than thinking about how to measure something, start with your goals and objectives. Make sure they clearly convey what you wish to achieve. Consider words you would use to describe meeting the goals and objectives such as effective, efficient, reliable, quality, engaged, systematic, and sustainable. What does it look like when the goal or…

KEYSTONE: Customer Knowledge

An organization exists to serve customers whether they are called customers, clients, patients, students, constituents, or another name given to people who come to you for your products or services. A key measure of your success is how well you meet your customers’ requirements: Meet or exceed them and you improve satisfaction and loyalty with the benefits these provide; fail to meet their requirements and you lose customers, revenue, or support.

The first order of business, then, is to make sure you know exactly what your customers require. Most organizations don’t. They think they know. After all, they interact with customers every day. They may even be able to produce a list of customer requirements, which should really be called a list of assumptions about customer requirements because few organizations take a systematic approach to identifying, validating, and communicating key customer requirements.

I once worked with a manufacturer that was the worldwide leader in its industry. After completing its award application, I was asked to share my feedback on the application with the senior leadership team. My first bullet said: You do not have rock-solid understanding of customer requirements.

Boy, did they lay into me! “We’re the market leader,” one said, “of course we know what our customers want.” “We have thousands of customer contacts every day,” said another, “and we capture and share information about them daily.” When the initial backlash died down I explained that they did not have any processes for identifying the requirements of their customer groups, validating those requirements, and…