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McKinsey&Compa ny LSE CENTRE for ECONOMIC PERFORMANCE •Healthcare management practice findings •Management •really matters Management practice is strongly related to: Clinical outcomes Patient satisfaction Hospital financial performance – •– •– UK healthcare management practice: Good UK average score Vs others Large intra-country variation creates a real opportunity •for improvement – •There is large •variation •Improvement •is possible – 5 factors are associated with better management practice: Share of clinically trained managers Degree of competition Hospital size Managerial autonomy Hospital ownership – •– •– •– •– •9 •There is a strong relationship between management •practice and health outcomes •UK heart attack mortality rates •10 5 •9 5 •9 5 •9 0 •3rd •2nd •Botto •Top m •quartil •quartil •quartil •quartil e e •Management practice score e e •9 •Good management is correlated with better clinical and •financial performance •A one point increase in management practice is associated with UK Hospitals •▪6.5% reduction in risk adjusted 30 days AMI mortality rates •▪33% increase in income per bed •▪20% increase in the probability that the hospital is above average •in terms of patients satisfaction • US Hospitals •▪7% reduction in risk adjusted 30 days AMI mortality rates1 •▪14% increase in EBITDA per bed •▪0.8 increase in the percentage of people that would recommend •the hospital • •9 There is a wide variation in average hospital management practice score by country Average Average with controls • •Management practice score –by country US •3.0 0 1.43 UK •2.8 2 1.22 Sweden 1.24 0 Germany France . 9 9 •.6 2 4 •22.5 Canada Italy •2.6 8 1 . 0 6 2.48 0.86 2.40 0.75 •9 •The UK achieves high management practice scores relative •to direct health expenditure •Government health expenditure per capita, 2006 •$ •6,00 0 •U S •5,00 0 •4,00 0 •3,00 0 •2,00 0 •Franc e •Ital y •German y •Canad a •0.8 0.9 1.0 1.11.2 •Swede n •U K •1.3 1.4 1.5 •Management practice score •9 •There is an even bigger variation of management practice •scores within countries •9 •Hospitals with more clinicians as managers have better •management •Management score relative to national mean •0.9 7 •1.0 0 •1.0 1 •1.0 2 •3rd •2nd •Botto •Top m •quartil •quartil •quartil •quartil e a clinicaledegree •Proportion ofemanagers with e •9 •Increases in clinically trained managers is correlated with •improved management practices •Change in management practice score1 •8.3 8 •9.3 5 •1.2 1 •0.3 1 •3rd •2nd •Botto •Top m •quartil •quartil •quartil •quartil e e •Changeein the proportion of managers e •with a clinical degree1 •1 Percent •9 •There is wide variation in the prevalence of clinically •trained managers by country • •Percentage of managers with a clinical degree1 Sweden 93 US 74 Canada 74 Germany 71 France 64 UK 58 •1 Italy excluded as it is a legal requirement that all general managers have clinical degrees •9 •Tougher competition appears to be good for management •Management practice score •2.5 9 •2.6 9 •2.8 2 •None 1 to 5 54 to 10 •Number of competitors1 •2.9 0 •More •than 10 •1 As perceived by the manager. •14 •There is a strong relationship between hospital size and •management practice •Management practice score •2.4 4 •2.6 5 •2.7 1 •<100 100-499 500-1,499 •2.8 0 •>1,49 9 •Number of employees1 •1 Directly employed by the hospital •14 •Managerial Autonomy is correlated with management •practice •Managerial Autonomy •0.2 9 •0.1 4 •0.07 •0.31 •2nd •3rd •Botto •Top m •quartil •quartil •quartil •quartil e e e •Management practice score e •14 •Private hospitals tend to have higher management practice •scores •Management practice •2.9 4 •2.6 0 •Private1Public •Hospital ownership •1 Private includes both for profit and not for profit organization •14 •BREAKOUT: Applying the insights in your hospitals •Horizon 2 •Horizon 3 • •Horizon 1 • •Increase share of clinically trained managers • ▪ Create programmes to give clinicians hospital management training (e.g., field and forum) • ▪ Develop explicit succession criteria and planning based on both clinical and managerial •competencies •Increase managerial •autonomy •▪ Strengthen service •line management, •especially talent and performance management • • • • • • • • • • • • • •Create internal proxies for external factors • ▪ Introduce a heightened sense of performance competition via performance transparency based on relevant managerial metrics and data (Competition) • ▪ Consider applying elements of private sector incentive systems (e.g., differential •compensation) (Private) • ▪ Manage the reputation and reality of being a “centre of excellence” (Size) •14 •McKinsey’s OHI survey can help you set a baseline for •Healthcare and Social •Performance and Health across your Assistance Sector (n=6,946) •0 25 50 75 100 hospital •General Medical and •Direction •Alignment Surgical Hospitals (n=4,733) •Leadership •Envt & Values •Accountabilit y •Execution •Coord & Control •Capabilitie s •Motivation •Innovation •Renewal •External Orient •Not Effective •SOURCE: Imperial Healthcare Organizational Health Index Survey (n=256) 15 •Common •Superior •Distinctive