The Efficiency Trap

There is a story about a man who, soon after China began to allow tourists, decided to run across mainland China.  The Chinese approved what they considered a rather odd request as most Chinese at the time wondered why any sane person would want to do such a thing.

Several weeks into the effort the young man became ill and almost died.  The body style that made the young man a virtual running machine lacked the body fat to sustain him through an extended illness.  So the young man that to many appeared the picture of good health came very close to death because he lacked the reserves his body needed in bad times.

There is a parallel in the ambulatory surgery center  market today.  As Medicare facility reimbursement continues to seek a bottom we find centers across the country reacting to falling reimbursement.  Poorly run and inefficient organizations now have their own survival at stake and begin to find time for the work it takes to measure themselves, to identify areas of inefficiency, and to apply staff and encourage physicians to become more efficient.  But what about those organizations with no fat to cut?

Like the young man running across China these organizations find it more difficult to find the “fat” needed to buffer decreased reimbursement so that incremental efficiency is harder and harder to discover.  Year-to-year performance measurements are wholly inadequate to provide an overall view of how well the organization is doing.  In such a construct efficiency gains in previous periods are perversely punished in all future periods.  What is needed is a way to place the organization in contrast to other organizations of a similar nature.

That is where benchmarking comes in.  Good benchmarking drops the organization on the continuum of inefficient to efficient operations and places year-to-year comparisons in proper perspective.   The problem is that is it hard to find benchmarking that is operationally focused.  Most benchmarking efforts are clinically or financially focused and provide only marginal information that can be used operationally to improve the efficiency of the organization.

What is needed is to have more operational individuals engage benchmarking efforts and explain what they need.   Organizations which provide benchmarking opportunities are eager to understand those measure that will encourage participation.  Find a benchmarking effort and stick with it.  Get involved.

If you don’t you will eventually find that driving out cost creates your own efficiency trap.