Execs see performances improve, but sustainabilty is key

March 1, 2005

While many managed care executives might have seen performance improve in recent years, driven by the various improvement initiatives that they have put in place, the number one challenge boils down to the successful execution of these initiatives to drive results that can be sustained over the longer term, according to a new survey.

NEW YORK - While many managed care executives might have seen performance improve in recent years, driven by the various improvement initiatives that they have put in place, the number one challenge boils down to the successful execution of these initiatives to drive results that can be sustained over the longer term, according to a new survey.

"A plethora of initiatives in the coming years isn't going to have the senior executives realize the full benefits of their investments for the longer term," according to Michael Wootton, lead analyst, Celerant Consulting, a Lexington, Mass.-based management consulting firm specializing in operational performance.

According to Wootton, the keys to driving the sustainability will be:

The survey found that a large percentage of senior executives (demographics of the study were 276 senior operating executives at companies across eight key industries in the United States; all holding roles with operational responsibility; 50% at C level) stated that performance improvement initiatives they had undertaken in past three years had failed to achieve the strategic business and financial objectives they were designed to support. Forty-six percent of senior executives in healthcare (30 respondents) said performance improvement initiatives had failed to achieve the strategic/business objectives they were designed to support. More than one-third of senior executives in life sciences (30 respondents) said the same.

However, despite the disappointing business results, Wootton says that the same executives judged the improvement initiatives a success. "This suggests that operational improvement initiatives are inappropriately measured; poorly understood; and ultimately, they have been poorly executed in terms of the strategies they are intended to serve," he says.

The survey also asked the respondents to identify up to three of the most important strategic objectives that performance improvement was intended to achieve. For healthcare it was improving customer satisfaction (67% vs. 61% overall) and improving operational efficiency (57% vs. 46% overall).

RAISE THE BAR "Executives will continue to focus on continuing to raise the bar in terms of their ability to deliver outstanding levels of customer service," Wootton says. "They are doing this by focusing their attention on the application of Six Sigma tools to drive better levels of customer service, and to realize efficiencies across their operations. At group level, these tools are being applied to reduce 'complexity' and the number of process steps in the administrative side of their organizations [back office] and to process claims quicker. At the individual hospital level, these tools are being applied to reduce patient waiting time, optimize use of their infrastructure-bed utilization for example."

"Senior executives in the industry are confident that 2005 will see top-line growth," Wootton says. Their ability to generate cost-benefits on the basis of major economies of scale; their move to introduce new and broader services to meet the demands of an increasingly demanding end-user; and significantly greater awareness and education of the general public of services available are helping to drive this confidence, Wootton says.