Falls Memorial Hospital, International Falls, Minnesota
Turnover, rising costs and falling reimbursements gradually weakened Falls Memorial Hospital. After years of operating losses, the organization was also losing the confidence of its community, employees and staff.
Changing the Focus
As the hospital struggled with only five days cash on hand, its auditors gave a grim prognosis: one year of viability. Recruiting a new CEO and CFO, QHR assisted a turnaround.
“We were bogged down in crisis management,” relates CFO Nancy Treacy. “To save the hospital, we knew we had to get proactive.”
Attending a QHR educational session, board members and the senior team learned about dashboards. CFO Nancy Treacy decided to research further.
“There were times when we wondered how we would meet payroll,” former board chair Dr. Jon Talsness remembers. “But QHR brought us excellent leaders. And every time we had a problem, QHR had a service to help.”
Financial data, according to Treacy, are lag indicators; she developed a balanced scorecard that includes lead indicators. So the teamcould start anticipating, rather than reacting.
Strategic Progress
Investing in a marketing study to begin the planning process, then CEO Mary Klimp and Treacy kept everyone informed of their vision and the hospital’s position.They created a scorecard that balances initiatives in four areas:
- Internal processes
- Customer service
- Financial
- Learning and growth
QHR’s experts supported the team with onsite analyses, management action plans and implementation assistance in many areas, such as:
- Business office
- Medical records
- Human resources
- Strategic planning
- Critical access hospital conversion
- Nursing operations
“The turnaround was just the beginning for us,” current CEO Ty Erickson comments. “It’s given us the opportunity to keep improving, expand services, plan a new hospital… and create a good place to work, practice medicine, and receive care. It’s working: our local Chamber just selected us as the large employer of the year.”
Why the Balanced Scorecard
The team understood that in crisis situations even the best plans often gather dust on a shelf.To manage to goals, the team would have to make the strategic plan a part of the organization’s mind set.
More than a measurement tool, the balanced scorecard is a communication tool. Illustrating a three-year plan on a one-page grid, it lists each goal alongside the initiatives that support it, and trends progress with a simple line graph. Color coded, it is also a quick reference: it shows which initiatives meet or exceed targets, and which need closer scrutiny.
“The balanced scorecard is something all our stakeholders could understand,” explains Mary Klimp, then CEO. “Everyone from trustees to department managers to staff and employees could easily see our progress, and how their work contributed to it.”
The tool enabled a change in culture. “The hospital had been functioning in a scarcity mentality. Everyone was divided, vying for a piece of the pie,”Treacy describes. “When we showed them the scorecard, they saw the whole picture – and started working toward common goals.”
Success Builds Success
Using QHR’s Learning Institute programs, the team raised managers’ expertise and began to achieve goals.
“We couldn’t have done it without QHR,” affirms Treacy. “The support was unbelievable. All our systems needed evaluating. The management action plans really made the difference. And QHR was always there, encouraging us.”
Leadership, communication and education generated mounting enthusiasm. “When the business office staff got A/R days below 50 once,”Treacy points out, “they knew they could do it again.”The same was true in other departments with patient satisfaction, and many other goals. As targets were reached, resulting financial improvements enabled the hospital to fund longneglected equipment needs, like new CAT scan and ultrasound equipment.The positive energy and newfound prosperity attracted more specialists, allowing the hospital to grow volumes and expand services, including surgical, occupational health and sleep lab capabilities.
- Operating margin rose from a 7 year average -0.8 percent to 9 percent over the past five years
- Days cash on hand has risen from 5 to 178
- Average age of plant dropped from 18 to 8.8 years
- The hospital is debt-free and poised for a major building project
The communication and education continue: both CEO and CFO participate in every new employee orientation. “I show them the budget,”Treacy explains. “I want them to understand what things cost…and that they share responsibility for our success.”
Measured Steps to the Next Level
With steady growth and stable financials, Falls Memorial is poised for its next step: a new facility.
“As we’re planning our new hospital, we’re also working on taking the balanced scorecard to the next level,” reveals Erickson.“We’re developing more specific indicators and tying goals to performance evaluations. It’s all about aligning our work with our strategic goals… and achieving more.”
The Secret of Success
Falls Memorial Hospital turned crisis into victory. Leaders
share insight…
“The scorecard is a reflection of our culture: no secrets,” explains CEO Ty Erickson, “and plenty of accountability.”
“A great day for me was when a housekeeper stopped me in the hall and said ‘we’re doing better now, aren’t we?’” Mary Klimp, former CEO smiles. “She’d seen a lot of green on the scorecard, and she got it.”
“When employees saw we had a plan,” comments CFO Nancy Treacy, “they got behind it. The unions even agreed to forego a raise to help the process.”
““QHR is very good at finding us the right people and supporting them with services to achieve amazing results.”
