Last Updated 06 Jul 2020

Case Study: Performance Management at Intermountain Healthcare

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Kuan-Chung (Bill) Wu HPM540: Professor Kamke HPM540: Case Study 3: Performance Management at Intermountain Healthcare 1. What is your assessment of the Performance Management system developed at Intermountain Healthcare? - The Performance Management (PM) system developed by Intermountain has become a model for many healthcare organizations. Intermountain’s PM system includes the following elements: 1) Identifying six most important performance criteria, 2) Developing goals for different groups within the organization, and 3) implementing the goals by creating an incentive compensation scheme.

This PM system design has proven to be effective in many perspective, ranging from individual staff to administration and to the organization as a whole. First and most importantly, this PM system aligns Intermoutain’s mission and values/commitments to its employees and their performances. Their employees and administration do not just talk about their values, they live those values – committing to best practice with quality and accountability.

Secondly, this PM system is effective in regards of beneficial and useful as development tool and administrative tool. The system not only allows administration to accountably designed, implemented, reached, and evaluated the goals for different groups in the organization, but also allows employees to engaged and contribute organizational goals by developing their career and earning incentives. As a result, different groups in the organization were able to remain focused on accomplishing all the goals as a whole team.

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Lastly, most employees in Intermountain had positive and fair views for the PM system. For example, employees in Intermountain expressed embarrassment, rather than complaints of not getting incentives, when they did not reach a certain objective, even it was missed by less than 1%. Lastly, this PM system allowed administration and management team at Intermountain to effectively and accurately measure employee performance, such as using balanced scorecard and data shown in Exhibit 8 and 12, as well as the cost of providing services.

The PM system created by Intermountain has served to be a model for healthcare organizations to face future challenges due to the Affordable Care Act as well as other changes in the nature of running a healthcare business. Lastly, they were able to realize the goal of recruiting and retaining the best employees. 2. In what ways could it enhance or detract from the organization's strategic objectives? - There were many ways this method could enhance the organization’s strategic objectives.

First, the important performance dimensions were identified – these constituted the big picture of the organization strategy and allowed the big picture to flow all the way down to every individual staff. Everyone in the organization could all know about organization’s objectives and commit to achieving them. Moreover, as described in a the section of Clinical Goals, this system allowed the goals of five dimensions of performances to flow in a topdown fashion, the goals for the Clinical Goals were developed in a bottom-up fashion.

This enabled the organization to have a continuous circle of performance management loop similar to Figure 10-1 in the textbook, which shows a linkage from organizational strategies to feedbacks collected from organizational results. The ways that this system would detract from organization’s strategic objective is the finance for implementing these strategies, as mentioned in last section of the article. The clinical performance improvement initiative had resulted in revenue losses.

If Intermountain did not have enough cash on hand, this performance management system would not work so efficiently. The other way that could detract the strategic objective is that data could be manipulated to make the performances 1|Page Kuan-Chung (Bill) Wu HPM540: Professor Kamke looked well on the graph/table/figures. This is because the incentives is generated by good data, and it is very easy for these data to be manipulated. 3. How are physician incentives at Intermountain unique? Why did they take a ifferent approach to physician performance as compared to other employees? - Physician incentives at Intermountain are unique because physicians are divided into two groups (employed and non-employed aligned) and incentive plans designed for each group have different programs. For employed physicians, three approaches were implemented for incentives: 1) Peer pressure, in which open discussion where held to examine physicians’ performance, 2) Public Recognition, in which best practice was recognized at the corporate level, and 3) monetary incentives for meeting clinical standards.

For non-employed, aligned physicians, who accounts for 2/3 all physicians using Intermountain, the organization has adopted the strategy to engage these physicians through peer-to-peer competition and a reliance on academic literature and internal data in a given clinical area. Here we can see that there are a lot of physician communication and engagement for supporting physicians to receive incentives, which are different approaches than other employees such as managers and staffs who earns incentives through achieving individual and corporate level goals.

In my opinion, physicians have their incentives different than just monetary incentives is because health care is a service business and physicians are the centers for providing different kinds of services to patients. In many cases, physicians are the decision makers who may influence the outcome of these services. Therefore, it is essential for physicians to know what each other is doing with transparent and evidence-based communications so the effective services can be learned and implemented by different physicians.

Moreover, the increased communication would enhance the aspect of coordinated care which would help both the physician and organizations to reduce the cost of their services. The other reason that different approaches were implemented for physicians might be because they have already been earning high levels of compensation and need something different than monetary incentives, in contrast with those who are in healthcare administration. 4. How might this system also improve the performance appraisal process? -

Performance appraisals are used to assess an employee’s performance and provide a platform for feedback about past, current, and future performance expectations. In Intermountain’s performance management system, there is a continuous goal development and implementation, as well as feedbacks to the senior management. The senior management team then provides recommendations for the group that develops the organization’s goal to make sure what the organization expects for everyone. In other words, the expectations, whether they are past, current, or future, are transparent to all employees.

Another aspect that I believe this system helps to improve the performance appraisal process in its uses. The textbook states that organizations generally use performance appraisal process in two conflicting ways – administrative and developmental. However, Intermountain’s performance management system seemed to resolve this conflicting issue by its incentive compensation scheme. As described by Dan Zuhlke, the Vice President of Intermountain HR, the potential bonus or incentive is based on the fulfillment of the combination of individual level goals and corporate level goals.

This helps to solve the conflict of uses because both administrative and developmental actions can be accomplished simultaneously under this system. Lastly, under the physician incentive system, open discussions and peer-to-peer competition allowed physicians to gain constructive feedback or improvement ideas from others. The physician incentive system essentially served as a virtual platform for care givers to learn what the expectations are. 2|Page

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