Is it a Metric or a Key Performance Indicator?

sgruber-200 (1)By Sarianne Gruber
Twitter: @subtleimpact

Beyond the numbers – measuring the right things
Identifying appropriate Key Performance Indicators (KPIs) in healthcare is not a trivial task. And when it relates to improving healthcare quality and operational performance, few tasks are as important.

KPIs are often confused with general metrics just because you can measure them – although there is a very important distinction.  I like to consider metrics as what information you use to manage a particular service or as a measure that represents the workings of your organization in relation to one or more components.

A Key Performance Indicator (KPI) goes beyond this, however, by tying into the goals of an organization. In other words, a KPI should:

  • be quantifiable
  • reflect critical success factors
  • show progress towards (or, away from) organizational goals,  and
  • evaluate performance over a designated time period.

What distinguishes a KPI from a “standard” metric is that a KPI is tied to a definable and agreed upon target.  Components for a KPI can include volume, cost, timeliness, quality, or satisfaction. A KPI will show how far a metric is above or below a pre-determined target.  KPIs are usually shown as a ratio of actual to target.

A KPI example
Consider a Healthcare Organization (HCO) that chooses to monitor the number of hospital readmissions; this is too weak to be considered a KPI as there is no sense of magnitude nor duration. Further defining the indicator as the rate of unplanned hospital readmissions within 30 days for a specific chronic condition provides further clarity. Using both variables:  (1) number of hospital readmissions and (2) a 30 day time period, provides the necessary context and results in a much better performance monitoring tool.

Introducing KPIs to an organization
All key stakeholders in the performance of an HCO should be identified and asked to participate in the identification of KPIs.   When introducing KPIs, it is important for stakeholders to understand:

  1. A KPI is quantifiable metric tied to an organizational goal with a set target.
  2. KPI are used to determine whether the practice, hospital or Accountable Care Organization is meeting predefined targets, and to compare performance results over a specified time period.
  3. Appropriate benchmarks are necessary to determine how an HCOs performance compares against it’s own desired goals and objectives, and against other (perhaps competing) HCOs.

Fundamentally, a KPI should be a recognizable and inherently understood by all involved.  In addition, KPIs must be collected, recorded, measured, and interpreted in the same way by all those involved.  The KPI serves to provide insight to where change may be needed or where areas are excelling.  Technology allows KPIs to be viewed on dashboards as well as provides quick updates to the decision makers.  Results can be reported in monthly, weekly or even real time.

Appropriate and well-defined Key Performance Indicators (KPIs) are a necessary component of an organization’s quest to improve quality and operational performance. KPIs provide monitoring and insight into the critical components of process and policy that need to be improved to achieve the overall goals of healthcare improvement.