One of our clients called me in a panic because she was told she had to reduce 20 FTEs in the hospital laboratory. The basis for the decision was a ranking in the 30th percentile for unit cost (where the 100th percentile is the best performer). The analysis was performed by a general consulting firm that did not understand the complexities of the laboratory. We used the exact same data submission and changed only the peer group, comparing this laboratory to other laboratories with comparable outreach volume (greater than 50 percent). Laboratory performance improved by 43 percentiles! The results are shown in the table below:
We all want comparisons to be fair, to be grouped with those that are most similar to us. If our peers are not comparable, then benchmarking results are skewed or invalid.
This is true in life and in the clinical laboratory:
- We hang out with people who have similar interests and aspirations. They give us honest feedback and help us grow, and we become better because of them.
- The same is true for laboratory peer groups. We learn from the top performers. We adopt their best practices and our performance improves. What happens when the peer groups are not comparable? Results can be erroneous, and consequences can be severe.
This laboratory was not a low performer by any standards. It was a GOOD performer, ranking close to the 75th percentile when benchmarked with a comparable peer group. The first analysis the laboratory received didn’t account for the cost of outreach infrastructure (FTEs, space rental, courier vehicles, IT systems, etc.), which is a prerequisite for the laboratory outreach business. When compared with other laboratories in the outreach business, this facility performed in the top third of the peer group.
Just like in our personal lives, when we’re inappropriately grouped with the wrong folks, people come to incorrect conclusions. They might surmise that we’re laggards because we’re hanging out with people who don’t have the aspiration of running a business. 🙁
Stay tuned for another blog entitled, “What Is the Other Half of the Benchmarking Equation?”
Kathleen A. Murphy, PhD
Chief Executive Officer
Chi Solutions, Inc.