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Failure: How close is your organization? Failure: How close is your organization?

Failure: How close is your organization?

There is no steady state in healthcare. Organizations are either continuing their never-ending improvement journey or declining. Mark Rochon and Govind Adaikappan discuss what ‘excellence’ looks like in healthcare, and how a healthcare institution can maintain a state of excellence over the long term without slipping into a spiral of organizational decline.

Attaining and then sustaining excellence in healthcare is hard because it requires a subtle mix of numerous tangible and intangible elements, such as values and beliefs, everyday behaviours such as how teams work together, and hard edged measurement, structure and systems to review, improve and optimise performance.

Leaders in excellent healthcare organizations instil a culture of innovation, collaboration and continuous learning to improve the quality of care, value and patients’ experiences. There is a strong sense of team members feeling responsible to one another as they work together to promote reliability and secure high quality.

Symptoms of a declining organization

Declining organizations gradually lose their quality or value. Many of them don’t even know their performance is sliding. There are lots of important lessons from studying declining healthcare organizations. There are four key symptoms that healthcare organizations on the decline share:

  1. Falling human resources health indicators – including lower staff engagement, low morale, increasing sickness and growing overtime.
  2. Organizational malaise – as organizational health starts to decline, the focus on improvement and innovation deteriorates. This can be disastrous. The organization will lose sight of the need to improve and adapt as their environment and patient needs change. Improvement initiatives will typically fail because of ambiguous objectives, conflicting priorities a lack of resources, and a feeling of passivity and helplessness among the staff.
  3. Poor quality of care indicators – such as falling patient satisfaction, increasing readmission rates, longer stays, higher costs, longer waiting times and growing variation in care. Organizations can mislead themselves on the quality of care by achieving success in high profile indicators while failing to recognise the significance of poor performance in other measures. Leaders tend to optimise performance around the metrics for which they are held to account at the expense of other measures.
  4. Poor communication and a lack of trust – people and teams losing trust are less inclined to share information or collaborate. As the sense of teamwork and shared responsibility declines, the limited communication that takes place often involves finger-pointing or conflict, while denial and self-protection become high priorities.

Some of the symptoms, such as declining care quality and the health of human resources can be measured easily, while others such as organizational malaise are more challenging to quantify. All of them can be spotted if you are looking for them, but they can also be lost among volumes of other data and information.

As weaknesses emerge, leaders often fall into the trap of talking up the positive signals while downplaying and explaining away the warning signs. It is vital to identify and address these signs quickly, because the technological, regulatory and competitive changes which can destabilise organizations are happening with ever greater speed.

Challenges with detecting the warning signs of decline

Decline can happen across an organization or in one ward or team. Often looking at organization wide performance averages mask issues within a specific area. Several factors can make it difficult to spot problems:

Relying on poorly designed reporting tools and analysis

Many organizations rely on reporting mechanisms such as scorecards to indicate where there is high performance or trouble. But this approach has its limitations.

  • Poor data quality – manually collected data can be full of errors because of inconsistencies in collection, system barriers or poor training.
  • Siloed data – if data for each department is viewed in isolation, leaders will fail to see performance from the perspective of the system or patient. This makes it difficult to grasp the broader implications of the numbers.
  • Focus on process measurement rather than outcomes – measuring activity does not determine whether it is delivering the desired outcomes.
  • Limitations of information systems and scorecards – it may not be sensitive enough to detect subtle but important variations in performance. A focus on the performance average may mask shortcomings in a particular area.
  • Looking for the positives – organizations can focus on the positive indicators while giving too little attention to those that point to concerns.

Leaders need to recognise that numbers will not tell them everything. It is important to complement data with anecdotal evidence from patients and staff given their first hand experiences with the organizational processes and issues. Triangulating data and information from various sources to create a comprehensive picture of performance is important. So too is augmenting data with leader experiences and what patients, staff and other stakeholders are saying is also key. When data is in conflict with experience, intuition and and additional analysis should be undertaken before conclusions are drawn. Senior leaders need to walk the corridors of their organizations with purpose to understand what the delivery of care looks like and what barriers their staff face in delivering quality care.

Not being able to sense a genuine threat among all the other noise

Warning signs are often ambiguous, allowing managers to either ignore or discount the risk and take a wait-and-see attitude, or overreact. Richard Bohmer of the Harvard Business School says organizations may be unable to deal with ambiguous threats effectively if:

  • Managers are firefighting symptoms instead of addressing root causes.
  • There is no process for escalating and responding to an ambiguous threat. It could be anything from a simple ‘trip hazard’ all the way to critical equipment needing repair, with poor systems meaning they are dealt with in an ad hoc manner.
  • There is a culture in which ‘speaking up’ about a concern is discouraged. ‘Freedom to speak up’ is crucial to achieving high performance but it is still not embedded in the culture of most health systems.

Serious patient safety errors or disasters such as a train or plane crashes rarely if ever result from a single failure, but a series of occurrences along the system. If every error, close call, deviation from accepted practice or adverse event is examined to understand the root cause there is far less risk of smaller events coming together to form a major failure.

While most data tends to be retrospective, organizations need more focus and systems which look forward. As organizations navigate more complex and fast changing environments, there is a need to spend more time looking out the windshield versus the rear-view mirror. This increasingly means building predictive tools and simulation models to investigate ‘what-if’ scenarios.

The causes of decline and how to avoid it

The investigation into the Mid-Staffordshire scandal1 exposed how the causes of its decline included tolerance of poor standards by the leadership, poor governance and a focus on the wrong priorities. This is consistent with KPMG’s experience working with organizations it has seen in decline. The primary causes are:

Ineffective governance in setting expectations and holding leaders to account

Ineffective governance is usually a key contributor to an organization’s inability to meet its strategic objectives or be in control how care is delivered. Organizations that are in control measure care outcomes methodically, understand the key drivers of these outcomes, understand how to make these outcomes best of class, and systematically prevent avoidable harm to patients.

Effective governance requires a critical tension between different levels of the organization, starting with the board to the chief executive then cascading throughout the organizational structures and processes. The board and leaders throughout the organization must feel comfortable in asking difficult questions and drilling down to understand the drivers of performance.

A lack of critical reflection on performance, leading to complacency

It is essential that healthcare organizations embrace critical reflection of their performance, to avoid being lulled into complacency based on current or past success. Complacency leads to decline.

Complacent organizations become unwilling to talk openly about failure and learn lessons about how to improve quality and reliability. While it is important to acknowledge what isn’t working, organizations need to spend as much if not more time discussing the issues and how they will be solved. A healthcare organization will never perform highly unless it creates an environment in which it is safe to report, discuss and resolve mistakes. To encourage an open culture, leaders need to admit their own mistakes, so that others believe it is safe to admit theirs.

Sustaining excellence and avoiding decline

How should organizations think about sustaining and building upon excellence? The key is to cultivate that spirit of continuous improvement – a belief that as an organization you are never finished that there is always space to improve and as a leader you need to create a culture where learning and calling out an error can be done in a safe environment.

Sustained excellence is underpinned by leadership which puts critical reflection of performance at the heart of the organization, encourages a relentless focus on continuous improvement and supports staff in making and sustaining that improvement. Excellence is certainly not maintained by simply layering on more measurement, governance and assurance.

Organizations that have an innate desire to seek perfection see providing care and improving it as inseparable parts of the day-to-day work of every member of the team.

Ten attributes for sustaining and improving organizational excellence
  1. Triangulate data to develop a reliable picture — complement data with insight from staff,
    patients and families.
  2. Periodically evaluate and validate data — to ensure it is fit for purpose and is being collected accurately and consistently.
  3. Look at the big picture and the detail – break the data down to specific programmes or teams so that pockets of poor performance are exposed.
  4. Understand your rear view but don’t forget about the windshield —assess what is on the horizon and its potential impact.
  5. Investigate ambiguous threats quickly, don’t wait for permission from a committee.
  6. Instil a culture of ‘critical tension’ within the accountability structure, so everyone expects a level of probing and inquiry that goes beyond the numbers.
  7. Periodically review whether governance relationships, processes and information are enabling effective decision-making.
  8. Acknowledge the good and spend more time talking about the bad — there needs to be open discussion at all levels of the organization about what is working, what isn’t and what needs to be done.
  9. Create a safe environment where it is expected that opportunities for improvement are raised and discussed — an organization where it feels safe to talk about failure is one that creates a platform for improvement.
  10. Foster a ‘learning lab’ culture — use insights from the recovery of failing areas as an organization-wide learning opportunity, exposing risks in other areas.

This article is based on Learning from failure, part of KPMG Healthcare's 'What Works?' series of thought leadership reports that addresses the world's most pressing healthcare challenges.

Mark Rochon is an inspiring leader and former as the Chief Executive Officer with a proven record of success in transforming healthcare organizations and systems. In a 25 year career he has led a number of complex change initiatives in a broad range of healthcare organizations while working within tight financial constraints. In addition to leading successful healthcare organizations he has been appointed by regulatory authorities to lead the turnaround of hospitals and led the largest healthcare system change process in Canada. He is now using this experience to help both public and private healthcare providers around the world to deliver better patient care with KPMG in Canada.

Govind Adaikappan is a Director at KPMG Healthcare based in Toronto. He has over 15 years of experience working in the healthcare sector with clinicians, administrators and executive teams to improve and optimize organizational performance. Through his work with providers, he has led transformations that have engaged frontline staff, built organizational capability for on-going operations improvement and embedded a relentless focus on sustainability helping organizations improve quality, safety and access while reducing cost in a sustainable manner. He has supported organizations accelerate their improvement journey in Canada and globally.


1 Francis, Robert. (2013). Report of the Mid Staffordshire NHS Foundation Trust Public Inquiry Executive summary. London: The Stationery Office.

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