What Is Benchmarking in Health Care? (Plus 4 Types)

By Indeed Editorial Team

Published November 23, 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

A benchmark is a standard or point of reference against which to compare conditions. In health care, benchmarking enables organizations to assess their own achievements in comparison to other industry leaders. If you're interested in or currently working in a health care role, you may benefit from learning about this valuable framework. In this article, we discuss the definition of benchmarking in health care, review the types of this process and provide steps for how to set up health care benchmarks.

What is benchmarking in health care?

Benchmarking in health care is the process of comparing an organization to benchmarks or industry standards. These standards could be set by regulatory agencies or achieved by top organizations in the medical field. Benchmarks act as targets for which to work during daily operations. This process is a way of measuring and understanding the effectiveness of a health care facility's efforts. Medical organizations can use benchmarks to conduct data collection and analysis and gain actionable insights about performance and success.

Using a benchmark helps organization leaders rank their facility among competitors, identify strengths and areas for improvement, address issues, set goals and implement quality improvement initiatives. Companies may choose to compare the performance of individual clinicians, departments or entire organizations. Benchmarking can foster healthy competition between organizations, encouraging them to strive for and practice continuous improvement. This strategy may guide and foster enhancements in the following areas:

  • Care quality

  • Workflow efficiency

  • Employee performance

  • Device performance

  • Patient experience

  • Customer satisfaction

  • Patient safety

  • Patient health outcomes

  • Financial success

Related: Everything You Need To Know About the Benchmarking Process

Benefits of health care benchmarking

Benchmarking allows organization leaders to identify goals and develop specific action plans to reach those goals. It may enable improvements like better communication techniques or more effective patient engagement strategies. Here are some other benefits to this activity:

  • Disseminate best practices: Clinician-based benchmarking allows leadership to identify high-performing employees and enable them to educate others across the organization on best practices. It also allows organizations to learn about the best practices and evidence-based clinical research outcomes of other facilities in the industry.

  • Make informed business decisions: Gathering data and insights can help business leaders predict future events, manage risk and make informed organizational decisions. Benchmarking may help with operational tasks like managing resources, reducing costs, setting targets and optimizing patient outcomes.

  • Establish improvement priorities: By comparing an organization to other successful models in its field, leaders can learn about which areas for improvement they could prioritize. This helps them organize their efforts into structured projects, implement initiatives more effectively and make sustainable changes.

  • Promote the organization: Conducting benchmark analysis can reveal an organization's strengths, helping them to promote themselves to audiences, expand operations and generate enough revenue to stay in business. For example, a company may market the fact that it has the industry's highest patient satisfaction scores or lowest readmission rates.

Related: 7 Reasons Why Benchmarking in Business Is Important

Types of health care benchmarking

Benchmarking is a type of comparative analysis, and business leaders can compare various aspects of a health care facility to gain different types of insights. Here are four types of health care benchmarking:

1. Internal benchmarking

Internal benchmarking is the process of comparing statistics across multiple departments in the same integrated delivery network or organization. For example, a leader may compare the patient satisfaction rates across the emergency, cardiology, intensive care unit and neurology departments of a hospital to ensure consistent care and service for patients. They may also study metrics such as 30-day readmission rates, average length of hospital stay, patient drug cost per stay and hospital-acquired condition rates.

2. Competitive benchmarking

Competitive benchmarking is the process of comparing one facility to similar ones in the same industry. It's most beneficial and accurate to make this comparison between organizations with similarities in areas such as region, size or type of patient population. The competitive benchmarking process is akin to competitive landscape analysis among for-profit businesses in various markets. It enables organizations to gain data on their ranking among competitors and characterize their performance in different disciplines.

Related: What Is a Competitive Landscape?

3. Functional benchmarking

Functional benchmarking is the process of comparing an organization to groups in industries other than health care, such as education, finance, information technology, manufacturing, business and agriculture. By exploring alternative fields, business leaders can learn about new strategies they haven't considered. They can then apply useful strategies to their facility's work processes. For example, a health care facility may benefit from learning about IT systems and security to protect sensitive patient data and prevent hacking and malware.

4. Generic benchmarking

Generic benchmarking is the process of comparing generic processes and workflows in one health care facility to generic procedures in other industries. For example, an organization may compare the way they collect patient feedback with customer feedback strategies and systems in the food service industry. Other examples include patient engagement methods, appointment scheduling systems and check-in technologies.

Related: Why Work in Health Care? 8 Reasons To Consider a Career in Health Care

How to set up health care benchmarks

With the proper planning and collaboration, many health care facilities can set up useful benchmarks and implement successful improvement initiatives. Here are five steps for how to do so successfully:

1. Establish a peer group

The first step to conducting a benchmark analysis is to establish the organizations against which to compare your health care facility. This group of organizations is a peer or comparison group, and you can use them to make a matrix comparing different statistics. Choose five to 10 groups in total that share common characteristics or interests or provide the same services. Ensuring similarities in the type of health care facility, patients and treatment can lead to accurate comparison results.

For example, you might choose organizations that act as the same types of facility as yours. Here are some examples:

  • Private practice

  • Academic research hospital

  • Outpatient laboratory

  • Hospice clinic

  • Teaching hospital

  • Acute care facility

  • Long-term care facility

  • Home health care group

  • Federal government facility

Here are some other qualities to consider when forming your peer group:

  • Facility size

  • Health care department

  • Facility location

  • Provider volume

  • Procedure volume

  • Specialties

Related: Learn About Companies in the Health Care Field

2. Choose key benchmarks

Upon forming your peer group, choose five to 10 key benchmarks toward which to work. Make sure to choose a limited number of goals that can be manageable for your facility's team. You may measure factors like patient characteristics, processes or outcomes. Here are some ideas for guiding metrics:

  • Mortality rates

  • Patient satisfaction

  • Medical outcomes

  • Readmission rates

  • Postoperative complications

  • Length of stay

  • Patient wait times

  • Adherence to protocols

  • Pharmaceutical side effects

3. Gain support from management

Upon initiating the benchmarking process by delineating a peer group and choosing goals, it's important to gain management approval for the initiative. Consider setting up a meeting with a manager or executive at the health care facility to review the benefits a benchmarking project could provide for the organization and for patient outcomes. You can then work with them to develop a strategic course, plan objectives and organize interventions to attain those objectives. It's essential to allot enough time, resources and staff to implement these interventions effectively.

4. Host a forum

After finalizing an initial plan with management, it can be beneficial to host a forum with key facility staff members. Use this forum to present the benchmarking plan and provide information on best practices initiatives. You can then allow team members to ask questions or add comments and opinions. The experience of nurses, physicians, lab technicians, administrative assistants and other health care staff may provide valuable insights into how to conduct benchmarking more effectively. Hosting this team meeting can also foster a unified vision of quality and improvement, motivating members to reach ambitious goals.

Related: Top 25 Public Health Careers (with Salaries and Job Descriptions)

5. Form a task group

It may be a good idea to form a task group or committee for your benchmarking project. The members of the committee may vary based on the type of benchmarking you're conducting. For example, if you plan to compare performance across departments, it may be helpful to request that each department head be part of the benchmarking task group. Those in this team can be responsible for monitoring progress toward benchmark goals and measuring compliance with protocols. They can also audit clinical practices regularly to ensure the achievement of desired outcomes.

Consider using software tools to automate benchmarking and goal-setting tasks and collect data easily and efficiently. There are many applications and electronic health record systems available to assist the task group with data analytic processes. These tools could provide a central database and dashboard through which team members can view top metrics and goals. These systems are often cloud-based, enabling users to access, edit, update, save and share information in real-time from any device or location with an internet connection.

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