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Healthcare Performance Management: Definitive Guide

Continu Team
One Platform for All Learning
Human Resources
October 24, 2023

Explore the intricacies of performance management in healthcare, emphasizing quality care, patient satisfaction, and operational efficiency.

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Healthcare Source calls healthcare performance management “the biggest opportunity in improving healthcare today.” That’s a bold statement—but it’s also hard to argue with.

Other industries have seen huge benefits from performance management, both in difficult-to-measure areas like corporate culture and in bottom-line financial outcomes.

As the healthcare industry faces new pressures and increased competition, organizations need new practices to stay competitive and provide high-quality care.

Instituting a performance management system in your healthcare organization is a serious undertaking. But without one, you could face serious problems.

What is performance management in healthcare?

Performance management in healthcare involves a systematic approach to optimize individual and organizational performance, ensuring quality patient care. It includes setting clear performance expectations, providing regular feedback, conducting performance evaluations, identifying areas for improvement, and offering training and development opportunities. Effective performance management enhances healthcare outcomes, promotes professional growth, and drives continuous improvement within the healthcare setting.

It’s also worth noting that effective performance management functions throughout the entire employee lifecycle. It starts even before hiring employees and continues until their exit interview.

Why is performance management important in healthcare?

Performance management is important for healthcare because it aligns training initiatives and employee performance to business goals. Managing the performance of healthcare professionals will allow organizations to improve the processes around healthcare customer service, upskilling employees, and compliance.

The healthcare industry is unique. Patient outcomes, insurance claims, and constantly changing regulations just don’t come up in other fields. (At least not in the same way.)

But healthcare organizations face many of the same pressures as other businesses as well. Staying profitable in a competitive marketplace. Differentiating products and services. Managing employee turnover.

The stakes are high in healthcare, and slip-ups can mean the difference between a prospering organization and a struggling one.

Many factors influence these various metrics, but in the end, the most powerful tool for offering better healthcare and running a better organization is employee engagement.

Patient Care and Values-Based Payment

When employees are engaged, hospitals see improvements in “retention, patient-centered care, patient safety culture, and employees’ positive assessments of the quality of care or services provided by their team”.

Those factors lead to better performance from healthcare organizations. And whether you’re in a country where private healthcare providers compete over customers or one where healthcare is provided by the government, better performance is always the goal.In the United States, values-based payments are becoming ubiquitous. And that means healthcare providers need to provide top-quality care and be able to back up their claims with data.

Performance management helps organizations provide better care and put systems into place that help them prove it.


In 2017, the healthcare industry had an average turnover rate second only to hospitality—a field infamous for high turnover.

One of the reasons for high turnover is that younger generations are more willing to leave their jobs than previous ones. A recent survey reported that 43% of millennials and members of Generation Z plan to leave their jobs within 2 years. Only 28% planned to stay in their jobs for more than 5 years.

And it’s expensive to replace healthcare workers. It costs around $100,000 to replace an RN. That’s a big problem. Why are younger workers more likely to leave their jobs? In many cases, it’s simply because they have high expectations. They want their employers to be making a difference in the world and standing up for values and ethics. They want to be recognized. And they want to continue learning.

Performance management is often paired with effective learning and development—which means millennials and members of Generation Z can continue learning and get the training they need without going back to school.

And with a clearer understanding of what they’re doing and how it affects the company, they feel important, too.

A recent survey reported that 43% of millennials and members of Generation Z plan to leave their jobs within 2 years. Only 28% planned to stay in their jobs for more than 5 years.

Employee Well-Being

While healthcare providers are in the business of ensuring patient health, it’s common for healthcare employees to have less-than-optimal well-being. In 2015, less than one in ten healthcare workers was thriving on all five well-being elements defined by Gallup and Healthways.

The report also states that “Healthcare workers are notorious for neglecting their own care and not taking time for their own well-being.” Which is not a reputation you want for your employees.

Healthy, well-rounded employees handle stress better, provide better care for patients, and are more resilient when facing difficulty. In an age (especially in the US) where the healthcare landscape is changing quickly and few futures are certain, that’s crucial.

Employee engagement and employee well-being are linked. Work on one, and you’ll improve the other.

Now that we’ve seen some benefits of performance management and employee engagement in healthcare, let’s talk about a few challenges.

Challenge #1: Managing a Wide Range of KPIs

Key performance indicators (KPIs) are the most basic indication of how you’re doing as an organization. In private-sector businesses, they’re often simple: total revenue, the number of returned products, churned customers, net promoter scores, and so on.

But healthcare organizations have an impressively wide range of KPIs. Sure, there are the ones that you’re already familiar with. Healthcare organizations need to run profitably, too.

But there’s a huge number of others, like adverse events, inpatient infections, patient confidentiality measures, denied insurance claims, and patient wait times. Some of these, like wait time, have a direct impact on the patient experience. Others, like mistakes, could have dire consequences for the organization.

Solution: Break Goals Down

There are two ways you can manage this range of metrics:

First, you can focus on a small number of measures. This involves getting most people in your organization involved in pursuing a small number of goals.

Maybe your focus is improving healthcare customer service. You might use wait time, satisfaction scores, and customer complaints as your KPIs, and expect every patient-facing employee to work toward improving these figures.

The second approach is segmenting your KPIs by different areas. This allows you to focus on different metrics at the same time, which may serve your organization well if you’re trying to improve in disparate areas.

For example, you could have doctors focus on reducing post-surgical infections. The emergency department could focus on decreasing wait times. Administrative staff might try to reduce the amount of time it takes to process insurance claims. And so on.

How do you decide which approach is right for your organization? By evaluating your priorities. What are your goals for instituting performance management, besides providing better service in general? Are there specific areas where you know you need to improve? When you understand your organizational priorities, you can start breaking them down into areas, goals, and metrics.

Challenge #2: Giving Constant Feedback

Doctors and nurses aren’t known for having a lot of extra time on their hands, which is one reason that annual reviews and other traditional methods of giving feedback might be appealing to healthcare organizations.

Healthcare performance management, however, is all about providing constant feedback. And that’s difficult when your staff barely has time to meet their responsibilities already.

How do you provide feedback without taking up more of their already dwindling time?

Solution: New Methods of Feedback

One method to explore is changing the method of the feedback. Instead of having meetings where a manager speaks with a single nurse, doctor, or administrator, try something different.

Some organizations use leaderboards or scoreboards that show individual employees’ or departments’ progress on their KPIs. This promotes a healthy sense of competition and motivates people to bring up their scores.

(You’ll almost certainly get some pushback on this from employees; if you think it’s better, you can use private scorecards that only individual employees and their managers can see.)

This is one of the best ways to share progress and help people understand what they need to be doing.You might also use some sort of central system like a corporate intranet or learning management system. Those that have tools for building company culture make it easy to share metrics and KPIs.

And, of course, you can always foster a culture of constant verbal feedback. Employees interact with their managers and supervisors on a regular basis, and regular five- or ten-minute check-ins can help everyone stay on top of things.

Shifting your culture like this isn’t easy. It takes time and a lot of communication. You’ll have to tell employees that you expect them to share feedback constantly. And you’ll have to tell them again. And again.

But when you integrate performance planning and constant feedback into the culture of your organization, you’ll see increased engagement.

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Challenge #3: Creating a Cohesive Culture

Healthcare organizations often feel fragmented. This is especially true of larger organizations like hospitals. There are many teams, and they often don’t have much crossover in responsibilities, communications, or even physical areas.

But creating a cohesive culture where everyone is working together improves employee engagement and helps with performance management.

It might not sound like a cohesive culture is a bottom-line priority. But the Society for Human Resource Engagement makes a great point: “A strong culture is a common denominator among the most admired companies. . . . [and] can bring benefits such as enhanced trust and cooperation, fewer disagreements and more efficient decision-making.”

The business world is increasingly recognizing the value of employee engagement—often driven by a strong culture—to organizations’ bottom lines. And the healthcare industry is finally catching up.

Solution: Consistent Communication

It’s not just down to HR to lay the scaffolding for great company culture. It requires buy-in and action from everyone. Communicating cultural values, putting systems in place to support employee connections, and showing progress toward culture-based goals all help employees stay focused on moving in the right direction.

One of the drivers of a cohesive culture is engaged leadership. Showing front-line employees that leaders care, are involved, and are also trying to improve their performance provides a morale and motivation boost.

So remember that performance management goes all the way to top, and it should be visible all the way to the bottom.

Again, choosing the right tools can make a big difference. Learning platforms and other software systems make communication seamless and routine at all levels of the organization.

For more ways that the right tools can help your company culture and boost employee engagement, check out 4 Unexpected Ways to Drive Employee Engagement with an LMS!

Managing Challenges—and Performance

There are certainly other challenges when it comes to healthcare performance management. But if you can address these three, you’ll be well on your way to better employee engagement and patient outcomes.

It can be difficult to put an entirely new system into place in a large, complicated, and very busy organization. You need to identify priorities, establish goals and metrics, get the buy-in of leaders and employees, and train employees on new practices.

That’s a lot, and it can be overwhelming when you’re looking at getting started.

Which is why I recommend starting small. Put performance management into place in one group; it could be a hospital floor, a clinic unit, or an administrative group.

In many cases, you’ll see notable improvements and positive results very quickly, which will help get buy-in from other parts of your organization, who will then be interested in putting their own performance management system into place.

A small start and slow, intentional expansion will help you start managing performance throughout your entire organization. Don’t rush it.

In the end, performance management helps everyone. And there might be no industry that needs it more than healthcare.

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