Progress Report on the Mission-Based Management Program: An Interview with Robert F. Jones, Ph.D., Vice President, AAMC Division of Medical School Services and Studies

The Mission-based Management Program, sponsored by the AAMC in partnership with CSC HealthCare, existed for a number of years now. What has been the impact of that initiative?

The interest in and implementation of the principles and practices that underlie what we have termed "mission-based management" blossomed within the medical school community. The AAMC program obviously has had a role in that. But, in truth, these principles and practices were attracting interest before we started the program and have continued to do so.

How many schools are now "doing" mission-based management?

The principles and practices of mission-based management have been adopted by many schools, even though the terminology "MBM" may not be used. For example, measuring and rewarding performance is evident as schools restructure their compensation plans. The push for transparency of financial information shows up as schools rethink their strategic and financial relationship with clinical partners. In our estimation, most schools have embraced those principles and practices, even without resort to that terminology or endorsement of the whole package.

What are these mission-based management principles and practices?

We think of mission-based management as encompassing two parts. First is the development of information systems that support a new approach to budgeting and accounting and to measuring departmental and faculty contributions to missions. Second is a change in the culture of decision-making that promotes the open sharing of information and peer (chair-to-chair) accountability.

Well, take the new approaches to financial accounting then. What has been the progress there?

Schools traditionally have financial statements that show the "sources and uses" of funds, but those statements do not provide the true picture of costs of each mission. A mission-based approach requires schools to track revenues and expenditures for each mission area-clinical care, research, and education. Most medical schools using a mission-based approach have found this aspect to be a major challenge. In truth, few schools yet have developed, on an ongoing basis, mission-based financial statements, but many are working on it.

Is this tracking of revenues and expenditures by mission the same as "funds flow"?

Mission-based financial analysis and funds flow analysis are highly complementary activities. Funds flow methodology is an enterprise-level analysis. It essentially examines the transactions that occur among the medical school and its partners, the practice plan, hospital, university, etc. It looks at the financial and in-kind support from one of these entities to the other, and attempts to understand them better. Some of these transactions are straightforward payment for services, some shared support of programs of mutual interest. Mission-based financial statements focus on the revenues that come into the medical school to support the work of faculty, classifies these revenues by mission, and matches them to the expenditures for that mission.

Funds-flow and mission-based financial analyses both contribute to the overall financial picture of an institution. They both support the value placed on "transparency" of financial information. They both help to illuminate the many and various "deals" that deans, department chairs, hospital and practice plan directors have struck over time.

What about measuring productivity or, as you say, departmental contributions to missions?

This is an example of a practice that is integral to mission-based management but is not new or exclusive to it. Take clinical productivity. With Hsiao's development in 1988 of the relative-value-unit approach to measuring clinical effort and the proliferation of billing and collection software that reports RVU data, the vast majority of schools are involved in measuring clinical productivity of physician faculty. This work has been facilitated by benchmark data provided by the Faculty Practice Solutions Center, a joint effort of the AAMC and University HealthSystem Consortium, and historically by data publications of the Medical Group Management Association.

What about research productivity?

An interest in measurement in that area has been growing as well. School administrators have always closely examined data on research grants and funding. The AAMC facilitates this through its provision of comparative data, the Institutional Profile System (IPS) Annual Report, the Basic Science and Clinical Science Department Data Reports, and the Institutional Goals Ranking Report. NIH rankings figure prominently in assessments of departmental and institutional performance. Academic institutions, not just medical schools, have also been using publication counts and citations indices as measures of research productivity.

The research-intensive schools have particular experience in measuring the research productivity of their faculties. Our expert panel on this topic included mainly representatives from our most research-intensive schools. They brought to us a great deal of wisdom and insight. Now the interest in tracking research productivity is becoming more widespread as is the development of information systems to track these metrics routinely and systematically.

And education?

Our academic culture resists applying the term productivity to education, as we do to the research and the clinical missions. But schools are realizing that they have to track educational activity, quality, and outcomes, for a couple of reasons. First, they need these data to ensure that funds are directed appropriately to support the educational mission. Second, they need them for an overall understanding of faculty and departmental performance. It is not possible to evaluate faculty and departmental productivity in the research and clinical missions without understanding their contributions to all missions. Otherwise, you're in a "shell game." Poor productivity in the research and clinical missions can be explained away by supposed contributions to the education mission. Unless that effort is independently measured, you cannot hold faculty members and departments accountable. Our April 2001 study (published in Academic Medicine 2002; 77: 115-123) found 41 institutions using metric systems to quantify faculty and department teaching activities. Many other schools are working on this, and I would bet that the number is even higher now.

So if schools are changing their accounting and have in place these metric systems for measuring faculty performance, does that accomplish the objectives of mission-based management?

No, and in fact, just focusing on the "information" by itself can be more of a problem than a solution. Again, you need to go back to the basic question. Why are you doing this? What's the objective? Schools have become interested in this approach for a number of reasons, but they boil down to one basic motivation: there is a gap between where they are and where they want to be. Mission-based management is a means to an end. It is an approach that, with the current resource constraints confronting institutions, helps them to find a way to support their strategic objectives.

So it is about institutional change?

Yes, which is why the "cultural" aspects of this are so important. With information alone, specifically information in the hands of a select few at the top, you have--at best--a more informed, beneficent leadership. At worst, though, you have more weapons in the hands of an autocratic leadership. In neither case do you have institutional change. That change comes from the open sharing of information ("open books"), nurturing a culture of accountability, and developing a structure that more effectively involves chairs and other leaders in institutional decision-making.

How is "open books" defined?

Historically, medical schools have kept budgeting fairly closed. As a department chair, you knew what your "deal" was, how much you were allocated out of the general funds. You didn't know about anyone else. You had your suspicions about that, of course. In such a culture, it is hard to find a chair who doesn't believe that the dean has "pots of money" squirreled away, which goes to others, not him or her, when that money is doled out. When the books are "opened," one of the most illuminating aspects for chairs is that they learn that the dean does not have large amounts of discretionary money. They also learn that other chairs typically haven't been the beneficiaries of greater largesse. On the one hand, they find this comforting; on the other hand, depressing. But this is the start of getting chairs to understand and share in the institutional problem.

How far does this "open books" go?

You don't want to disclose truly private information--salaries and the like. And you don't have to put all this information on bulletin boards. But you do need to establish processes and procedures, for chairs particularly, to be able to review institutional financial information, including the budgets and financial performance of other departments. How else do you expect them to adopt the role not just as department leader but institutional leader? You have to share institutional information. Just the act of doing so is significant to changing the culture.

What about the peer accountability you mentioned?

Historically, with the closed budget hearings, if a department had financial problems, it was the dean's job to deal with that. It still is, of course. But what other chairs have not always understood is another department's financial woes is really their problem as well. Any monies that go to bail out a financially insolvent department are monies not available to support their programs and activities. Like it or not, they have a vested interest in how their colleagues perform.

But what about departments that, through no fault of their own, lose money, because of a high indigent care load, etc.?

They should be supported. The key is to differentiate departments who are in deficit for structural or environmental reasons and those who are in deficit because of poor management or underproductivity of faculty. Mission-based management does not require that schools end cross-subsidies. It suggests that those cross-subsidies be known and discussed by other chairs. Many schools have developed a fiscal advisory committee for this purpose. That group--consisting mainly of representative chairs and almost always headed by a chair--reviews departmental budgets prior to submission to the dean. It closely monitors budget variances through the year and takes responsibility for advising the dean on measures to be taken with an "underperforming" department.

What mistakes have schools made in implementing mission-based management?

One, two, and three on this list have to do with metrics. Historically, medical schools have operated and made decisions that have not been well informed by data. It's akin to flying a plane with a small and unreliable instrument panel. Medical schools did just fine with that when resources were more plentiful. But in a more resource-constrained environment, deans and department chairs today are looking for more and better data to aid their management decisions.

In the process of doing this, schools can and do go overboard. You simply cannot quantitate every contribution of a faculty member or department to the missions of the medical school. And you shouldn't try! We still rely heavily on dean and chair judgment, as we should. Many schools first developed elaborate, complicated systems that defied easy understanding. A key lesson they have learned is to keep the system simple. A few key indicators in each area provide adequate information. Once a school becomes adept at using this information, additional measures or complexity can be added over time.

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