Medical Directors’ Knowledge of a Key Performance Indicator

According to contingency theory, organizational performance depends on successful adaption to environmental demands. In order to curb health care costs in the German hospital sector, measures such as budgeting and DRG-based reimbursement have been introduced. This new environment demands efficiency which requires medical directors (MDs) to be familiar with key performance indicators (KPI’s) of the hospital. We aimed to analyze whether MDs’ assessments of the KPI “net income” of their hospitals was consistent with objective data derived from the hospitals’ annual financial statements. In addition, we analyzed whether a consistent assessment of this KPI differed among hospital size, ownership and teaching status. In a cross-sectional study, 551 MDs were asked whether their hospital had a net profit or a net loss. This information was then compared with the hospital’s annual financial statement in order to analyze whether MDs’ assessments of the KPI “net income” differed from the objective data. We compared the proportion of consistent assessments among hospitals size, ownership and teaching status. We identified the annual financial statements of 106 participants of the cross-sectional study (19%). 58 (55%) MDs made an assessment that was consistent with the objective data whereas 48 (45%) MDs made an inconsistent assessment of the KPI. Making a consistent assessment did not significantly differ among hospital size, ownership or teaching status. Many MDs made an assessment of an important KPI that was not consistent with objective data but due to the small sample size we are not able to generalize our finding to the entire German hospital sector. However, the results indicate a need for future research on MDs’ knowledge about KPIs. Following contingency theory research should aim at identifying organizational characteristics that foster such knowledge and analyze whether it corresponds with a better adaption to an environment that increasingly demands efficiency.

Contingency Theory - Hospitals - Performance