Evidence-Based Management: Better Decisions, Better Outcomes

Just because an organization is used to doing things a certain way, it does not mean it is the best way, according to Frank D. Cohen, Director, Analytics and Business Intelligence, Doctors Management, Knoxville, TN, a healthcare consulting firm.

Relying on the excuse of, “this is how it’s always been done,” no longer cuts it, he explains. Rather, practice managers and others in the healthcare field should seek out what is and is not working. By employing evidence-based management techniques, organizations can validate their findings and use them to inform positive changes.

“Way too often we depend on traditions, emotions, politics, or anecdotes to make critically important business and management decisions, which we’re going to stand accountable for in the future,” he says. “While no system is perfect, the use of evidence in the form of data and statistics can significantly increase the probability that the decisions you make will result in a positive outcome. After all, that’s why we’re doing this.”

What is Evidence-Based Management?

In healthcare, evidence-based management is defined as, “the systematic application of the best available evidence to the evaluation of managerial strategies for improving the performance of health services organizations.”1

Mr Cohen explains that this concept employs practical applications such as process mapping, cause and effect analysis, and critical thinking, but perhaps more importantly, it forces organizations to ask themselves practical questions such as, “Is what we are doing working for us and continuing to result in improvements?” and “Do the majority of our decisions result in positive outcomes?”

He cites the jury system as a prime example of an evidence-based management model. In a jury, people put aside their biases, prejudices, and preconceived ideas in favor of information, data, and evidence to come to a decision that will result in a just outcome. If an organization is open-minded to change, and if the people within it believe that there is an opportunity to improve by employing newer and more contemporary techniques, then exploring evidence-based management will likely be beneficial.

The Illusory World

However, can we always trust what we see and hear? Our brains construct a reality based on only a fraction of the information available, and there are many ways to exploit this (ie, magicians, illusionists, scammers). Everyone has a bias or prejudice that causes them to lose context, but the trick is to identify it.

Mr Cohen explains how optical illusions can demonstrate that our sense of constancy is violated when there is an inconsistency between what we see and what we think we should see. As a result, the brain fills in the blanks to continue processing data accurately.

“The truth is, we don’t necessarily believe what we see; we see what we want to believe,” he notes. “Because we are filled with biases, traditions, and preconceived ideas, this creates huge problems for us as managers when trying to make decisions that we hope will affect positive outcomes.”

According to Jeffrey Pfeffer, Thomas D. Dee II Professor, Organizational Behavior, Graduate School of Business, Stanford University, CA, and Robert Sutton, Professor, Management Science and Engineering, Stanford Engineering School, who wrote on evidence-based management in the Harvard Business Review:

“At least since Plato’s time, people have appreciated that true wisdom does not come from the sheer accumulation of knowledge, but from a healthy respect for and curiosity about the vast realms of knowledge still unconquered. Evidence-based management is conducted best not by know-it-alls but by managers who profoundly appreciate how much they do not know. These managers aren’t frozen into inaction by ignorance; rather, they act on the best of their knowledge while questioning what they know.”2

Mr Cohen relates this concept to a real-life scenario. “It’s cute when a 6-year-old tells you he knows everything. It’s not cute when it comes from an adult, especially when that adult is your manager.”

Why Use Evidence-Based Management?

In healthcare, evidence-based management improves profitability by controlling revenue and costs while increasing efficiency. It raises the standard of care by increasing patient access while improving quality and outcomes. It also minimizes risks of a clinical, financial, or regulatory nature.

According to Mr Cohen, the 3 major components of evidence-based management are: (1) evidence, based on information, data, and sourcing; (2) decision-making, based on analytics; and (3) problem-solving, which includes the implementation of actual solutions. He notes that, although not all of these will work in every situation, the goal is to develop a toolbox that you can dig through when solutions are needed.

“You do not have to be a data scientist to do this correctly,” he says. “You just have to commit yourself to the idea that gut and intuition are not necessarily the best drivers.”

Along with uncertainty and risk, managers must also be equipped to deal with asymmetry of information, or “rational ignorance.” Almost all the information people receive as consumers comes from someone else (eg, government, vendors, associations).

According to Mr Cohen, most of the individuals providing this information have an incentive to use it to influence consumer decisions, and the first step toward being informed is recognizing that this condition exists.

“When we look at the data, the only thing we can do is try to understand where they’re coming from: the biases that may be included, and why,” he explains. “Why are people telling us these things? Do they have any skin in the game? What do they stand to gain if we’re convinced?”

Although the number of decisions human beings must make on a daily basis can be overwhelming, these decisions do have consequences.

“We have to accept the fact that when we make decisions without having all of the information, we’re increasing the risk for a negative outcome,” Mr Cohen says.

However, decisions are rarely made on the spot, he noted. Rather, good decision-making skills are accumulated over time and based on factors such as experiential learning and formal training. Healthcare is a complex system with many interdependencies. Sometimes outcomes are simply beyond one’s control and accepting that fact is part of becoming an evidence-based thinker.

“There is no silver bullet to this,” Mr Cohen says. “There’s only our ability to remove the level of uncertainty so that we can come out with the best possible results.”

Pitfalls to Anecdotal Thinking

According to Mr Cohen, 3 main pitfalls can stand in the way of even the best-intentioned managers. The first is assuming they know what the problem is without seeing what is happening. To remedy this, it is important to explore the actual workings of an organization to understand how things operate. They should sit in their own waiting room for a few hours and observe what is and is not working. They should also conduct current state mapping—look at the physical space, staff movements, redundant events, and manual processes.

“We want to be able to explore—to develop the data and evidence necessary—to find ways to improve what we do,” Mr Cohen says.

The second pitfall is assuming they know how to fix a problem without first finding out what is causing it. Managers should seek to understand the difference between related events and actual correlations in their practice (eg, payer mix and revenue; work relative value units and charges).

The third pitfall is assuming the action they have taken to fix the problem has worked without measuring to see whether it is doing what was expected. In short, there is a difference between simply changing something within an organization and changing it for the better.

“As a manager, wouldn’t it be nice to know whether the time, resources, and effort that you put into making a change resulted in a positive outcome? I am amazed at how many people do not do this,” he concludes. “If you are going to affect a change within an organization, you owe it to yourself and to the organization to measure the outcomes of your decisions.”

References

1. Kovner AR, Rundall TG. Evidence-based management reconsidered. Front Health Serv Manage. 2006;22:3-22.

2. Pfeffer J, Sutton RI. Evidence-based management. January 2006. https://hbr.org/2006/01/evidence-based-management. Accessed November 6, 2019.

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