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“Working on performance measurement, ask yourself what your objectives are”

Edited on

30 June 2015

Peter Scholten is an international expert on social performance measurement. Consultant and developer for organisations and enterprises with a financial, social/cultural and ecological bottom-line, Scholten has co-introduced the SROI-methodology in Europe and invented the 'ValueGame'. Here he answers some of the questions related to Health measurement and Health Innovation development in global terms and applied to the 4D Cities network.

-We have detected that, in general, Health is only seen as a spending stream, but we think that it also can be a loophole that generates wealth. Do you agree?

Sure! I think the main reason for this is that nonprofits –like healthcare– get paid on the basis of their costs and not on the basis of their value created (like many for profits). Since nonprofits are not meant to make profits, we tend to pay them on the basis of cost. And therefore treat them as expense centers.

 

-Do companies really realise that the Health Sector is a valuable economic sector?

Yes, I think so. Everybody will agree that health is an important part and driver of our economy. But it is not only an economic issue. It is also about value creation for people, which is often not seen as an economic issue. Health care organizations can improve their outcome statements by adding this ‘customer value’ to their reports.

 

-What are the evidences that companies need to invest in health?

Unhealthy people will create huge business and societal costs. I do not think we have to prove that; it is common knowledge. The problem is not in investing itself, but in investing in regions, where the costs of healthcare –due to the limited scale and small populations– is not feasible in pure financial terms.

Therefore, the example of Baia Sprie –one of the participating cities in your project– is so great. It is pretty simple and straightforward, but it proves that people are willing to invest, not only on financial impacts, but also on personal impacts. This is a very great example of what people are willing to invest, in order to have a hospital in their own city.

 

-Is “health” assessable? How can we prove the benefits of social investments?

Nowadays, there are quite a lot of methods to measure the impact of social investments. However, many organizations keep focussing on ‘cost savings’ and thus keep pushing the idea of health being a cost-issue. These organizations do so, in order to attract funding from governments. But if they would look at it from another perspective –the perspective of citizens– they will need to do more research on value creation for citizens. Like ‘willingness to pay’ for services, valuegames, conjoint analysis, etc. But, as said, we tend to keep measuring cost savings because they seem more convincing for governments, although cost savings are not really the main mission of most health care organizations.

 

-Is extended, in Europe, the performance measurement in the healthcare sector? And in the rest of the world?

It is increasing, we have to take a longer perspective. About 20 years ago hardly anyone asked the question about performance measurement; now it is quite general and accepted.

There is also a shift from proces-management to performance measurement. Not as two different issues, but two types of measurement that should be alligned.

 

-Which is nowadays the role of the local administration in creating the conditions to promote business implantation of health relates companies?

I am a bit less positive about local administrations as such. They still keep on creating massive bureaucratic systems; collecting mainly output data about activities, worked hours (or better: worked minutes). All information, that is not telling much about the quality and impact of healthcare.

Local administrations have to much the role of an accountant of output-numbers; they often (not always!) lack the vision to separate relevant and irrelevant informations.

 

-What do you think this role should be and what is needed to capture business in this field?

For businesses it is not only turnover that is important; also questions about returning customers, customer value perception, retention, margins, etc.

Healthcare could use a bit of that more value-driven spirit! Not (only) to make money, but to keep adding value in the future!

 

-Why is Health Innovation so hard to develop?

Is it? Pharmaceuticals invest a lot in innovation; there is also a lot of innovation in treatments, etc. So I am not sure if that is so hard. The question maybe more, that innovation is pretty expensive, and businesses make their business cases: is it feasible to invest in specific types of innovation. So they are very focused on specific types of innovations and on results.

But many innovators in the public sector are funded with public money. And that leads in some cases to pretty lofty visions about innovation. Very general, pretty vague… Public money for innovation is not always targeted or focussed on specific changes, specific needs.

 

-Specifically focusing on 4D Cities, which would be good objectives for project partners to execute impact measurement?

Not costs and activities, but outcomes; not the service itself, but the impact of it.

 

-And the most applicable methodology? Why?

There is not something like the ‘most applicable methodology’. It always depends on the objectives for the research. Customer value? Cost saving to society? Quality of life? Is it done for decision making, reporting or internal learning processes? There are too many factors that influence the choice of methodology. I think there are about 200 methods available these days. Maybe also because many consultancies develop their own tools and methods in order to attract customers. Performance measurement nowadays is a business!

My recommendation to everyone interested in working on performance measurement is: ask yourself what your objectives are. What do you expect the measurement should deliver to you? If you have no clear expectations about where you are going, every method will bring you there.

 

-Which is your opinion about the contribution that 4D Cities can offer to promote the local investment in the Health sector?

Being more specific about what is the problem and what needs to be changed, and why. And to whom that is really an important and urgent issue.

Keep things simple. Like the bicycle lane in Lithuania: you are not selling bicycle lanes, but health improvement through your facilities and activities. It is not about the number of cyclists, not about the number of activities or offerings. It is about the change you are creating to your customer: the local people.

 

*Peter Scholten, international expert on social performance measurement. Consultant and developer for organisations and enterprises with a financial, social/cultural and ecological bottom-line. Scholten co-introduced the SROI-methodology in Europe and invented the 'ValueGame'.