A Quality Framework

Based on more than 20 years of working in the "claim trenches," I have observed there are four core principles underlying successful quality improvement programs. The following cornerstones are apparent:

?Identify, document, and embed precisely measurable claim "best practices" into organizational culture.

?Implement a consistent, metrics-based approach to measuring best-practice adherence at all organizational levels. This includes establishing measurable relationships between best-practice non-adherence and financial outcomes.

?Analyze the data that matters. Find the pain points and their root causes throughout the organization.

?Strengthen performance by executing continuous quality improvement processes that consistently drive measurable gains in knowledge, skills, and behaviors.

By consistently employing these quality principles in collaboration with executive and front line management, we identified best practices that most positively affected claim outcomes. We were able to pinpoint claim-handling behaviors that, when consistently applied, drove claim success. Another main component was learning how to spot best practitioners on claim handling teams and leverage their behaviors to drive performance excellence.

By integrating these principles into your own claim organization's culture, you can ensure the adoption and continuous application of best-practice behaviors that will improve financial performance and enhance customer satisfaction.

Applying the Framework

The first cornerstone calls for "identifying, documenting, and embedding highly measurable claim best practices into your culture." Organizational policies and best-practice guidelines are the marching orders for any claim organization. They are the dynamic elements of an operational strategy, reflecting the impact of constantly changing regulatory standards, market conditions, customer expectations, competitive pressures, and technological innovation.

In order to be effective, process guidelines must be readily understood and achievable. As such, be certain to clearly define expectations and document them in such a way as avoid putting the organization at risk of bad-faith litigation.

Let's assume that you've compiled and published your best practices operational guidelines. You have also trained, tested, and certified that your handlers understand how to apply these practices. Why then might you still notice performance variance in excess of expectations? The reason is subtle. Individual claim handlers have varying levels of knowledge and skill. Additionally, each claim handler has a unique desk-level process, a pattern of behaviors applied to each file.

Effectively, claim handlers are translating operational guidelines and best practices in real-time based on their knowledge, skill, and desk-level practices. This leads to a fundamental challenge: constructively managing the performance variance.

Applying our first cornerstone, let's examine best-practice behaviors in desk-level processes. To identify best practitioners, managers need to analyze and review all performance data for all of their direct reports. They must also move away from their "green screens" to directly observe, document, and question floor behaviors. Consider the case of one prototypical high performer. This particular instance involved an actual person at a major carrier. Vera (a fictitious name for our purposes) always finished her work by 5:00 p.m. Her desk is organized, the red message light on her phone seldom blinks, and correspondence is answered in a timely fashion.

Compared to the rest of the unit, Vera, an APD handler, boasts the lowest cycle times, highest level of quality in physical damage assessments, and lowest average number of rental days. She also has the best inbound/outbound call ratio, is always current in her diary, and has the highest customer satisfaction ratings.

Sure, Vera is working from the same "rule book" as every other handler in her unit. But what makes her more successful? Perhaps more importantly to your own success, how can you leverage her successful behaviors throughout the rest of the claim organization?

Measuring Adherence

Consider our second cornerstone of implementing a consistent, metrics-based approach to measuring best-practice adherence at all organizational levels. By implementing a well-developed best-practices compliance questionnaire, you can:

?Accurately translate best practices into a measurement tool that allows for capturing job performance and behavioral attributes in a discrete data format.

?Identify tasks and decision points where the highest frequency of errors occurs.

?Assess the economic impact of errors at the task level.

?Generate insightful reports that enable supervisors to develop improvement plans and deliver meaningful, objective feedback.

Once a questionnaire has been drafted, a review protocol supporting continuous quality-improvement objectives should be developed. This may include both a central review process and a field review process. Here's why:

?A sound central review process ensures that steady state measurements for evaluating the program's impact on financial performance are in place.

?A continuous field review process forms a foundation for departmental/unit/handler quality issue identification and analysis. This means that supervisors have the requisite tools to develop and execute sustainable quality improvement plans.

Analyze Pertinent Data

Our third cornerstone, analyzing the data that matters, leads to a fuller understanding of what can be achieved by effectively applying captured data. To perform an accurate claim handler performance analysis, you need to look beyond audit results.

Let's return to Vera, our prototypical high performer. Her organizational best practices dictate that -- wherever possible -- initial contact with an insured occurs within four hours from the time a claim is assigned. Other members of Vera's unit consistently hit this target more than 98.5 percent of the time.

Upon review of the audit data, you observe Vera is delivering below this benchmark, at 90.5 percent. Is she underperforming? If you relied on audit data alone, that would be a logical conclusion. A broader performance analysis, however, reveals that year-to-date customer satisfaction reports show the rest of the unit is scoring 85 percent across all key customer satisfaction dimensions, while Vera's score is 95 percent. Meanwhile, her inbound/outbound call ratio is the lowest in the unit.

By effectively partnering with her customers and clearly explaining the claim process during initial contact, Vera has reduced her number of inbound calls, providing her with more time to focus on timely resolution of the physical damage claim. While she isn't hitting timely contact numbers, her contacts are more meaningful. Because she explains the process to her customers, Vera obtains the relevant information she needs at the time of first interaction. While others get bogged down in callbacks, she can quickly resolve claims to consistently outperform her peers.

Continuous Quality Improvement

In this scenario, Vera's methods should be identified as best practice behaviors to be used as organizational benchmarks and modeled by her supervisor for the rest of the unit. All of which brings us to our fourth cornerstone of "strengthening performance by executing continuous quality improvement processes that consistently drive measurable gains in knowledge, skills, and behaviors."

It is possible by having a sound continuous improvement methodology. In executing the detailed analysis described above, you will have identified your pain points, their root causes, and the levels within the organization where the issues occur. In addition, you will have established a clear link between these issues and the impact on both financial outcomes and customer satisfaction.

Now it's time to document and communicate what you have learned. Armed with performance analysis data, your first task will be to draft concise statements that outline the depth, breadth, and root causes of issues that need to be addressed. Next, detail the performance goals and metrics that will be applied in measuring your progress in mitigating identified issues. Then, clearly spell out financial and customer service outcomes that will result from failure to meet these objectives.

Once your issues, goals, metrics, and targets are clearly delineated, your issue-driven action plans can be developed. The plans should be task- and time-driven. Assign responsibilities and accountability at the appropriate organizational levels. To assure success, plans should incorporate continuous testing and analysis to determine whether performance improvement is actually taking place.

Lessons Learned

The continuous quality improvement principles outlined here can help you identify, codify, and accurately measure best-practices adherence across an organization. In heeding this advice, you are taking a step toward enabling your supervisors to more effectively manage their teams, thereby creating a culture of continuous improvement that empowers individual claim handlers. However, hurdles will invariably exist:

?Errors result from unfavorable decisions made by individuals, but performance data is not always adequately individualized.

?Aggregate quality improvement requires improvement in knowledge, skills, and desk-level behavior from each individual.

?Claim supervisors are not traditionally practiced in data analysis and quality improvement techniques.

?Gaps can occur in addressing performance issues as a result of supervisory knowledge and skill deficits, as well as inconsistent improvement planning and execution processes.

It is crucial to keep in mind the positive results to anticipate when implementing a sound continuous quality improvement program. For one, objective measurement tools will have enabled management to develop an actionable understanding of the depth and breadth as well as root causes of performance issues impeding success. Your managers will have the information they need to improve knowledge, skills, and behaviors across all organizational levels. Finally, the entire enterprise will be aligned to best practice behaviors, continuously identifying new and better ways to drive the performance improvement to increase claim handling quality, customer satisfaction, and financial outcomes.

Mark Snyder is director of insurance services at Athenium, Inc. He may be reached at 781-478-6300; [email protected]; www.athenium.com