HEALTH leaders dealing with the business side of health care have much to glean from the intellectual advancements of their financial industry counterparts. Whether it is a venture capital fund or a tertiary hospital, leadership affects organisational performance, with a considerable body of supporting evidence.

Investing in the leadership development of medical practitioners and upholding a high standard of leadership competence can be considered the epitome of specialty medical leadership training.

While there is evidence to support the value of such investment in leadership training, this philosophy can be extended even further in that leadership development and management training are not in fact ends in themselves. They are a means by which we can strive to improve the delivery of health services.

Therefore, when considering the measurement of leadership, it must be remembered that leadership outcomes need to be measured by two facets: the behaviour changes that occur in individual teams and the results that these teams then produce which contribute to the organisation’s larger overall outcomes.

However, whether measuring individual leader performance and learnings, or measuring the extent to which individual changes may have led to far-reaching outcomes, there is a paucity of evidence supporting the use of a validated tool to objectively quantify quality health leadership.

We propose that the practices of the financial industry be examined to see if there are any insights which can be adapted to the health care arena.

Although standards defining the highest ideals of good leadership and management already exist in the health care industry, there is no index or rating system to measure the performance of leadership in a more specific, quantifiable and accurate manner.

This paves the way for the novel consideration of a “leadership ratings index”.

Such an approach may be useful in assessing not just the leadership capabilities of the current and future medical leadership workforce, but also in benchmarking competency levels and providing a means of standardising leadership training requirements across the Australasian and, possibly, the wider global stage. It may also be useful in informing relevant stakeholders about the real-life readiness of hospital leadership teams in meeting current and future health care challenges.

The financial industry has to a large extent bypassed health care in the development of the notion of a “leadership capital index,” which proposes that both individual and organisational domains be included in the leadership measurement process.

It uses a methodology where currently assessed individual qualities such as character traits, behaviours and levels of emotional intelligence are supplemented by an assessment of more specific factors, such as the extent to which leaders are able to strategise, execute plans, build commitment and contribution from others, and demonstrate consistency in meeting patient and customer expectations.

An assessment of larger organisational measures is also warranted, such as an examination of the clinical governance and operational management systems created by the leaders, and the capability and adaptability of those systems and processes in meeting the various challenges that arise.

Our model hypothesises that the measurement of leadership capacity is not an end in itself, rather, measurement of leadership is a means of improving the hospital environment, unifying a multi-disciplinary workforce and, eventually, strengthening the delivery of health services. This means that there is an evaluation not just of the results at the output and outcome levels of leadership, but also a measure of the processes that leaders use to achieve them.

The proposed leadership ratings model, as adapted from the financial industry, illustrates 10 leadership factors grouped into two domains of a leadership ratings index. A measurement based on these factors can be used to assess the market value of leadership of organisations.

The first domain relates to five individual factors: personal proficiency (the qualities required to be an effective leader); strategist (having a point of view about the future and the firm’s strategic positioning); executor (ability to make things happen and deliver); people manager (ability to build competence, commitment, and contributions); and leadership differentiator (behaviour consistent with customer expectations).

The second domain relates to five organisational factors: culture capability (a customer-focused culture); talent management (process of managing the flow of talent); performance accountability (management practices that reinforce the desired behaviours); information (management of information flow); and work practices (ability to deal with the increasing pace of change).

The adaptation of this validated leadership measurement tool provides a rigorous means of evaluating a health leader’s performance as well as the health care organisation’s full market value.

Hospital boards and other governance bodies will have access to a more comprehensive process for evaluating the quality of leadership within and between organisations. This will inform them of areas requiring additional focus and of any short and long term amendments that may be required. It will also support and strengthen the accountability that both governments and the public expect. All of this will foster and promote a new level of constructive competition between health services to achieve better patient outcomes.

Simply put, measuring the market value of health leadership using a leadership capital index will allow us to measure the true impact that medical leaders have on the intangible value of health care organisations.

It may even lead to an improvement in cost efficiencies, and pave the way for novel means of containing the national health expenditure.

Such a system would be of particular benefit to the private health sector, where higher leadership market value ratings may lead to stronger positions in contract negotiations with health funds and practitioners, and may also attract more patients, and positively impact on staff recruitment practices. This will strengthen the capacity of private hospitals to undertake effective workforce planning and succession planning.

Such a ratings system could even be useful as a means of obtaining additional contributory funding from governments, private enterprises and other research and education grant sources. It would empower, and standardise the private health sector in eliciting an increased capacity for contributing to health care needs and prompt a reinvigorated participation in improving health care across several domains.

We believe that by implementing a formal measure of leadership capital for health organisations, we will be transforming the landscape for our future health leadership workforce. Now is the time for us to embrace this new concept of a “leadership capital index” in health.

Dr Singithi Chandrasiri is a medical management registrar at Epworth HealthCare in Melbourne. Professor Erwin Loh is the Chief Medical Officer at Monash Health, and Adjunct Clinical Professor in the Department of Epidemiology and Preventive Medicine at Monash University, also in Melbourne.


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