Massini: Financial performance goal: Achieve 6% operating margin

Penn State Health CEO Steve Massini sent the following email to Penn State Health employees on Thursday:

Dear Colleagues,

Before December’s holiday break, I sent emails regarding the first three Penn State Health organizational goals. Today I’m writing to tell you about our fourth and final goal – financial performance. I’m also going to share a link to a webpage where we can track our progress, and outline a bonus program that will be tied to our success.

Our financial performance goal for fiscal year 2020 is to achieve an operating margin of 6%. That’s the margin we believe will allow us to continue to invest in our people, our patients and our programs.

I saved this goal for last because if we achieve our first three goals  in quality and safety, patient experience and employee engagement, strong financial results will follow. If we provide our patients with a great experience that includes safe, high-quality care, not only will we receive fair reimbursement for that care, but these patients will come back to us. They will tell their friends and family about their great care and great experience at Penn State Health, and we will continue to grow.

Additionally, if we can improve our work environment, you will be happier, healthier, higher performing employees – and less likely to look for another job.

Together, these factors contribute to a better bottom line. We still need to make sound financial decisions and continually look for ways to improve efficiency and innovation, but we know from research that when we do right by our patients and employees, our financial outlook reflects that.

And, we’re already on our way. We created webpages (Penn State Health St. Joseph Medical Center, Penn State Health Medical Group and Penn State Health Milton S. Hershey Medical Center) where you can view our organizational goals and how we are doing in achieving them. The current outcomes on the webpage are for the first quarter of fiscal year 2020, which ended Sept. 30. Second quarter results will be ready in a few weeks and I’ll let you know when they are posted.

You’ll see that in quality and safety, we’re on target in two of our goals (reducing serious safety events and increasing Medicare wellness visits) but lagging behind in reducing preventable inpatient mortality.

We’re doing very well in our patient experience Patients are sent a survey following their care with us, and our patient experience derived from the overall rating they give us in that survey. Our goal is a 2% increase in our overall scores across the health system, and we currently are above our goal with a 4.6% increase. Keep up the good work.

In financial performance, you’ll see that last fiscal year, we ended with a 7.5% operating margin and our 2020 goal is 6%. The lower anticipated margin reflects a commitment by Penn State Health leadership and our board of directors to invest in our infrastructure, including our technologies. So far, our financial performance this year is on target.

We won’t know how we are doing in employee engagement until we take a ‘pulse’ survey late next spring. Judging by your thoughtful and heartfelt responses to my communications, I am optimistic we will get there.

If we meet these organizational goals by the end of the fiscal year, eligible employees (that’s the vast majority of you) across the health system will receive a discretionary performance bonus next fall. The amount will be determined by the Penn State Health Board of Directors and the formula for the bonus, based on our outcomes for each goal, will be the same across the health system. This program is designed to recognize that we all contribute to the well-being of Penn State Health and the communities we serve.

I appreciate each and every one of you, and look forward to our work together this year.

Steve Massini

CEO

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