Mello: Guest Columns: Evidence-based Management (EBM)

The Myth of the Mean

Over the past number of months I have been in a quandary about something that I would love your opinions about. That is, “the myth of the mean”. I’ve been calling this out more and more lately with my direct reports. In essence: I believe that the mean/median/mode has only minimal power in true evidence based management. Increasingly the use of “average” data never gets to the essence of what is happening with any discrete population that drives performance. Let me give you but one simple example.

In measuring clinical performance for DaVita we pay attention to lots of indicators. One of them is “average hematocrit level”. We’ve been patting ourselves on the back for moving this indicator higher over the past 3 years. I am certain that is a good thing. However, in any given month when that number goes up, I have no window on whether we really improved the aggregate population, we got the patients that were already high higher, or we got the low patients up --which of course would be the best thing.

I could provide you with many other examples that are relevant to managing a portfolio of anything: reducing turnover is a good thing, but how many of our centers have zero turnover? How much of the reduced “average” turnover comes from the worst performing centers going from 110% to 80%? We’ve reduced our nursing vacancies from 548 to 392 in the past 12 months. If you’re at a center that has 2 nurse openings you don’t really care about that statistic. I’m not saying that averages don’t matter. I just don’t think they are as useful for managers to make decisions/take actions as other indicators. As you know, we at DaVita are relentless at only measuring stuff that we believe will require a management action at the other end.

I thought at first that “the myth of the mean” idea was only relevant for looking at the big picture. Stuff at my level of the organization. So I decided to test it a bit. I visited a few of the better Facility Administrators (our dialysis center managers) and asked them how they drove improvements in clinical indicators. They, of course, said that they focused on the bottom performing patients and worked on improving them first. So, what value can I add as a senior management schmuck by looking at the mean? Not much. I can say “improve those averages”. Or… I can say “look at these 22 centers that are the outliers”.

So…while we have intuitively always done a bunch of managing at the tails of the distribution I am focusing much more on outliers. Systematically measuring the “less than” and “greater than” populations. Looking at data on the best performers and the worst performers. Gaining insights from the best and sending SWAT teams to the worst. This seems to be working and I can almost generalize it to any population. About four years ago, we coined a moniker here that we refer to as “B-52’s”. At the time we had about 500 dialysis centers so really we were looking at the bottom 10% performers. Now that we are 1,300 centers, we still look at the bottom 10% (and we still like the B-52 label). Driving performance in this population drives aggregate performance up and if all else stays constant, the mean will improve as well. I no longer trust the rest of the population, so we now use averages or means very infrequently in our metrics, particularly our in process metrics.

Food for thought…

About Joe Mello

Joe Mello has been Chief Operating Officer of DaVita since June, 2000. He joined the company in the very early stages of a significant financial and operational turnaround. DaVita is a leading provider of dialysis services for patients suffering from chronic kidney failure. The Company provides services at kidney dialysis centers and home peritoneal dialysis programs domestically in 42 states, as well as Washington, D.C. As of December 31, 2006, DaVita operated or managed over 1,300 outpatient facilities serving approximately 103,000 patients.

As COO, Joe has responsibility for all operating units, IT, Nursing Services & Recruitment, DaVita University and Academy, Clinical Operations, Compliance Operations, BioMed Services, Reimbursement Operations, and People Services (our moniker for Human Resources).

Prior to DaVita, Joe was President and CEO of Vivra Asthma & Allergy, the nation’s largest single specialty PPM focused on chronic respiratory disease. In addition, Joe held various management positions with MedPartners (through its acquisition of Caremark) including senior vice president/chief operating officer – southeastern region. Prior thereto, he was a partner in the healthcare consulting practice of KPMG for ten years.

Joe holds an MBA in Finance from Golden Gate University and a Bachelor of Science in Industrial Engineering from Georgia Tech. He resides in La Quinta, California.

Posted on February 19, 2007