>

Benchmarking in Healthcare: The Data You Need to Protect Resources and Promote Investment

Benchmarking in Healthcare: The Data You Need to Protect Resources and Promote Investment

As hospitals and medical centers grapple with economic uncertainty caused by the lingering effects of the pandemic, inflation, rising costs of patient care, and a tight labor market, two things have become clear. First, our advancement teams must safeguard existing resources against thinning margins and budget cuts – an imperative in today’s climate. Second, we must advocate for ongoing investment in fundraising to grow philanthropic revenue and keep pace with priorities.  

Recent reports on the “gathering storm” in U.S. healthcare predict that the institutions most likely to thrive despite market volatility will do so by “redesigning their organizations for speed-accelerating productivity improvements, reshaping their portfolio, innovating new business models to refashion care, and reallocating constrained resources.” 

While strong data can help achieve these objectives, advancement teams must know what data to evaluate, how to use it to demonstrate impact, and how to leverage it to make a compelling case for further investment into their work. This is why benchmarking analysis is critical.  

Benchmarking helps institutions visualize how they are allocating and using resources, then establish realistic expectations for the impact of these decisions on operations over time. In turn, it enables leaders to project results that could be achieved with sustained or increased levels of investment. 

Identify a Suitable Peer Cohort 

To get the most out of benchmarking data, development teams must know how to identify an appropriate peer cohort. Deans or CEOs are likely to suggest peers for a benchmarking cohort based on total development staff, number of fundraising professionals, size of faculty, etc., and incorporate aspirational organizations that perform at a higher threshold.  

Teams should use three- or five-year averages to smooth out data points, and when possible, identify factors that might skew the analysis, like the receipt of a transformational gift. Then, you can see how you compare. 

Accounting for the structure of your organization is also vital. Yours might be a joint program in which there is a medical school and hospital; a community hospital or hospital system within academic medicine; or a medical school within a university. Additional factors, like geographic location (East/West Coast or Midwest) must be weighed when evaluating cost of living expenses and how such costs influence your development budget, particularly your personnel expenses.  

Development teams may or may not have easy access to data to conduct a benchmarking analysis. GG+A has done extensive work with academic medical centers and their development teams to gather quantitative and qualitative information among a defined cohort for deeper study.  

Teams must remember that even with quantitative data, qualitative information will add nuance that reflects differences in culture, academic leadership, volunteer involvement, or prospect pool. Through interviews and targeted questions, we gather details that might be overlooked in a purely quantitative review, and all this information is essential for determining how and where to invest resources. 

Benchmark in Key Performance Areas 

There are myriad ways to use benchmarking data, but here we’ll focus on three analyses: 

  • Total Private Support (TPS) and Fundraising Progress (FRP)
    To start, let’s look at how the institution sponsoring this benchmarking study compares to five other peers in terms of total private support (cash and pledge payments) and total fundraising progress (new commitments and outright gifts). Then we’ll see how it compares in terms of faculty, total development staff, and fundraising professionals.   

Average 3 year total private support

At first glance, the sponsor appears well below its peers in all categories, but this initial analysis does not help a development team know if it is actually performing at the same level as its peers. With more data needed to understand the full story, further analysis was done on the relationship between the number of fundraising professionals and three data points: total private support, fundraising progress, and individual giving.  

 

Average Fundraising Professional Benchmarking Sponsor

3 year Average fundraising professional Benchmarking Sponsor

3 YEAR Average fundraising Professional Benchmarking Sponsor

Combined, these charts present a more realistic picture of the impact of the sponsor institution’s fundraising professionals. All charts paint a positive picture for the sponsor, since the institution has similar totals or higher dollars raised across multiple factors.  

  • Team Impact
    To help development teams understand their direct impact on annual fundraising progress, they must be able to track solicitations and dollars raised explicitly from the group of frontline major and principal gift officers. In the chart below, we show how a report can be created to track data year over year.   

Frontline Officer Impact on Fundraising Progress FRP

Here, frontline gift officer dollars are directly tied to a closed solicitation, and percentages are calculated from fundraising totals that include annual fund giving and grants driven by faculty with no development team assistance. If we were to exclude the $7 million unexpected bequest in FY20, this team would have raised 58% of total giving in FY20 as the team ended a campaign, which is consistent with team performance in FY22. This team brought in an even higher percentage of total support in FY21, still comparable with the adjacent years. 

It is important for development leadership to know the impact of their frontline officers, in context with other giving the team may not manage. Above we see that other giving, absent a realized bequest, is hovering in the $45 million range. Ultimately, what this means is that apart from dramatic changes in the “other giving” category, growth is more likely predicated on increasing the number of frontline officers – particularly since the team has been able to maintain an average of six $100,000+ gifts per officer per year.  

  • Budget and Staffing Analysis 
    In the above section, we focused on an analysis of fundraising professionals. Now, we’ll look at data with total development staff in mind, analyzing a cohort of three, joint programs located in the Midwest, and accounting for cost of living. 

Fundraising Cost per Total Development Total Private Support Per Total Development Staff

For Institution A, this information validates either maintaining or increasing its budget. It has fewer total development staff but uses its current budget quite productively, mirroring its peers in terms of fundraising cost per total staff and performing well alongside B and C in total private support per staff member.  

Set Appropriate Expectations Based on the Data 

In all budgetary decisions, senior leaders, including the dean, CEO, and chief financial officer, will surely want data to support the return on their investment. Development teams must ensure that goals are not set too high immediately after receiving additional resources.   

The analysis below evaluates five new hires in director-level positions to determine their impact on solicitations and fundraising progress in year one and year three. According to this data, the direct impact of a director-level hire is made after three years on the job. 

  Director of Individual Giving metrics

These new directors need time to form relationships with leadership, faculty, volunteers, and their prospects. They also need time to build their overall portfolios. As this occurs, the investment in their positions pays off, which we can clearly see in the numbers. 

Now as much as ever, fundraising leaders in healthcare and academic medicine must be fiscally agile. In situations where executive leadership is simply comparing dollars to dollars and asking what can be done to raise more, benchmarking data can reinforce the strengths of the development office, clarifying the team’s impact and supporting the key role philanthropy plays in shaping the future of our sector. 

 

Jeff Nearhoof brings more than 30 years of advancement experience to GG+A, and concurrently serves as the Associate Vice President of Individual Giving at UChicago Medicine. For guidance in developing and leveraging benchmarking data or other philanthropic analytics at your institution, contact Jeff at jnearhoof@grenzglier.com 

 

Contact-us button to link to contact us form

 

Grenzebach Glier & Associates Inc http://gga.ugmade.co/wp-content/themes/gga/assets/img/grenzebach-glier-and-associates-print-only.png
About the author

Jeff Nearhoof

Senior Vice President

Jeff Nearhoof, Vice President, brings over 30 years of experience leading advancement and development programs in both public and private universities. Jeff has extensive experience in prospect and donor cultivation and management, data analysis, strategic thinking, and employee management and mentoring. He brings a depth of experience spanning multiple industries.…