Improving business performance at AMFC
a case study on improving business performance using organizational project management
This paper will describe the path that the AmeriHealth Mercy Family of Companies (AMFC) has taken to improve its business performance. Project management is an essential element used by AMFC to deliver its strategy. In order to improve the execution of its strategic goals, AMFC has adopted the discipline of Organizational Project Management. This paper will describe the activities AMFC has undertaken to adopt OPM and obtain the business results they have been seeking.
(Authors note: An ownership change to AMFC was announced on August 9, 2011 and is currently undergoing regulatory review which may not be completed by the time of this presentation.)
In 2007, the AmeriHealth Mercy Family of Companies (AMFC) embarked upon a journey to improve its ability to systematically deliver its strategy. Facing new competition in the managed healthcare industry and facing substantial changes due to federal healthcare reform, the organization determined that the results it was achieving would not sustain the growth needed to face the increasing competitive and changing landscape.
AMFC is a partnership of Mercy Health System and Independence Blue Cross. The two companies joined together in 1996 to provide Medicaid-managed care services to underserved and low-income populations. A mission-driven organization, AMFC employs almost 2,500 associates and serves more than 6.5 million members in 14 states. AMFC's diverse product lines include full-risk health plans, management and administrative services for health plans, intensive care management, pharmacy benefit management, and behavior healthcare services.
In 2004, AMFC formed its first iteration of a Program Management Office (PMO), which was the result of the organizational recognition of the importance of creating a resource pool of project managers who were well skilled in delivering projects. The PMO began creating a set of standard templates and reports that the organization uses to this day to execute and monitor the performance of its projects. The PMO leader was promoted to another position and, in 2007 AMFC brought in another seasoned PMO professional to continue the advancement of the PMO and the organization's results in project management. The new PMO director, Ruth Anne Guerrero, was familiar with the concept of Organizational Project Management (OPM) and determined that the OPM approach would serve as a roadmap to advance the organization.
Organizational project management is critical to business (Exhibit 1). This approach aligns the organization's resources to its strategy through disciplined portfolio management.
Exhibit 1 – Organizational Project Management Model
This approach integrates the business needs of the strategy into programs and projects so it can deliver the intended benefits back to the organization through “intelligent” program management; it then executes the strategy-driven initiatives through superior project management. This systematic approach aligns the work of the organization to the strategies of the organization and delivers the results that advance the organization's strategy.
2008 OPM3® Assessment and Findings
In September 2008, AMFC decided to conduct an Organizational Project Management Maturity Model (OPM3®) assessment to understand which OPM capabilities were already in place and what improvements needed to be made to achieve their goals in the adoption of OPM and therefore improve business performance.
“Every PMO wants to improve,” Ms. Guerrero says. “I wanted to be able to objectively determine the maturity of our PMO. I wanted to leverage best practices and, if needed, make effective improvements to our processes. That is why I chose to have an OPM3 assessment performed.”
OPM3 is a global best practice standard used to measure and improve an organization's ability to deliver its strategy with the use of program, portfolio, and project management. An OPM3 assessment compares the existing capabilities of the organization with the best practices of Organizational Project Management.
“It is a diagnostic tool that allows organizations to understand what they are doing to achieve specific business results,” says Claudia Baca, PMP, OPM3 Professional Services, who worked with AMFC to complete the evaluation.
“What separates OPM3 from other models,” she says, is that it is “flexible enough to allow the organization to uniquely define excellence for itself. OPM3 uncovers gaps, and lets each organization determine what improvements are needed to meet their goals.”
AMFC's 2008 OPM3 assessment revealed that its organizational maturity was lower than desired. Although the company had excellent project resources and personnel, it also had gaps in its portfolio processes. There were opportunities to improve how AMFC prioritized its projects, so that the organization would be assured that it was delivering projects that adequately supported its strategic goals. AMFC had not yet embraced the discipline of program management.
2008 Improvement Plan
Once the results of the AMFC 2008 OPM3 assessment were understood, the PMO immediately built an improvement plan to implement the changes most important to AMFC. Using a building block approach (J. Ross, 2010, p. 155), the PMO developed a high level plan that detailed, quarter by quarter, the expected accomplishments.
“Some of the recommendations given after the 2008 OPM3 assessment were adopted immediately,” Ms. Guerrero says. “Others took a significant amount of time and effort to complete.”
Their first step in the 2008 OPM3 improvement plan was the completion of an organizational roles and responsibilities matrix that clarified the roles and responsibilities of project leaders and minimized redundant efforts. This also created the additional resource capacity required to work on other projects.
The PMO then created a goal for the end of 2010 to have benefit realization in place for 10% of the projects that their organization undertakes. In order to reach this goal, the organization determined that they would have to complete four different improvement activities in 2009 to reach the business alignment goal for 2010. The first activity was determining the criteria to be used to prioritize and select projects that would provide the most value to the organization. The second was aligning each project to the business strategy and identifying the expected business benefits for each project. Each project would have benefit realization metrics established to prove that the project did indeed deliver the expected business value to AMFC. And, finally, the organization would document and implement standard practices for projects and programs to guarantee each activity's successful completion.
2010 OPM3 Assessment and Findings
After two years of work, in the fall of 2010, AMFC conducted a follow-up OPM3 assessment to determine how well the gaps had been addressed, how opportunities were seized, and to set goals for the future, to ensure continuous, ongoing improvement. “The improvements achieved by AMFC are a wonderful example of how to grow and mature a PMO to deliver tangible value to its organization,” says Claudia Baca, PMP, OPM3 Professional Services, who also worked with AMFC to complete the second assessment.
The results of the 2010 assessment showed that AMFC was able to:
- Move from immature portfolio selection and management processes to a sophisticated Demand Management process, which engages the business owners to create a strategic valuation of all work, aligning that work to the strategies of the organization.
- Design, implement, and manage a benefits realization process that is managed at the individual project level as well as at the program and portfolio levels. Changes to benefits are managed as part of the change control process that already controlled changes to scope, budget, and/or timeline.
- Mature project management processes into a continuous improvement phase, and now yield more predictability in execution.
- Achieve best in class status in several areas of best practices, including their ability to build a project management community within AMFC.
Some challenges still remain, however.
- The organization still faces challenges with prioritization of multiple tracks of work.
- The program and project management methodologies and supporting tools are still being refined to support the new PMO responsibilities.
- It has become clear that there is an immediate need to better understand resource demand and capacity across a large part of AMFC.
The key to proving that AMFC's PMO improvements were, in fact, successful was the ability to gather data to support the progress that was made. The PMO had to build a set of measures to gauge improvement and then gather the data to measure. By doing so, it was able to demonstrate the benefits of the changes it recommended, while fine-tuning the processes themselves.
The improvement implementation was not seamless, but in the spirit of Organizational Project Management best practices, Ms. Guerrero and her team learned from their setbacks. “It's an evolution,” she says. “That's why I like Organizational Project Management; you can take the top ten pain points, fix those, and then find more challenges to solve.”
There are three key results from the adoption of Organizational Project Management and the improvements over the last two years that must be noted:
- The AMFC PMO was repositioned to be more strategic in nature. The PMO used to report to AMFC's Chief Administrative Officer, but recognizing the broad strategic role of the PMO, in 2010, it was moved to report to the Chief of Staff for the Executive Vice President and Chief Operating Officer. This reflected the expanded role the PMO is expected to play in the delivery of AMFC's strategic plans.
- AMFC has completely eliminated overlapping project management responsibilities and has streamlined its roles and responsibilities. Every project now has a single point of accountability, and that is the project manager. Having a single project manager accountable for the end-to-end project has created additional capacity for work with the same number of project managers. Project stakeholders and team members have benefited from this clarity, and communication has improved too.
- “In the end, the AmeriHealth Mercy Family of Companies strives to continue to grow, support operations, and develop its people. That's what drives us,” says Ms. Guerrero. She adds, “Since we've made the right investments to improve organizational project management, we've seen the company meet its strategic and operating plans. The benefits that we're reaping from the enhanced PMO are being used to fund additional project work, including future improvements. The PMO has truly become a strategic operations center for the organization.”
Nonetheless, after two years, AMFC's PMO had become the go-to organization for change. The business was getting the results it needed from efficiently implementing the right strategic projects, and the PMO concept was being embraced throughout the corporation as the way to get things done.
2010 Improvement Plan and Looking Ahead
AMFC is in the process of finalizing strategic plans for 2012 through 2015, and all projects need to demonstrate a connection to one or more of the key strategic goals in these plans. Broadly, the company's strategic goals generate annual operating goals, which in turn generate initiatives in their pursuit. Proposed projects are evaluated for strategic fit, risk, and other characteristics. As some projects are being completed and new project requests are received, AMFC's organization project management oversees the “demand” and “delivery” aspects tied to the plan. AMFC anticipates that the focus on benefit realization will result in renewed focus on meeting project timeframes and quality goals. According to Joanne McFall, Chief of Staff for AMFC's COO, “Our success in achieving our strategic goals is directly linked to the effectiveness of our overall portfolio management function. By continuing to enhance our use of Organizational Project Management practices, we expect to see even greater benefits in future years.”
The real measure of success, however, is more tangible to the staff of the AMFC PMO. The PMO has more requests from the business for projects to become part of the Corporate Portfolio because of the level of professionalism, dedication, and leadership displayed by of the PMO staff. Through its consistent approach, the AMFC PMO has led the entire organization to a new level of Organizational Project Management maturity.
The results of the 2010 OPM3 assessment have supported these conclusions and given AMFC the ability to set further goals in pursuit of continuous improvement. However, the story of the AMFC PMO's journey to maturity will not end here. As additional improvements to methodologies, tools, and skill sets are made, new expectations and goals are set, which must be met. How will AMFC be able to know for certain that it continues to mature its organizational project management practice? With the next OPM3 assessment and improvement plan, of course!
Letavec, C., & Bolles, D. (2010). The PMOSIG program management office handbook: Strategic and tactical insights for improving results. Ft. Lauderdale, FL: J. Ross Publishing.
© 2011, Claudia M. Baca & Ruth Anne Guerrero
Originally published as a part of 2011 PMI Global Congress Proceedings – Dallas, Texas USA