Balance Scorecard in Healthcare Industry

Topic 3: 1. There are a few different ways that performance management studies affect patient care outcomes. Warburg (2006) outlines a couple of them. One way is that performance management studies highlight the need for measurement as a central part of performance management. Studies illustrate how the different aspects of performance management link with patient outcomes. This assists health care managers in designing the best performance management systems for their organizations. The way a performance management system is designed has a high degree of influence over patient outcomes. Therefore, it is valuable for managers to know what types of performance management systems exist, where they are best applied, what the expected outcomes of implementing such systems might be and what the risks associated with these systems might be. All of these different factors are covered in the studies around performance management systems in health care.

The Balanced Scorecard (BSC) is a strategic planning and management system that is used widely in different organizations all over the world. The concept was originated by Robert Kaplan and David Norton in the early 1990s. In

In 1996, the Hospital found itself confronted by mounting challenges caused by falling revenues and increasing expenses. Cost per case for children's services increased by 42% over a three year period from 1993 to 1996. The Hospital was faced with having to consider drastic solutions, including eliminating programs and reducing services. Staff productivity along with patient and staff satisfaction had also fallen significantly. Duke responded to these challenges by implementing the balanced scorecard methodology, an analysis technique that helped them translate their mission of delivering quality clinical outcomes, along with their overall business strategy, into specific quantifiable goals that they could monitor to determine how well their organization was achieving those goals. The BSC methodology, which had grown so popular that the Gartner Group estimated that at least 40 percent of all Fortune 1000 companies were using it (TechTarget, 2012), helped Duke Children's hospital to strategically align their administrators and clinicians to

The Balanced Scorecard (BSC) is a powerful diagnostic tool which provides managers with a vision and strategy of the organization to completely value the performance of the organization(Roussas & Mccaskill 2015). BSC integrates financial measures with several crucial factors to create a long or short term plan(Huang 2009). This system emphasizes ‘leading and lagging indicators, internal performance perspectives, and quantitative and qualitative objectives’(Roussas & Mccaskill 2015). BSC works by four perspectives:

Duke Children’s Hospital fell into a crisis within the mid-1990s. Expenses were rising while dramatic reductions in net margin were occurring. Staff productivity fell and staff satisfaction was at an all-time low. They overcame the crisis by implementing the balanced scorecard. Their way of designing their scorecard catered to their business in healthcare. The higher officials of Duke Children’s Hospital made a three-step process in designing their balanced scorecard. “The three steps of proven rapid-fire approach are to: get connected, get results, and get smarter” (Meliones, 2001).

“The balanced scorecard should translate a business unit’s mission and strategy into tangible objectives and measures. The measures represent a balance between external measures for shareholders and customers and internal measures of critical business processes, innovation and learning and growth. The measures are balance between outcome measures, the results of past efforts, and the measures that drive future performance. And the scorecard is balanced between objective, easily quantified outcome measures and subjective, somewhat judgmental, performance…”

Healthcare organizations (HCOs) are in the business of providing quality care, while reducing cost and meeting various guidelines and regulations. Therefore, it is necessary that HCOs monitor, measure, and evaluate the performance of their organization. Balanced scorecards is a tool that is used in healthcare to monitor organization performance by focusing on indicators that affect performance. A balanced scorecard was created and implemented at a clinic at the Oregon Health and Science University Family Medicine. The article “Performance Enhancement Using a Balanced Scorecard in a Patient-centered Medical Home” discusses how the balanced scorecard was developed, how it was used, and how it improved performance.

Martello, M., Watson, J., Fischer, M., (2008). Implementing a balanced scorecard in a not-for-profit organization. Journal of Business & Economics Research. 6(9), 67-80. Retrieved from: http://journals.cluteonline.com/index.php/JBER/article/view/2471/2517

As the book explains, health care organizations are utilizing a scoring system that concentrates to improve on performance and productivity which will give effective information on how well that organization is working. Unfortunately, there are some organizations that may try to use over use the measurement process and can ultimately have a negative effect. The administration and leadership side needs to be on the same page and focus mainly on the performance improvement efforts and not lose site of their overall effectiveness. Each scorecard and dashboard need to be used according to the level of focus, for example, with governance, organizational performance measures should be the main concentration, leadership should have the main focus

Literature indicates successful usage of business intelligence balanced scorecards in healthcare organisations - burn centre (Wachtel, Hartford, & Hughes, 1999), a kidney transplant (Colaneri, 1999), an ambulant treatment (Curtright, Stolp-Smith, & Edell, 2000), an electronic patient record (Gordon & Geiger, 1999), a children’s hospital (Meliones, 2000), anaesthesiology (Zbinden, 2002), cardiology (Chang, 2002), behaviour therapy (Santiago, 1999), dialysis (Peters, 1999), information strategy of

This paper highlights viability of having a new product offering by Medstreaming Company namely a Business Intelligence Balanced Scorecard specifically designed for the healthcare sector. Focus of the study is on identifying the appropriate measurement metrics for the balanced scorecard. The project has added knowledge to the critical issues which need to be addressed by the healthcare organizations in implementing the Business Intelligence Balanced Scorecard product within the system. This project also discusses the benefits which the proposed business intelligence tool once implemented in a healthcare organization can provide for all hierarchical levels of the organization.

In this discussion, the researcher believes the Balanced Scorecard method is a 20th century innovation that can be used to improve hospital performance, strategic planning and implementation initiatives.

Another perspective of balanced scorecard is learn and growth. For healthcare industries, health providers must have sufficient knowledge within their specialty to provide safe and efficient services to patients. The primary objective for patients care is the quality of interventions and procedures provided to reach desirable outcomes. In addition, training and development for staff is required to ensure safe and effective work environment. Lastly, the workforce should be evaluated to address any deficiencies and morale of employees.

Benchmarking is a powerful tool used to promote continuous improvement of an organization. It enables the decision-makers to realize how much improvement is required to achieve satisfactory performance. The Joint Commission on Accreditation of Healthcare Organizations (JCAHO) has defined benchmarking as “a measurement tool for monitoring the impact of governance, management and clinical and logistical functions” (as cited in Ettorchi-Tardy, Levif & Michel, 2012). There are four different kinds of benchmarking: internal, external or competitive, functional and generic or best practice. Also, there are several benefits of using benchmarking within healthcare organizations such as improving the quality of patient care, encouraging accountability among providers, improving productivity, yielding greater efficiency, meeting accreditation requirements, etc.

The BSC was originally developed as a performance measurement system in 1992 by Dr. Robert Kaplan and Dr. David Norton at the Harvard Business School. Unlike earlier performance measurement systems, the BSC measures performance across a number of different perspectives—a financial perspective, a customer perspective, an internal business process perspective, and an innovation and