Applying the balanced scorecard in healthcare provider.docx

Applying the balanced scorecard in healthcare provider.docx

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Applyingthebalancedscorecardinhealthcareprovider

Applyingthebalancedscorecardinhealthcareproviderorganizations/Practitioner'sResponse

NooreinInamdar, RobertSKaplan, KimberlyReynolds. JournalofHealthcareManagement. Chicago:

May/Jun2002.Vol.47, Iss. 3;  pg. 179, 18 pgs

 »

Jumptofulltext 

Subjects:

Healthcareindustry,  Managementstyles,  Performanceevaluation,  Studies

ClassificationCodes

9130 Experimental/theoretical,  2200 Managerialskills,  8320 Healthcareindustry,  9190 UnitedStates

Locations:

UnitedStates,  US

Author（s）:

NooreinInamdar,  RobertSKaplan,  KimberlyReynolds

Articletypes:

Feature

Publicationtitle:

JournalofHealthcareManagement. Chicago:

 May/Jun2002. Vol. 47, Iss. 3;  pg. 179, 18 pgs

SourceType:

Periodical

ISSN/ISBN:

10969012

ProQuestdocumentID:

122868431

TextWordCount

5599

ArticleURL:

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Abstract（ArticleSummary）

Severalinnovativehealthcareexecutiveshaverecentlyintroducedanewbusinessstrategyimplementationtool:

thebalancedscorecard.Forthispaper,executivesinnineproviderorganizationsthatwereimplementingthebalancedscorecardweresurveyed.Thesurveyaskedaboutthefollowingissuesrelatingtoitsimplementationandeffect:

1.theroleofthebalancedscorecardinrelationtoawell-definedvision,mission,andstrategy,2.themotivationforadoptingthebalancedscorecard,3.thedifferencebetweenthebalancedscorecardandothermeasurementsystems,4.theprocessfollowedtodevelopandimplementthebalancedscorecard,5.thechallengesandbarriersduringthedevelopmentandimplementationprocess,and6.thebenefitsgainedbytheorganizationfromadoptionanduse.Theexecutivesreportedthatthebalancedscorecardcouldbesuccessfullyappliedinthehealthcaresector.

FullText （5599 words）

CopyrightAmericanCollegeofHealthcareExecutivesMay/Jun2002

EXECUTIVESUMMARY

Severalinnovativehealthcareexecutiveshaverecentlyintroducedanewbusinessstrategyimplementationtool:

theBalancedScorecard.Thescorecard'smeasurementandmanagementsystemprovidesthefollowingpotentialbenefitstohealthcareorganizations:

*Italignstheorganizationaroundamoremarket-oriented,customer-focusedstrategy

*Itfacilitates,monitors,andassessestheimplementationofthestrategy

*Itprovidesacommunicationandcollaborationmechanism

*Itassignsaccountabilityforperformanceatalllevelsoftheorganization

*Itprovidescontinualfeedbackonthestrategyandpromotesadjustmentstomarketplaceandregulatorychanges

WesurveyedexecutivesinnineproviderorganizationsthatwereimplementingtheBalancedScorecard.Weaskedaboutthefollowingissuesrelatingtoitsimplementationandeffect:

1.TheroleoftheBalancedScorecardinrelationtoawell-definedvision,mission,andstrategy

2.ThemotivationforadoptingtheBalancedScorecard

3.ThedifferencebetweentheBalancedScorecardandothermeasurementsystems

4.TheprocessfollowedtodevelopandimplementtheBalancedScorecard

5.Thechallengesandbarriersduringthedevelopmentandimplementationprocess

6.Thebenefitsgainedbytheorganizationfromadoptionanduse

TheexecutivesreportedthattheBalancedScorecardstrategyimplementationandperformancemanagementtoolcouldbesuccessfullyappliedinthehealthcaresector,enablingorganizationstoimprovetheircompetitivemarketpositioning,financialresults,andcustomersatisfaction.ThisarticleconcludeswithguidelinesforotherhealthcareproviderorganizationstocapturethebenefitsoftheBalancedScorecardperformancemanagementsystem.

Executivesofhealthcareproviderorganizationsthatfaceincreasedpayerpower,growinghealthcareconsumerism,andconstrainingregulationsmustbalancecomplextradeoffsamongcost,quality,access,andconsumerchoice（Shortelletal.2000）.Theylooktonewbusinesstoolsandbestpracticestohelpthemtakeamorestrategicapproach,onethatwillnotonlydifferentiatetheirservicesandattractmorebusinessbutalsocomplementtheircurrentfocusonoperationalimprovements.HealthcareleadershavebeguntousetheBalancedScorecard（BSC）,a"multidimensionalframeworkfordescribing,implementing,andmanagingstrategyatalllevelsofanenterprisebylinkingobjectives,initiatives,andmeasurestoanorganization'sstrategy"（KaplanandNorton1996）.

Thisnewmanagementtoolprovidesanenterpriseviewofanorganization'sperformancebyintegratingfinancialmeasureswithotherkeyperformanceindicatorsrelatedtocustomerpreferences;internalbusinessprocesses;andorganizationalgrowth,learning,andinnovation.Basedonexperienceinotherindustries,theBSChasthepotentialtodeliverthefollowingbenefits:

*Provideaframeworkforfocusandalignmentaroundamarket--orientedcustomer-focusedstrategy

*Establishcoreprinciplesandprocessesforimplementingthestrategy

*Provideacommunicationandcollaborationmechanismthatclearlyassignsaccountabilitytothoseresponsibleforcarryingoutthestrategyatalllevelsoftheorganization

*Developameasurementandreportingsystemtoassesstheprogressandsuccessofthestrategy

*Directresourceallocationstodevelopnewproductsandservicesfortargetedcustomersandimprovetheiraccesstohealthcare

*Allowcontinualfeedbackandlearningprocesses,facilitatingrapidadjustmentstomarketplaceandregulatorychanges

AlthoughBSCapplicationsinhealthcareorganizationshavejustbegun,severalarticleshavedescribedtheuseandpotentialbenefitsofthistoolinvarioushealthcaresettings:

communityhealthpartnerships（Hagemanetal.1999）;Children'sHospital（Melionesetal.2001）;ArmyMedicalDepartment（AMEDD）（Holt2001）;outpatientservices（Curtright,Stolp-Smith,andEdell2000）;andhospitalsystems（Pinketal.2001）.AnothersetofarticlesprovidesinformationandadviceonthegeneralissuesandspecificstepshealthcareorganizationsshouldconsiderwhenbuildingaBSC（Oliveira2001;Mac--Stravic1999;Weber2001;GriffithandKing2000）.Noneofthesearticles,however,describesthemotivation,experience,andresultsfromtheperspectiveofhealthcareexecutiveswhohaveimplementedtheBSCintheirorganizations.

Toaddressthisgap,weconductedaresearchstudyofnineproviderorganizationsthathadbeguntoimplementtheBSC.ThefirstsectionofthisarticleprovidesabriefdescriptionoftheBSC,thesecondsectionpresentstheresultsoftheresearchstudy,andthethirdsectionprovidesguidelinesforsuccessfulimplementationoftheconceptinhealthcareorganizations.

DESCRIPTIONOFTHE

BALANCEDSCORECARD

TheBSCoriginatedin1990fromaone-year,multicompanystudyofprivatesectorcompanies（KaplanandNorton1992）.Thestudyconcludedthateveninfor-profitorganizations,relianceonfinancialmeasuresalonewasinsufficientformanagingcomplexandeverchangingbusinessenvironments,especiallyasorganizationsbecamemorecustomerfocusedandwantedtobenefitfromtheirintellectualcapitalandknowledge-basedassets.Duringthenextdecade,theBSCevolvedfromanimprovedmeasurementsystemtoastrategicmanagementsystem.SeniorexecutivesusedtheBSCasacentralorganizingframeworktoformulate,communicate,andexecutestrategyandtolearnandadapttheirstrategytochangingconditions（KaplanandNorton2001）.

TheBSCstrategicmanagementsystemusesaframeworkandcoreprinciplestotranslateanorganization'smissionandstrategyintoacomprehensivesetofperformancemeasuresandstrategicallyalignedinitiatives.Theorganization'smissionandstrategyaretranslatedintostrategicobjectivesandmeasuredaroundfourperspectives--

（1）financial,

（2）customer,（3）internalprocess,and（4）learningandgrowth--thatrepresenttheBSCframework.Theframeworkprovidesabalancebetweenshort-andlong-termobjectives,financialandnonfinancialmeasures,andexternalandinternalperformanceindicators.Mostimportantly,thescorecardbalancestheoutcomestheorganizationwantstoachieve（typicallyinthefinancialandcustomerperspectives）andthedriversofthoseoutcomes（typicallyintheinternalprocessandlearningandgrowthperspectives）.Detailedcause-and-effectreasoning,depictedinastrategymap,linksthedriversofthestrategytothedesiredfinancialandcustomeroutcomesthatrepresentthesuccessofthestrategy（KaplanandNorton2000）.

ExecutivesimplementedtheBSCframeworkbyapplyingfivecoreprinciples:

1.Translatethestrategyintooperationalterms

2.Aligntheorganizationtothestrategy

3.Makestrategyeveryone'sjob

4.Makestrategyacontinualprocess

5.Mobilizechangethroughexecutiveleadership

Inthisresearchstudy,weevaluatedthepotentialvaluetohealthcareproviderorganizationsfromapplyingtheBSCframeworkandthefivecoreprinciples.Thenextsectiondescribesandpresentstheresultsfromtheresearchstudy.

RESULTSONTHE

APPLICATIONOFTHE

BSCINHEALTHCARE

TheresearchstudyexaminednineinnovativehealthcareproviderorganizationsthatwereearlyadoptersoftheBSCframework.WeconductedinterviewswithexecutivesoftheseorganizationstoevaluatethepotentialvalueoftheBSCasastrategicmanagementtoolforhealthcareorganizations.Figure1describesthepositionsoftheinterviewparticipantsandtheirorganizationtype（forconfidentialityonlytheparticipants'andorganizations'