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Subjects:
Healthcareindustry,
Managementstyles,
Performanceevaluation,
Studies
ClassificationCodes
9130
Experimental/theoretical,
2200
Managerialskills,
8320
9190
UnitedStates
Locations:
UnitedStates,
US
Author(s):
KimberlyReynolds
Articletypes:
Feature
Publicationtitle:
May/Jun2002.
Vol.
47,
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
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'