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Fall 2009 IDN SummIt Peer-to-Peer learNINg exchaNge reSearch rePortS

KPIs and Balanced Scorecards

Final Report October 2009.Information compiled by Healthcare Business Media, Inc in cooperation with the Exchange facilitators. For any questions or comments please contact Lisa Ponssa, lisa@idnsummit.com or 866.530.4441 ext. 2.

using the Balanced Scorecard in Supply chain
Among the issues you may want to address are the following: • • • • • • • • • • • • • • What is the balanced scorecard and how does it relate to supply chain? What are the benefits of implementing a balanced scorecard in supply chain? How does the balanced scorecard differ from other methodologies? Does every supply chain organization need a balanced scorecard of some type? Is a balanced scorecard champion needed? Why? How does an organization identify its scorecard measures? Do standard key performance indicators (KPIs) need to be modified to meet the needs of supply chain? How do you involve the customer in developing KPIs? How is the balanced scorecard implemented? How can an organization determine ROI? What are the unique balanced scorecard needs and priorities of the healthcare environment? Does an organization need external support to implement balanced scorecard? What are the key challenges of implementing balanced scorecard? How can these roadblocks and barriers be overcome? What are the factors that contribute to balanced scorecard success?

Introduction

Healthcare organizations continue to be buffeted by a perfect storm—a confluence of forces that include the economy, workforce shortages, revenue and reimbursement shortfalls, and pressures to demonstrate safety, quality, performance and cost savings. To gain control over these forces, healthcare organizations—including supply chain organizations—are implementing a variety of strategies. Writing in The Balanced Scorecard: Translating Strategy into Action, Robert Kaplan and David Norton of the Harvard Business School observed that organizations tend to fail not because of bad strategies that lead to inferior performance. They fail because of their inability to deploy, communicate, monitor and refine the strategies. Many organizations are trapped in traditional financial reporting systems, which provide an indication of how an organization performed in the past, but offer no insight into how an organization will perform in the future. This is a problem since a critical element of any organization’s performance management system is knowing where the organization stands in relation to where it wants to be. Decision makers can better monitor performance if they receive accurate, timely, relevant measurement reports. As management gurus have noted, “If you can’t measure it, you can’t manage it.” Unfortunately, organizations often fail to look at the full range of activities that result in superior performance. To deal with this problem, Kaplan and Norton developed the balanced scorecard, a performance measurement system that considers financial measures as well as customer, business process and learning measures. Development of a balanced scorecard begins with a definition of strategy, objectives, company-wide and business unit targets and individual measures and targets. Anything can be measured through the balanced scorecard. Moreover, when the balanced scorecard is used properly, it can generate several benefits. Among them: • • • • • • • Enhanced structure Shared objectives Positive financial return Improved functionality Raised profiles for key projects Funding and internal support Project implementation and success

Four core Perspectives
The balanced scorecard translates an organization’s strategy into four perspectives (financial, customer, business processes and learning and growth) with a balance among the following elements: • Internal and external measures • Objective and subjective measures • Performance results and drivers of future results The balanced scorecard can be...
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