Balance Scorecard in Healthcare Industry

Topics: Strategic management, Management, Balanced scorecard Pages: 10 (2968 words) Published: November 8, 2008
The BSC, developed by Robert Kaplan and David Norton, has become a popular management tool for Performance, Management since 1990 s. Adoption of it became main stream amongst many industries quickly, however, the healthcare industry has been slow to adopt them. The healthcare organizations had to face some issues in adopting the BSC to their industry like cost structure, competition, payor hurdles, increasing demand for qualitative treatments, shortage of talented specialists, which forces them to balance cost versus patient outcomes. Key to overcoming these issues is utilizing innovative approaches for performance and performance measurements, such as BSC. By the end of this report, you will be able to see how the BSC has been efficiently used to transform action into improved performance. . BSC in Health Care Industry & CHS

As it is already known BSC was first introduced in the year 1990 but the health care industry and a lot of other non-profit organizations dint really adopt it till 1996 when a few American and Canadian hospitals started using the system, and till around the year 2000 only 70 out of the 6000 hospitals were using the method. In the year 1997 the Howard Business Review listed the BSC as one of the most influential ideas of 20th century, as it has proven to have a successful track record in cost savings, in improving efficiency, and management of the strategic plans in a better way. The name of the hospital that we have taken into consideration in our case study has not been provided with its real name, and is fictitiously been named as Crandon Hospital. (Austill et al., 2007) Again going back to the industry as a whole, it has been seen that it has had tremendous growth in the past two decades, in which we have seen a lot of small medical centres taking forms of today’s big well reputed hospitals and for that case well renowned hospitals being shaped into health care cities, for example the Dubai Health Care City. There has been a lot of credit also been given to the Balanced Scorecard for having an association with these transformations. More about the BSC and its connection with the health care industry and especially with our case study on the Crandon Hospital can be seen clearly in the following pages.

Balanced Scorecard
“The Balanced Scorecard (BSC) is an instrument which translates the mission and strategy of an organization into a broad collection of action metrics and indicators, and which subsequently provides the structure necessary to serve as control and strategic measurement system.” (Ignacio, 2005). Balanced scorecard helps the business organization to simplify their decision making in regards to strategic planning, diagnostics feedback, and to improve their overall strategic performances. Balanced scorecard basically originated by undergoing three distinctive phases which can be classified as following:- Stage1:- Measurement Tool- Originally, the balanced scorecard was used as a tool for measurement with connection to the tactical and operational forces. It generally helped the business unit to display a list of indicators which helped the business to perform well, as compared to that of only the financial indicators which were used initially. It was then that the four prospective of BSC were formulated which were financial, customer, internal processes, learning and growth. (Ignacio, 2005) Stage 2:- The four prospective:-

Financial Perspective
Customer’s perspective
Internal operations
Innovation and learning
Stage 3:- Strategic Organizational Plan -In this stage, the strategic plan of the organization is being communicated to the different audiences which include the staff members, management, decision makers and the business unit’s customers. The plan is generally depicted by a strategic map which demonstrates the cost effect relations between the different business strategy objectives. (Papenhausen, 2006) Why Adopt the Balanced Scorecard?

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