Balanced Scorecard at St. Elsewhere Hospital

1. What is the Balanced Scorecard/What is its purpose?

- The Balanced Scorecard provides a framework for strategic management by transforming a company’s strategic goals into an integrated collection of objectives and performance indicators. The performance indicators are grouped into four perspectives which include: Financial, Customer, Internal Business Process, and Learning & Growth. Objectives are then formed within each of these perspectives and measures are chosen to create a scorecard that promotes the company’s strategy. The objects and performance measures within each perspective must be linked together. This overall process allows a company’s overall strategy to be transparent to all employees within the organization.

2. Describe each of the four perspectives of the Balanced Scorecard?

- Financial Perspective: These are usually associated with profitability. Typical measures could include operating profit, return on assets, and individual product line or customer profit margins. However many other financial measures can be used as they usually differ depending on what industry you are in.
- Customer Perspective: These measures include customer satisfaction, customer retention, and new customer acquisition which in turn indicated how well a company is providing value. Understanding what customers value is a big part of this perspective.
- Internal Business Process Perspective: In this perspective, companies need to identify what individual processes within their business provide the most value to their customers. Once these critical processes are identified, companies need to measure the critical success factors for each process.
- Learning and Growth Perspective: Measures in this perspective attempt to identify the skills and tools needed to improve key internal processes. Indicators include employee skill level, training availability, and employee satisfaction attempt to measure a company’s ability to excel at key business processes.

3. Why might the Balanced Scorecard be particularly important for healthcare organizations?

- The Balanced Scorecard is important for healthcare organizations now of days due to the changes in reimbursements. In previous times, these healthcare organizations could just raise prices to pay for the escalating costs and inefficiencies so linking the hospital’s strategy with activities of its employees was less important. However, the change in reimbursements cause these hospital’s to seek a way to better link these two areas together. Using the Balance Scorecard will help these hospitals to decrease inefficiencies which will lower operating costs for them.

4. Briefly describe the Hospital’s current financial and strategic situation.

- St. Elsewhere Hospital’s current situation consisted of many financial problems and an administration that was measuring management performance in the wrong way. The hospital was seeing lower reimbursement rates and higher costs at the same time. This was forcing them to focus on cost reduction. However this was counterproductive in their hospice unit. It ultimately lead to poor relationships with their primary feeder units in the hospital and an unexperienced staff. This strategy was not allowing the physicians to live up to their objective of providing high quality care. These physicians ended up refusing to refer their patients to St. Elsewhere’s hospice unit which hurt revenue coming in for the hospital.

5. Explain how the Balance Scorecard aids the hospital staff in achieving the Hospital’s mission.

- The Balanced Scorecard that was developed to focus on the promotion of patient-focused care. The scorecard allowed the hospital to implement strategy that demonstrates how to link its strategy to the daily activities of its employees. To ensure this happened, the performance measures chosen would have to communicate the unit’s and hospital’s goals to all members of the hospice unit. The scorecard helped to guide the daily actions of the hospice unit staff to achieve the hospital’s mission of providing patient focused care. The scorecard also helped to set goals that ensured the measures were consistent with the hospital overall mission and that the measure were linked to one another in a chain of cause-and-effect relationships that communicated the unit’s strategic goals.