The Balanced Scorecard for Health Care Organizations
As clinical outcomes become more
important in health care, methods to assess
these outcomes become more important. A
strategic management tool documented in a 1992 Harvard
Business Review article written by Robert
Kaplan and David Norton has gained prominence as
a tool to measure "the outcomes
of business strategies." And this tool is
increasingly being used in the health care
arena. The name of the tool documented by Norton
and Kaplan is the Balanced Scorecard (BSC).
The BSC was designed to encourage managers to focus, in a more evenly distributed fashion, on four organizational components that contribute to an organization's success. These components are the financial component, the customer component, the internal operation component, and the learning and growth component.
Norton and Kaplan called these components perspectives. So the BSC encourages managers to view the organization from four perspectives. These perspectives are the financial perspective, the customer's perspective, the internal business process perspective, and the learning and growth perspective.
When considering the organization's financial perspective, the organization evaluates its financial affairs, and seeks to answer the following question: What does the organization need to do to improve its financial position? When considering the customer's perspective, the organization seeks to answer the following question: What does the organization need to do to satisfy its customers so that customers will purchase products or services?
When considering the internal business process perspective, the organization seeks to answer the following question: What internal processes does the organization need to perform to deliver to the customer the best product or service? And finally, when considering the learning and growth perspective, the organization seeks to answer the following question: What does the organization need to do to "continue to improve and create value?"
Once the organization answers these questions, the organization knows what objectives need to be achieved to satisfy each of the four perspectives. The organization can then establish these objectives, construct targets for each one of the objectives, design measurements for each one of the objectives, and develop initiatives to achieve the objectives, using the measurements to determine success.
The objectives, targets, measurements, and initiatives are shown on a scorecard. And tracking these items for the four perspectives or domains will give executives a balanced view of the organization's strategic status.
Since 1992, organizations in different industries have used the BSC as part of their strategic business process. And while health care organizations were not among the first organizations to use the strategic tool, many health care organizations have begun to use the tool.
For example, an orthopedic medical practice of fourteen surgeons implemented the BSC, and the tool has benefited the practice. According to one source, "The BSC process resulted in increased engagement and ownership for the management team and was a positive exercise that created agreement about what processes and results are really important to our success." So, medical practices, including bariatric practices might want to consider BSC as a tool to measure outcomes.
The BSC was designed to encourage managers to focus, in a more evenly distributed fashion, on four organizational components that contribute to an organization's success. These components are the financial component, the customer component, the internal operation component, and the learning and growth component.
Norton and Kaplan called these components perspectives. So the BSC encourages managers to view the organization from four perspectives. These perspectives are the financial perspective, the customer's perspective, the internal business process perspective, and the learning and growth perspective.
When considering the organization's financial perspective, the organization evaluates its financial affairs, and seeks to answer the following question: What does the organization need to do to improve its financial position? When considering the customer's perspective, the organization seeks to answer the following question: What does the organization need to do to satisfy its customers so that customers will purchase products or services?
When considering the internal business process perspective, the organization seeks to answer the following question: What internal processes does the organization need to perform to deliver to the customer the best product or service? And finally, when considering the learning and growth perspective, the organization seeks to answer the following question: What does the organization need to do to "continue to improve and create value?"
Once the organization answers these questions, the organization knows what objectives need to be achieved to satisfy each of the four perspectives. The organization can then establish these objectives, construct targets for each one of the objectives, design measurements for each one of the objectives, and develop initiatives to achieve the objectives, using the measurements to determine success.
The objectives, targets, measurements, and initiatives are shown on a scorecard. And tracking these items for the four perspectives or domains will give executives a balanced view of the organization's strategic status.
Since 1992, organizations in different industries have used the BSC as part of their strategic business process. And while health care organizations were not among the first organizations to use the strategic tool, many health care organizations have begun to use the tool.
For example, an orthopedic medical practice of fourteen surgeons implemented the BSC, and the tool has benefited the practice. According to one source, "The BSC process resulted in increased engagement and ownership for the management team and was a positive exercise that created agreement about what processes and results are really important to our success." So, medical practices, including bariatric practices might want to consider BSC as a tool to measure outcomes.
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