Implementing and Using Balanced Scorecards in Healthcare

(Sept. 23, 2009)

Business operations have changed dramatically in recent years and healthcare is no exception. Healthcare executives now must run their hospitals and clinics as they would most any other business entity - with a fine balance of high quality and customer satisfaction coupled with adequate financing and long-term strategic plans.

In the mid-1990's the concept of balanced scorecards (BSC) became popular among many large corporations including AT&T, Intel and 3M. With the influx of managed care, government intervention, aging baby boomers and new technologies, healthcare began to embrace this latest management strategy to cut costs and improve quality.

Essentially, the way BSCs - also referred to as clinical scorecards or dashboards - work is via integration with a clinical application; for example, an electronic medical record (EMR). The BSC system automatically retrieves data, designated by the development team, from the EMR, which provides information on how well the appointed goals are being met.

Today, BSC practices appear to have translated smoothly from corporate America to the US healthcare system. A number of healthcare organizations have successfully reduced costs, cut length-of-stays (LOS) and avoided staff turnover by using the core strategies of BSC. Those BSC core ingredients include:

  • developing a strategic plan, including goals to be accomplished;
  • linking key areas: typically, finance, customer service, business process and staff satisfaction;
  • establishing specific indicators and measurements for each area identified;
  • establishing a regular reporting period (monthly, quarterly) to evaluate results and address variances in indicators;
  • creating a system for addressing and resolving variances in measurements.