How to Develop a Balanced Scorecard In Healthcare - With Examples

Learn how to build a balanced scorecard in healthcare. Get examples to implement a strategic performance management tool that drives success.
How to Develop a Balanced Scorecard In Healthcare - With Examples
Learn how to build a balanced scorecard in healthcare. Get examples to implement a strategic performance management tool that drives success.

Every hospital and medical facility wants to provide high-quality care, but that requires planning—setting goals and continuously striving to be better. Known as strategic planning, this process allows healthcare providers to develop a long-term vision that ensures their organization will remain financially healthy and their patients will continue to receive the best care possible.

Many healthcare facilities rely on the Balanced Scorecard framework to help them create and execute these plans. The Balanced Scorecard (BSC) offers a way to convert the mission and vision of any type of organization into specific and measurable goals, thus providing a thoughtful and clear plan of action.

Wondering how the balanced scorecard can help your healthcare organization continuously improve? Keep reading to learn more about the Balanced Scorecard in healthcare, and see some examples of how organizations are currently using it to get ahead.

What is a Balanced Scorecard?

Created by Drs. Robert S. Kaplan and David P. Norton, the Balanced Scorecard (BSC) is a revolutionary way to handle strategy management and has been one of the most popular methodologies used over the past three decades. Notably, it centers your vision and strategy around four distinct perspectives: customer, internal processes, financial, and learning/growth. Essentially, the Balanced Scorecard allows you to get your whole team on the same page with organizational goals in a clear and understandable way. It allows you to:

  • See the alignment of your strategic plan. Using the balanced scorecard framework, you’ll define goals for each perspective, measures to quantify progress toward goals, and projects to achieve the goals. Everything can be logically and neatly tied together.
  • Provide a high-level overview of how well the organization is following and executing its strategic plan. After establishing clear alignment and measurable goals, it will be obvious whether your strategy is on track or hitting speed bumps. Having this transparency also helps employees understand how their role fits into the organization’s goals and mission as a whole.

Although it started out being used primarily in the private sector, you now see the Balanced Scorecard in healthcare, nonprofit, and government organizations, as well as a number of other types of associations. If you have a strategic plan or goals to improve certain areas of your healthcare facility, the Balanced Scorecard is a relevant and powerful tool to help you get results.

For an in-depth explanation of the Balanced Scorecard, check out this article.

Why Healthcare Organizations Should Use The Balanced Scorecard

Healthcare institutions operate in a turbulent environment that is continuously impacted by regulatory shifts, technological changes, new epidemics and pandemics, and more. But that shouldn’t preclude them from being strategic. It just means they need to be more thoughtful than some other industries about what might happen in the next three to five years, and use every tool at their disposal—like the balanced scorecard—to help them be successful.

Strategic planning is challenging for organizations in all industries, but the way the Balanced Scorecard works makes it possible for healthcare institutions in particular to overcome some specific obstacles to strategy execution because:

It aligns the activities of all departments

Hospitals tend to be large, complex organizations where departments have varying priorities—not all of which serve a unified goal. The Balanced Scorecard facilitates alignment across departments by giving departmental leaders a way to connect their priorities to those of the organization, ensuring everyone is working toward the same ultimate goals.

The balanced scorecard format also makes it easy for leaders to see how their goals are interlinked with those of other departments, which highlights potential opportunities to collaborate. For example, knowing that an organizational goal is to improve patient safety, the HR department of a small community hospital might decide to collaborate with operating room managers to implement a new training program for staff members around operating room safety. Similarly, if a goal is to increase employee retention, leaders from various departments could work together to develop ideas around how to improve morale.

It improves transparency and accountability

Employees aren’t always aware of the role they play in achieving organizational goals, especially if they work in a sprawling healthcare network. This results in little-to-no accountability for some employees, which leads to poor performance.

The Balanced Scorecard framework can be cascaded down so that even employees have key metrics that reflect the larger goals. As a result, everyone is accountable in some way for supporting the organization’s mission and vision, and everyone is aware of the metrics that will impact goal achievement.

Using the balanced scorecard also allows hospitals to do strategy mapping, a visual approach to strategy that helps communicate the plan to employees more effectively. Compare a one-page, colorful map to a strategic plan document that runs more than 100 pages—which most employees will never see or hear about—and you can clearly see the benefit!

It simplifies performance measurement and management

Big data can lead to big problems for healthcare organizations, many of which struggle with data overload. Tracking too much data makes it difficult to organize, understand, and analyze, which means most of the data (and the effort put into collecting it) goes to waste.

The Balanced Scorecard gives healthcare organizations a way to focus their efforts on the places where data will have the greatest impact. You’re no longer tracking data for the sake of tracking it, or trying to analyze data simply because you have it. Instead, you’re focused on collecting and tracking strategic data—that which is important to helping you achieve your objectives.

How To Put The Balanced Scorecard Approach To Work In Your Organization

In order to fully understand how to put this approach to work, here’s a general explanation of how to create a Balanced Scorecard with a strategic model that includes these example perspectives: quality of patient care (customer), accountability (internal processes), sustainability (financial), and research and education (learning/growth).

These are four steps your organization might take to develop its scorecard:

Define each perspective and key outcome(s)

For quality of care, the definition might be: “Lead in the development, application, and promotion of quality and safe practices system-wide that improve the patient experience and outcomes.”

Establish strategic goals

Next, establish several strategic goals designed to help you achieve each perspective. To meet the example listed above, one goal, or “objective,” could be: “To offer industry-best medical treatments that lead to measurable improvement in patient well-being.”

Track measures for each goal

To ensure objectives are met, define measures of success for each goal/objective. A measure for the example above could be “Reduce the percentage of hospital readmission rates and/or hospital acquired conditions (HACs).

Set and track targets

Then, set a target for each measure—for example, “Reduce readmission rates by 15% in [year]” could be implemented. As time goes on, you will be able to determine whether your organization met and exceeded targets, or if it underperformed.

Create projects

Projects, or initiatives, are where the action takes place. This is where you outline the tangible steps that will be taken to ensure the objectives are met. Continuing with our example, one initiative could be, “Gather data on all HACs from the past 12 months by Q1 of [year].”

Real-Life Examples Of The Balanced Scorecard In Healthcare

An increasing number of healthcare organizations are turning to the Balanced Scorecard to achieve tangible performance results. One of them is Jefferson Health, whose website says: “In our drive to deliver the best quality care, we utilize proven methodologies for quality improvement.” Its approach has clearly been successful: Jefferson Health hospitals rank among the best in the nation for specialty care, and in the top 10 for the Philadelphia metro area.

Jefferson Health created strategic values around quality and safety, service, people, growth, and finance and operations. It sets goals and benchmarks results to national standards, measures progress toward goals, and tracks the most important metrics (those that impact its strategic values) to ensure accountability.

Other organizations’ strategic values might differ from Jefferson Health’s. For instance, another hospital might focus on operational excellence, quality/safety/service, and community and academic engagement. All healthcare organizations apply the scorecard in the way that works best for them, which is one of the most appealing things about the balanced scorecard—it’s flexible!

Of the healthcare providers that use ClearPoint for strategy reporting, we’ve seen some organizations:

  • Create scorecards for each department: ICU, HR, legal, marketing, outpatient services, patient experience, pharmacy, urgent care, endoscopy, etc. Each department creates its own objectives, measures, and initiatives. This seems to work best for hospitals with complex structures.
  • Create scorecards for functional areas, like HR, Communications, EMS, and Major Projects. This is ideal for smaller, less complex organizations
  • Create scorecards for each C-suite executive, for example, the chief health management officer, chief compliance officer, chief operating officer, chief nursing officer, etc.

We’ve also seen some organizations use the balanced scorecard as their organizing framework and combine it with the OKR goal-setting framework.

See ClearPoint Strategy in action! Click here to watch a quick DEMO on the software

If you’d like to know more about using the Balanced Scorecard as a strategic management system, check out this detailed example (which includes templates you can steal ideas from).

However you decide to structure your balanced scorecard system, remember this: One of the hardest parts of implementing the balanced scorecard in a large hospital is making sure everyone is bought in. You simply can’t have some people doing it and not others, or it won’t produce the results you expect.

Rally support from managers in all departments, and encourage participation and dialogue around the balanced scorecard. The time you invest in awareness and education will pay off in the long run.

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How to Develop a Balanced Scorecard In Healthcare - With Examples

Ted Jackson

Co-Founder & Alabama Native

Ted is a Founder and Managing Partner of ClearPoint Strategy and leads the sales and marketing teams.

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