How to tell if your QM department measures up
The balanced scorecard, step by step
By Patrice Spath, RHIT
Brown-Spath Associates
Forest Grove, OR
The balanced scorecard (BSC) dates back to a study by the Norton Institute, which documented the feasibility and benefits of instituting a balanced measurement system organized around four perspectives. Today, the balanced scorecard is a tool used in many businesses to help people communicate, measure, and stay focused on strategic goals.
The BSC is a conceptual framework for translating an organization’s vision into a set of performance indicators distributed among four perspectives: financial, customer, internal business processes, and learning and growth. (See related cover story.) Indicators are used to measure organizational progress toward achieving the vision and strategic goals. Through the BSC, an organization monitors both its current performance (finances, customer satisfaction, and business process results) and its efforts to improve processes, motivate and educate employees, and enhance information systems.
The financial perspective focuses on profit targets, cost avoidance, and cost efficiency, i.e., the ability to deliver maximum value to the customer. The financial objectives of health care organizations generally represent clear long-range targets as well as cost efficiency and the ability to deliver maximum value to the patient for each dollar spent.
The customer perspective captures the ability
of the organization to provide quality services,
the effectiveness of delivery, and overall customer service and satisfaction. Health care organizations have both internal and external customers that can be addressed by this perspective.
The internal business processes perspective focuses on the internal business results that lead to financial success and satisfied customers. The key business processes at which the health care organization must excel are identified and monitored to ensure that clinical and fiscal outcomes are satisfactory.
The learning and growth perspective looks at the ability of staff, the quality of information systems, and the effects of organizational alignment in supporting accomplishment of organizational goals. Processes will succeed only if employees are adequately skilled and motivated and supplied with accurate and timely information. To meet the demands of changing technology, external requirements, and customer expectations, physicians and staff may be asked to take on new responsibilities, which will require new skills, capabilities, and organizational designs.
Four perspectives
In each of the four perspectives, performance objectives are established. These are the critical success factors in achieving the organization’s mission, vision, and strategy. If these success factors are not achieved, the result will likely be a significant decrease in customer satisfaction, system performance, employee satisfaction or retention, and effective financial management. Each objective is supported by at least one measure that indicates how the organization will measure performance against that objective.
Selecting and agreeing on measures in each perspective forces the people in the organization to define what is strategically important to them. To create focus, most organizations limit the number of measures to no more than 20. As the scorecard flows through the lower levels of the organization, more measures will be added by individual departments, but these additional measurements should link directly back to the initial organizationwide measures established in each perspective.
While the authors of the BSC model originally intended it to be used as an organizationwide management model, a modified version of the tool can be selectively applied at the departmental level. If everyone in the quality management (QM) department has a clear understanding of his or her goals and targets, roles, and business processes, the department, as a whole, will succeed. The BSC goes a long way toward clarifying what the department is expected to accomplish and measuring the degree of success toward those goals. If your facility has not adopted the BSC management model, it can still work for the QM department. The steps for creating a BSC for the QM department are listed below:
1. Define short- and long-term strategic goals for the QM department in each of the four BSC perspectives. The organization’s vision and mission should be considered when setting departmental goals.
2. Decide what QM processes are critical to achieving those goals, then determine the best ways to measure the effectiveness of those processes. Select key performance measures the QM department should be tracking. Ideally, these measures link back to improvement goals that may have been established by the organization as a whole. A BSC for the QM department in a hospital is shown in the chart on p. 117. Strategic goals and measures for each of the four perspectives are listed.
3. Implement data collection and ongoing feedback (at least quarterly) to determine how well the department is doing at achieving its goals. Conduct regular departmental meetings
to evaluate progress toward goal attainment.
4. Revisit and refine departmental performance measures on a regular basis to ensure that they continue to reflect the organization’s current mission, which may change over time, and the strategic goals of the QM department. Scorecards only succeed when they provide relevant facts and data about current performance and show what needs to be improved, either immediately or in the future.
Departmental benefits
The scorecard can be a powerful change management tool when everyone in the QM department feels a sense of ownership and sees its value. Every individual should know what is being measured and how his or her work ties in with the measurement results. Sometimes the pressures of the changing health care environment can cause staff to lose concentration on what’s really important to the QM department as a whole. The scorecard helps to keep staff focused on improvement priorities.
Developing a BSC for an entire health care organization requires an extensive commitment from leadership. For the scorecard to work, everyone from the top executives down needs to spend considerable time reaching consensus on the key performance indicators and then providing, collecting, collating, and analyzing feedback on the measurements that the organization deems critical to its success. If such a commitment does not exist in your organization, don’t think the BSC can’t be adapted for use in the QM department.
Initially, the scorecard was intended as an organizationwide framework for articulating strategic vision and measuring global results, however, with a few modifications BSC can be a powerful system for managing change just within the QM department.
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