Balanced Scorecard’ helps fix Overlake strategic plan
Quality targets make the rubber meet the road
Overlake Hospital Medical Center seemed to have a pretty good strategic plan to carry it into the new millennium. It was chock full of market analysis, the requisite vision/mission statements, and impressive goals and objectives. But over time, it became apparent there was an important piece missing.
The missing piece of the plan was a mechanism for measuring performance. The 257-bed nonprofit, non-tax-supported hospital in Bellevue, WA, had carefully thought out and articulated goals such as "partnering with the community" and "improving overall quality of care." However, these goals were not attached to any kind of specific, quantifiable targets and measures that would provide feedback on how they were achieved. In other words, while Overlake knew what it wanted to be and what it needed to do to improve, it had no defined quality indicators or targets for assessing how well "the rubber was meeting the road" in its quest to meet its goals and objectives.
"We needed to figure out what measures we would use to determine if we were reaching our goals," says Carolyn St. Charles, RN, MBA, president of the St. Charles Consulting Group in Issaquah, WA, a health care consulting firm involved in strategic planning, business planning, and performance improvement. Over a period of about six months in 1998, during her tenure as vice president for Strategic Services at Overlake, St. Charles used the principles of the "Balanced Scorecard" to help develop these measures while revising the hospital’s strategic plan. She also spent a lot of time soliciting input from the many constituencies whose members hold a stake in Overlake. And when it came time to sell the newer, better plan to the hospital’s board of trustees, she used the format of a high-school science fair to help gain their approval.
Overlake was definitely not alone in its predicament. "The vast majority of hospitals do not have a performance measurement system that links back to strategic goals and objectives," says St. Charles. And of the ones that do, very few look at individual performance measures and their impact within the context of the entire organization, she notes, unless they utilize the principles of the Balanced Scorecard.
The Balanced Scorecard was developed by Drs. Robert S. Kaplan and David P. Norton in 1992 and is the topic of a best-selling book, The Balanced Scorecard: Translating Strategy into Action. The concept is implemented, according to some estimates, by 40% of the Fortune 1000, but is currently little-used in the health care industry. "The Balanced Scorecard is a methodology for developing performance measures and targets that are aligned with organizational strategy," says St. Charles. "It translates an organization’s mission and strategy into a comprehensive set of performance measures that provides the framework for a strategic measurement and management system."
"The Balanced Scorecard provides an enterprise view of an organization’s overall performance," according to the Lincoln, MA-based Balanced Scorecard Collaborative, an organization founded and managed by Kaplan and Norton. It does so "by integrating financial measures with other key performance indicators around customer satisfaction, internal business processes, and organizational growth, learning, and innovation."
Central to the Balanced Scorecard is the notion that "squeezing the balloon in one place makes it pop out in another," says St. Charles. "This means that you have to recognize that one department’s actions can have a direct impact on those of others; for example, finance’s goal of driving down costs can affect many aspects of care quality or patient satisfaction," she explains. At Overlake "We realized that we had to stop compartmentalizing the pieces of our operation. We started viewing Overlake as a whole in terms of goals and performance measures, which is different from what most health care organizations are doing now."
In revamping the Overlake strategic plan, St. Charles relied heavily on the various groups that could be considered "stakeholders" in the hospital. "We spent a tremendous amount of time getting input from all of the multiple constituencies that operate in the hospital as we developed our strategic plan — and there were a lot of them, trust me," she recounts.
At Overlake (and, in varying mixes, at all hospitals), these constituencies/stakeholders included internal groups such as the board of trustees, physicians, other medical practitioners, and administrators/managers, according to St. Charles. Major players also included members of external groups, such as vendors/suppliers, payers, and other health care professionals in the Bellevue community, she notes.
The input of these groups was crucial for a couple of reasons, St. Charles explains. "As we looked at the major service lines at Overlake, engaging each of these constituencies in a discussion about the marketplace — as they saw it — provided us with invaluable market intelligence." The process also helped define strategic goals and, perhaps more importantly, performance measures, "as people told us, based on their experience, what critical items Overlake needed to work on to become a really outstanding facility," she adds.
After obtaining input from the various Overlake constituencies and doing the requisite massaging, St. Charles, her department, and other managers involved in the process were ready to present their draft work to the hospital’s board of trustees. The method chosen was an all-day Saturday retreat at a local convention center. "We thought we had a pretty good draft," she says, "and we put together this board retreat in order to talk to all the board members, along with medical staff, foundation staff, volunteers, about our strategic plan and what it was we were accomplishing."
Eager to avoid the situation where a series of "talking heads" present information to an audience that grows increasingly restless with each speaker, St. Charles organized the retreat along more unique lines. "Instead of speeches about the plan, we had staff and managers put together a booth for each component, much like you’d find at a trade show — or a high-school science fair," she says.
Each booth at the Overlake board retreat featured written and graphic information about goals, objectives, and performance measures, says St. Charles, "along with a staff member, manager, or doctor who was ready to talk to anyone who wanted more information or explanation." Many retreat participants "knew a lot about one part of the plan but maybe not about other components," she notes. In the science fair environment, "Participants were able to basically just walk around and get whatever information they felt they needed about any component of the plan," says St. Charles. "And, at the same time, the got to talk to each other."
Initial misgivings about this format proved groundless. "It turned out to be awesome," she says. "Our CEO gave an initial overview, and then we just let everybody loose on the booths." After a couple of hours, she says, "We couldn’t get anybody to break for lunch; no one would leave the science fair floor."
Participants wouldn’t leave because they were engaged in what they were doing. "Everybody was busy talking to each other," says St. Charles. Managers and physicians were trading views on goals, objectives, and performance measures, she says, "and staff members were locked in one-on-one conversations with individual board members about what the plan was all about — in many cases, to the delight of the board members."
The retreat continued with a series of focus groups, where participants met in small groups to discuss their concerns about the plan. The day ended with the members of the board of trustees voting on which components of the draft strategic plan they felt were most critical for Overlake. The plan was eventually approved. "Now performance measure data for the entire organization is available on the desktop of every manager in the hospital," says St. James.
"Developing a strategic plan requires that an organization answer just five little questions," says St. Charles. Those questions are:
1. "What do we want to be?" (vision/mission)
2. "What’s going on around us?" (market assessment)
3. "What do we need to do [to be what we want to be]?" (strategic goals)
4. "How are we going to do it?" (strategic objectives)
5. "How will we keep watch along the way?" (performance measures and targets)
St. Charles has other advice: "Make the process fun, visual, and interactive. You want the whole organization to be engaged in helping you put together the plan," she notes, "which means you have to communicate with them, convince them that the plan is important, and get their input on performance measures and targets."
[For further information, contact:
• Carolyn St. Charles, President, the St. Charles Consulting Group, PMB 2122, 1420 N.W. Gilman Blvd., Issaquah, WA 98027. Telephone: (425) 557-8708. Fax: (425) 557-8731. E-mail: [email protected].
• The Balanced Scorecard Collaborative Inc., 55 Old Bedford Road, Lincoln, MA 01773. Telephone: (781) 259-3737. Fax: (781) 259-3389. E-mail: [email protected]. Web address: http://www.bscol.com/.]
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