Achieve balance from your scorecard strategy

Scorecards can boost physician buy-in

The Balanced Scorecard — who uses it? Is it just another buzzword developed for corporate gurus trying to write a strategic plan? And what does it really have to do with health care?

Actually quite a lot, some health care experts claim. The concept, which started out as a business tool for corporate America, has found its way into some of the major hospital and health management organizations around the country. According to some of the players, it’s a keeper.

The concept was initiated by R.S. Kaplan and D.P. Norton in their book Translating Strategy Into Action: The Balanced Scorecard.1 According to the authors, "the Balanced Scorecard 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."

Bruce Harber, now CEO and president of Northshore Health Board in Vancouver, BC, enthusiastically endorses his experience with the Balanced Scorecard when he was CEO and president of Peel Memorial Hospital in Brampton, Ontario. "We gathered people from all levels of the organization and explained the importance of measuring performance to improve the underlying capability of the organization," he says. Harber’s hospital managers then focused on identifying "the vital few" — the most critical elements of the business that required change. Teams were selected to monitor the vital areas. They developed action plans to achieve the necessary results.

"Selecting the vital few is part science and part art," Harber says. The hospital administrators brainstormed at the senior level toward the end of each fiscal year to determine which drivers would improve performance results. Typically, we selected at least four vital projects," he says. These were then measured against the hospital’s strategic objectives with an emphasis on accountability, productivity and quality.

But he cautions about becoming enamored with using the same measure over and over again. "You must learn to reject those that don’t initiate any change in performance — where it’s unclear about what’s being measured and how results should be interpreted, where there’s no display of progress toward strategic objectives, or where there’s no ownership for performance."

Beware of drawbacks

In their article2 analyzing the effectiveness of scorecards, a group of researchers from Dartmouth Medical School in Hanover, NH, and Dartmouth Hitchcock Medical Center in Lebanon, NH, pointed to other potential drawbacks in using scorecards:

1. Some of the data being used are included more because they are available rather than because they provide quantifiable answers to questions.

2. A scorecard might show where improvements are needed, but fail to show how to make improvements.

3. If the data are not gathered and analyzed by third parties, there is the potential for manipulating data to the organization’s advantage.

Staff involved in process improvement efforts at Johns Hopkins University Hospital in Baltimore began building their scorecard last spring.

"By October we were all set to put the draft scorecard out for approval," says Daniel Wassilchalk, director of performance improvement and utilization management at Johns Hopkins. "But then we reviewed some of our leader opinions and stopped to take a second look. Our scorecard was geared to clinical outcomes, financial goals, and patient satisfaction."

But in a teaching hospital like Johns Hopkins, the physicians are dedicated to other goals, like research. They needed to see their work in those areas recognized, too. So Wassilchalk and his colleagues pulled their scorecard from the pipeline and went back to work.

"We knew it was important to have physicians buy into this plan if it was going to work," he says. "So we’re just now adding a fourth quadrant to our scorecard that addresses research and teaching outcomes. To reflect those results recognizes the hard work of our medical staff and brings us physician acceptance."

Connecting past, present, future

That angle of total organizational acceptance is underscored by Bruce Harber. "One of the most important aspects of implementing organizational change," he explains, "is the ability to sell the rationale to the organization. People must see the connection between the past, present and future. Before implementing any change, we communicated with those involved to explain what we were doing and why we were doing it, the timetables and the level of involvement we expected from staff."

Carolyn St. Charles, RN, MBA, of St. Charles Consulting Group in Issaquah, WA, has been developing and implementing balanced scorecards for health care clients for more than four years. She notes that the "health care environment is very complex, with unique characteristics that create the need for special considerations." In The Balanced Scorecard Strategic Management System, a resource guide she wrote with her colleague Dona Foth, RN, MBA, she itemizes several of these characteristics:

• The customer (patient) who receives the services is not directly responsible for the cost.

• Physicians practice in organizations providing medical care and are a major driver of resource consumption; yet, they are generally not accountable for the cost.

• There are multiple constituencies that must be involved in decision-making, including board members and physicians, with both formal and informal influence and decision-making authority.

St. Charles adds that "most hospitals lack information systems that allow easy access to critical information such as cost, process and outcome data. Even if the data are available, they usually reside in multiple sites without an adequate interface," she says. She also notes the difficulty in defining meaningful outcome measures and targets in areas such as clinical quality and community benefit. "These challenges," she warns, "must be taken into consideration to ensure a successful development and implementation of the balanced scorecard."

In developing a strategy, it’s important to look at the hospital from all angles. It’s also important to develop the scorecard around the individual organization. Depending on the size of the hospital, its requirements and its mission, scorecards can be adapted to areas where they are most needed and effective.

Identifying high-value care

At Denver’s Craig Rehabilitation Center, for example, Vi Griffin, director of quality management, typically doesn’t outline evaluation processes for each area. Instead, she says, Craig’s scorecard is an ongoing evaluation of critical processes and outcomes. "We identify the critical areas and monitor for any adverse events," she explains. "Things like unplanned discharges to acute care facilities or surgical complications are significant concerns for us. I trend this sort of thing quarterly and write a report. Then on a report-to-report basis, I can key into the areas that require attention."

Dartmouth Medical School’s Nelson and Batalden found that, among other things, a well-done scorecard could help consumers identify high-value care, hold providers accountable for outcomes and costs, and offer positive measures of recently provided care. But to be used constructively, scorecards must be reliable and relevant, predict future needs, and define what is being measured.

It’s important to develop the scorecard around what works for your organization.

"While this was a major undertaking for us, the return on investment has exceeded our expectations," says Harber.

References

1. Kaplan RS, Norton DP. Translating Strategy Into Action: The Balanced Scorecard. Boston: Harvard Business School Press; 1996.

2. Report cards or instrument panels: Who needs what? The Joint Commission Journal on Quality Improvement 1995; 21:4.