Balance Score Card Approach For Healthcare Delivery: Benefits And Implementation

Concept of Balance score card

Describe about the Accounting Information for Business: Long Range Planning?

Kaplan and Norton (1996) introduced Balance Score Card as a performance measurement tool by the Managers (Kaplan and Norton, 2001). The strategy of every organization is to improve its performance in order to fulfill its objectives. The benefit of balance score card in New croft hospital trust has been studied (Kaplan and Norton, 2001). New croft hospital trust is a public sector hospital in North East England. It is run by Government fund by the Department of Health. The mission of the hospital is to improve the quality of care provided to the patients to promote the well being of the patients. This will ensure value for money for the patients as well as the tax payers who are regularly engaged in funding activity in the hospital. In order to improve the quality of service to the patients it is important to analyze the present performance of the organization and its employees (Kaplan, 2001). This can be achieved by using the balance score card approach. The benefit of this approach for New croft hospital has been discussed.

Balance score card can be defined strategic planning and management system applied in the business industry (Kaplan and Norton, 2006). It helps to align the business activities with the strategy and vision of the organization (Ahn, 2001). The Balance score card approach helps to improve the internal and external communication within the organization. It is used as a tool to monitor the performance of the organization against the strategic goals. The Balance score card approach was introduced by Robert Kaplan and David Norton (Niven, 2002). It is a performance measurement framework that adds non financial performance measures to the traditional financial metrics. It provides the manager a balanced view of the performance of the organization (Bhagwat and Sharma, 2007). The traditional financial measure is retained by the balanced score card approach. The financial measures are inadequate for evaluating the journey of the companies in the information age. The companies bear the responsibility to create the future values via making investment decisions in the customers, suppliers, technology, process and innovation (Figge et al., 2002). The balance score card approach is used by the companies to clarify and update the strategy. The approach is used to communicate the strategy throughout the company. The individual goal of each unit of the organization is aligned with the strategy. The long term targets of the organization are linked with the annual budgets. The Balance score card approach is used as a tool to measure the periodic performance of the organization in order to improve the strategy.

Healthcare delivery and the Balance Scorecard

New croft hospital recognized that the effective health care delivery involves patient-centred care of high quality which will be safe and based in evidence. There are unique challenges faced by the health care sector as it is considered as a complex industry (Stewart and Bestor, 2000). The challenges faced by the health care sector include extremely diverse range of stakeholders which includes the patient, their families, staff and range of other government departments.  The resource available in the environment is finite with the rapidly rising costs. This has resulted in the increase in the cost of the medical technologies (Voelker, Rakich and French, 2001). There has been rapid growth in the health costs. It is important for the organization to implement Balance Score card approach to address the growing concerns in health care sector. The hospital is under the hands of innovative and skilled management team who can use the balanced score card approach as one of the key management strategies. It will help to address these major challenges (Protti, 2002). The outcome of the Balance Score card approach will be provision of patient care of high quality along with the improvement in the health of the community and its well being (Niven, 2008). The Balance Score card approach can be used for the purpose of strategic management at the level of the organization. It can also be used for the purpose of evaluation of various health care programs and projects that will improve the quality of care.

Benefits for Balance score card in New croft Hospital Trust

Both the developed and the developing countries have been using the Balance Score card approach to improve the performance of the health care sector. The excellent past performance provides no guarantee of the past performance of the health care organization. The health care sector can bring major structural changes in the independent operating units in order to integrate the health care system (Radnor and Lovell, 2003). The Balance Score card approach assists to build a unified system which is one of keys for the success of the organization. The best practices in the health care system has been identified which help to differentiate their services which help to attract more business (Marr and Adams, 2004). There has been considerable improvement in the collaboration and communication between all levels of the staff and the stakeholders. The Balance Score card approach provides a comprehensive view of the performance of the organization in order to fulfill its mission. New croft hospital will implement the Balanced Score card approach as a response to the external forces which includes the increasing financial pressure (Niven, 2002). This will motivate the management to search for relevant and effective tools of strategic management (Strategic control: meshing critical success factors with the balanced scorecard, 2002). But it was stated by Kollberg and Elg (2010), that the Balance Score card approach can be implemented by New croft hospital in order to improve the quality of health care in the organization(Nørreklit, 2003). The uncertainty towards reaching the goal will be reduced and enhance the focus on the consumers. This approach can be applied to monitor the outcomes and thereby improve the performance in order to ensure that the strategies and goals are achieved.

The Balanced Score card approach can be applied by New croft hospital to measure the non financial performance of the organization (Banker, Potter and Srinivasan, 2000). Unlike the non health care sectors, the health care sector is a customer and people centric sector.

 In the health care sector, all the efforts to achieve the balanced accountability for quality, cost and care depend on the attitude of the physician, behavior and belief. The attitudes of the nurses and other professionals are also accountable (Lipe and Salterio, 2000). There is huge difference of the health care sector from the other sectors which is visible in the autonomous culture of the physicians and the importance of the outcomes on a long term basis. Thus it is important for the health care sector to implement Balance Score card approach to analyze the attitude of the health care practitioners towards the patients.  Thus human resources are critical for the implementation of the strategy (Norreklit, 2000).

In the health care sector, the focus is on the patient as the customer and their needs are served in order to achieve the mission. In this sector it is important to maintain a balance between the community and the patient. In health care sector it is not possible to segregate clients in the community and the service is targeted towards the entire community. The Balance Score card approach will help to identify the needs of the patients. It is difficult to balance life and most countries are struggling to reduce the health costs. The Balance Score card approach will make the customers i.e. the patients as the central aspect of the organizational strategy. There are certain indicator that is critical to measure the performance of the organization. The review data of the organization can be collected using this approach to identify the linkages between the indicators (Ittner, Larcker and Meyer, n.d.).

Reasons for introduction of Balance Score card

Conclusion

Thus it can be said that Balance Score card will bring positive growth in New core hospital. It will be a viable option for generating the business value. Many organizations face difficulty in implementing the Balance Score card approach. But New core hospital has to select the protocols on the basis of which the non financial performance of the company can be measured. It will improve the service of the organization towards the customers and add value to the organization.

Article 1

Kaplan, R. and Norton, D. (1993). Putting the Balanced Scorecard to Work. [online] Harvard Business Review. Available at: https://hbr.org/1993/09/putting-the-balanced-scorecard-to-work [Accessed 9 Mar. 2015].

The article reviews the impact of Balance Score card as a performance management tool on the organization. It is considered as an innovative strategy to measure the non financial performance of the organization. It helps to introduce breakthrough performances in the organization. The firms has been using short term financial indicators like the growth of sales, return on investment and operating income in order to evaluate the performance of the organization. These tools have been used for decades to review the financial performance of the company. The managers have failed to monitor and measure the new goals and incapable of undertaking new initiatives for the organization. But with the introduction of the Balance Score card approach, a comprehensive framework was introduced by organization which translated the strategic objectives of the company into coherent set of performance measures. It has helped to achieve the break through improvement in the organization in cases like development of the market, customer relations and process development. The Balance Core card approach is based on four different perspectives. The traditional financial indicators are complemented by the four financial indicators. They are measurement of customer’s performance, internal process improvement, innovation and improvement of activities. The Balance Score card approach is keeps a balance between the external measures like the financial indicators and the internal measures which includes the product development. It serves as the focal point for the efforts of the organization, defining and prioritizing the main objectives to the managers. The Balance Score card approach is used as a focal point by the organization to measure its efforts. It is an important tool for evaluating the new projects.

Article 2

Salem, M., Hasnan, D. and Osman, D. (2012). BALANCED SCORECARD: WEAKNESSES, STRENGTHS, and ITS ABILITY as PERFORMANCE MANAGEMENT SYSTEM VERSUS OTHER PERFORMANCE MANAGEMENT SYSTEMS. Journal of Environment and Earth Science, 9(2), pp.1-8.

The article presents an overview of the strengths and weaknesses of the Balance Score card method in the organization. The performance measurement tool has become imperative for the private and public sectors. It is imperative for the organizations to implement the Balance Score card method to measure the non financial performance of the organization. The article has tried to identify the pros and cons of Balance Score card method. The effectiveness of the Balance Score card method cannot be ignored. It aims at improving the performance of the organization. It is not possible for the organization to manage what it cannot measure. Lack of predictability has reduced the ability of the organization to measure future performance of the organization. In this respect the Balance Score card approach is beneficial for the growth of the organization. The Balance Score card approach is considered as a new and innovative approach in comparison to TQM, performance pyramid, MBO and BOS.

Balance Score Card as non financial performance indicator

But there are certain limitations to the Balance Score card approach. The relationship between the various areas of measurement is considered to be unidirectional and simple in nature. Lack of cause and effect relationship has resulted in assumptions that are invalid. The role of time has not been mentioned in this approach. The validity of BSC is based on few measures. If the measures are not suitable then it will create a disadvantageous situation and the right number of indicators might not be selected. This leads to inappropriate measurement of performance. The BSC is incapable to review the performance of the competitors which is essential to measure the performance of the organization. This is an ineffective approach to corporate sustainability. The sustainability issues are crucial for the success of the performance of the organization. However several management organization has felt the shortcoming of the various measures of BSC as it has been ineffective in improving the performance of the organization.

But in order to incorporate an innovative environment within the organization , it is important to incorporate the BSC as a non financial performance measurement tool for the growth of the organization as the improvement of the intangible assets acts as a cutting edge for the organization.

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