The importance and application of Balanced Scorecards in Hospitals.

ORGANZIATIONAL AND MANAGERIAL PERFORMANCE

What is Organizational Performance?

Organizational performance can be termed as “The actual results or output of an organization as compared to its desired output or results”. Organizational performance measures are taken to ensure that this difference between the intended and actual results is kept as minimum as possible, keeping in view that the desired objectives do vary from actual, due to changing circumstances.

Organizational performance covers three areas of an organization’s outcome, which are its products market performance, financial performance and shareholders return. In case of hospital this concept would include return on investment made also. Also the beneficiaries should get benefit from the confidence reposed by them in the trustees of the trust.

What is Managerial Performance?

Managerial Performance, in general and also for a private hospital would include patient’s satisfaction over the long-term, maximizing confidence of the patients, maximizing return on investment and securing long term well-being of the organization.

Measures of Organizational and Managerial Performance

The measures of organizational and managerial performance enhance the strategic planning along with the operations of an organization. Also the measures would help improve the financial matters. Organizational and managerial performance measures would also have an impact on legal matters arising if any ,like in cases of assault and other related legal matters, what standard procedure would be followed at managerial level and also the organizational level. Budget would be allocated appropriately if the measures of organizational and managerial performance are adequate. The measures improve the customers/patients satisfaction, staff satisfaction and are important to promote good will of the organization along with innovation, creativity, staff performance and profitability of the organization and the organizations without these measures would be without clear aims and objectives and lesser customer satisfaction would accrue.

BALANCED SCORECARD APPROACH

Advantages of Balanced Scorecard Approach

The balanced scorecard which is usually termed as a tool for performance management, is a semi-standard structured report sustained by design procedures and automation , that can be used by managers to keep record of the execution of work done and other related activities by the staff ,within their control and to monitor the consequences arising from these activities. One main objectives of the Balanced Scorecard is the consistent transformation of visions into strategies, objectives and measures and are typically designed to monitor business process. Balanced scorecards are usually being used by government agencies, non-profit organizations, and schools. One of the common uses of balanced scorecard is to support the disbursement of incentives to employees.

Balanced Scorecards can be implemented through methods based on email, phone calls and office software, so it provides an advantage in the form of easy access. One other advantage of using this approach is that it alerts the managers about areas where performance deviates from intended results and they can be encouraged to divert their attention on these areas, and as a result initiate improved performance within the part of the organization they lead. In case of a small private hospital the advantage would come in the form of a report of work done and other associated activities by the staff which includes doctors, management and nursing staff.

One of the advantages of this approach is that it helps focus managers divert their attention on strategic issues and the management of the implementation of strategy and moat importantly recognition of financial and non-financial measures and assigning tasks to them, so that when they are reviewed, it is feasible to determine whether existing performance meets the anticipations. Other advantages would include translating the vision into operational goals, interconnecting the vision to individual performance, planning the hospital business and feedback from the doctors and other staff and adjusting the strategy accordingly. Some other advantages that would accrue from the use of balanced scorecard approach would be better organizational and strategic alignment.

Disadvantages of Balanced Scorecard Approach

One of the disadvantages of Balanced Scorecard is that it has no role in the formation of strategy but they co-exist with strategic planning systems and other tools. Also the methods of gathering and reporting balanced scorecard information can be labor intensive and is likely to face procedural problems i.e. getting all relevant people to return the information within the required date

In complex organizations, where there are several balanced scorecards to report and there is a need for co-ordination of results between balanced scorecards i.e. if one level of reports depends on information collected and reported at a lower level, then the use of individual reporters is problematic. Empirical nature of framework of this approach also attracts criticism from academic community. There is lack of citation support which adds to the disadvantages of this approach and it also does not provide a bottom line score or a unified view with clear recommendations i.e. it is solely a list of metrics. Another disadvantage of this approach is that it based upon the principle of shareholders being the ultimate purpose, so other stakeholders deem to be undervalued. Also it cannot be determined what the organization would have achieved if the change had not been made, so it is problematic to attribute changes observed over time to a single intervention. In case of a small private hospital this approach would confine itself to doctors which are deemed to be the major stakeholders, which would end in other stakeholders being undervalued

BALANCED SCORECARD FRAMEWORK

Balanced Scorecard application

JUSTIFICATION OF RECOMMENDATIONS

Ø  Financial Perspective

The measures relating to return to shareholder’s or trustees on the investment made for constructing and operating a private hospital is an important area of organizational and managerial performance. Cost and equity management along with the shareholder’s return at an appropriate level will be an important measure of organizational and managerial performance.

Ø  Patients/Customers Perspective

For a small private hospital the customers who are usually the patients should be satisfied and doctors should be available in emergency and should be well known to deal every patient’s condition.

Ø  Internal Process and Employee Growth

Measures of organizational and managerial performance should be like, the team of doctors and employees should be given positive feedback. Employee coordination should be encouraged and objectives of the hospital generally and in the perspective of doctors, owners, trustees, beneficiaries should be the primary focus for better organizational and managerial performance.

IMPLEMENTATION & EVALUATION

Implementation

The measures of organizational and managerial performance can be implemented through methods based on email, phone calls and office software, so it provides an advantage in the form of easy access. Enterprise Resource Planning (ERP) software can also be used for the implementation of methods of organizational and managerial performance

Monitoring

These methods can be monitored through proper balanced scorecard approach. The comparison should be done on regular basis whether the intended results deviate as to how much from the actual results

Reviewing

The review can be made by a balanced score card on the feedback provided by doctors and patients of the performance measures already adapted.

Evaluation

Evaluation of the performance measures can be done by the comparison of score card giving the comparison of objectives, strategies, initiatives and the deviation of actual results from the intended results.

                                            

STAKEHOLDERS AND OPINION

There are three kind of stakeholders in a hospital .These are characterized as internal, interface and external stakeholders.

INTERNAL STAKEHOLDERS

1. Ø  Management staff

1. Ø  Professional staff

1. Ø  Non-professional staff.

 INTERFACE STAKEHOLDERS

1. Ø  Hospital staff

1. Ø  Medical board of trustees

1. Ø  Tax payers

1. Ø  Other contributors

EXTERNAL STAKEHOLDERS

1. Ø  Suppliers

1. Ø  Patients

1. Ø  Third party payers

1. Ø  Financial community

OPINION

The medical staff admits the patients and provides many services to a small private hospital so it makes them the most important stakeholder in a hospital. The doctors keep shifting between hospitals and patients so their relationship can be best characterized as mutually dependent though they are an important stakeholder having a very important view about the performance of the hospital but cannot be considered as the only stakeholders having legitimate view about the performance of the hospital.