Implementing the balanced scorecard
The Internal Business Process Perspective at Duke Children’s Hospital
This paper reviews of the Internal Business Process Perspective (IBPP) at Duke Children’s Hospital as measured by the balanced scorecard approach. Here, it is critical to start by defining the balanced scorecard approach. This is primarily a strategy-based tool that aligns or merges the activities of an enterprise to its goals, objectives, mission, and vision. It is also a management tool that is stringent on easing communication (CQI, 2008, p. 13).
In the case of the Duke Children Hospital, the IBPP is a strategic planning tool used to link the hospital administrators to clinicians, as well as other allied professionals so as to meet the objectives of the hospital. For a long time hospitals were driven only by providing quality healthcare to their patients. This approach was a necessary but was not sufficient. The financial perspective or performance and internal business perspective are also quite critical in advancing health care and remaining relevant (Kaplan & Norton, 2001).
The Duke Children’s Hospital was in crisis during the year 1996. In fact, it was considering shutting down some facilities and services. Revenues were plummeting downwards, and costs were at an all time high. In addition, the productivity of the staff had dwindled. The turnaround for the hospital came through implementation of the balanced scorecard. This saw the hospital become strategically oriented bringing the stakeholders of the hospital together on a single platform (Segil, Goldsmith, & Belasco, 2003).
Implementing the balanced scorecard
Physicians play an important role in determining how long a patient stays in hospital and what medication they take. Nurses play a critical role in advancing the quality and form a significant percentage of a hospital’s cost of labor. The stakeholders at duke children’s hospital developed an alliance. They were provided with adequate and timely information on how they individually affected performance of the hospital. The balanced scorecard approach focuses on the performance of individuals and not on criticizing the performance of others. The approach at Duke Children’s Hospital was to get connected, get results and finally to get smarter (Segil et al 2003).
They got connected by identifying the objectives of the hospital, and mapping out strategies to achieve them with everyone’s input. They did this by identifying the critical performance pointers to health issues. Subsequently, they laid out strategies to maintain staff satisfaction so as to increase quality. The hospital continually measured and recognized staff performance and welfare. Thirdly, they set up regulatory measures. The hospital is a highly regulated arena and thus had no otherwise but to comply (CQI, 2008, p. 21). The next approach was to analyze performance of the hospital that is to be result oriented. The hospital provided tools that helped the staff improve their productivity and reduce costs without reducing the staff. An example is how the hospital used technology to register all patients and the automation of the process of filing for claims. Their previous approach of verifying claims through telephone calls cost them up to 45% denials. Later on, the nurses and the accounting staff worked together to implement the automated verification of claims. This saw a reduction of claims that were denied from fifteen to one percent. The hospital also ensured that data ran smoothly between all relevant parties and changed their approach to strategic solutions from a crisis intervention approach. They analyzed data more regularly so as to aid in gauging performance (Kaplan & Norton, 2001).
The third aspect that the hospital implemented was getting smarter. The hospital recognized that the healthcare sector is a dynamic sector. Thus, to keep up with all the changes, they had to establish new strategies to address the emerging issues. They also regularly reviewed and revised the scorecard, which enabled them to make updates of the scorecard and key performance indicators. The hospital embraced new challenges as opportunities for improving themselves (Niven, n.d., para. 3)
The hospital embraced the internal business process perspective by focusing on how to create value. It created value by increasing both staff and patient satisfaction and by increasing their revenues. The hospital operated within a framework of managing its operations and patients. This includes the day to day routine operations of the hospital such as diagnosis of diseases. As for patient management, the hospital involved the patients in the vision of the hospital by offering quality healthcare (Niven, n.d., para. 4)
The other framework was the regulatory framework. This ensured that all hospital operations were within the required standards. The last framework is the innovative aspect. The hospital set out to discover new strategies of doing things in a timely and efficient manner to increase the quality and efficiency (Segil, et al, 2003).
By employing the balanced scorecard approach, the Duke Children’s Hospital has seen a significant improvement in not just the internal business process perspective but in all perspectives. Their cost per case, which stood at $14,889, was reduced to $2000 in 1996 and 2000 respectively. This meant that there was a reduction of close to $30 million of total costs. There was an improvement in the net margins from a negative 11 million dollars to 4 million dollars in the same fiscal years. Patient satisfaction has risen from 4.3 to 4.7 on a scale of 5.0. Staff productivity rose to an impressive 100% up from 71% between the 1996 and 2000 fiscal years. Their satisfaction on a scale of 5.0 also went up from 1.5 to 4.0. Morbidity rates increased as readmission rates fell from 7% to 3%. The transformation that has been witnessed in the institution can be attributed to the implementation of the balanced scorecard.
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