The Internal Business Process Perspective

Introduction

The balanced scorecard (BSC) is an organizational measurement and management system (Kaplan & Norton, 4-9) that links strategy to financial and nonfinancial objectives. The BSC measures organizational performance across four perspectives: financial, customer, internal process, and learning and growth. Executives translate the organization's vision and strategy into linked objectives and measures in the four balanced scorecard perspectives. (CQI, 2008) Duke Children's Hospital in Raleigh-Durham NC is a great example of this approach.

Analysis

This study shows a Duke Children's Hospital health care strategy map, based on the balanced scorecard. The map's causal linkages provide a framework to articulate strategy and a road map for executing and evaluating the strategy.

1. The high-level financial objective “financial viability” is supported through two basic approaches, revenue growth and productivity. Revenue growth comes from(a) deepening relationships with existing customers, such as by offering multiple services and delivering complete solutions; and (b) selling new services to new customers and in new markets. A productivity strategy also has two components: (a) lowering direct and indirect expenses and (b) reducing the working and fixed capital needed to support a given volume of activity. Every strategy requires a balancing act between growing revenues and managing costs.

2. A health care organization must deliver attractive value propositions to its key constituencies (customers). The value proposition is the unique mix of product, price, service, relationship, and image that an organization offers its customers to differentiate itself in the market. Typical value propositions can be lowest total cost, product leadership, and complete (one-stop) customer solutions. Constituencies could include patients and their families, referring physicians, payers, academics, government and advocacy groups, and communities.

The customer perspective typically includes several generic measures—customer satisfaction, customer retention, new customer acquisition, and market and account share in targeted segments—of the successful outcomes from a well-formulated and implemented strategy. It should also include value proposition measures. Typical customer perspective measures include patient satisfaction surveys, referrals by physicians, number of patient complaints, and presence on preferred provider lists.

3. To support its financial and customer objectives, the organization must excel in key internal processes, both clinical and administrative. It must articulate and measure for the effectiveness and efficiency of both clinical processes and important nonclinical and administrative processes. The key processes include admission and discharge, planning, innovation, relationship management with constituencies, clinical outcomes, and operations.

4. The learning and growth perspective establishes objectives for the health care staff to be ...