Duke Children's Hospital's balanced scorecard implementation in 1996

Internal Business Process

In 1996, Duke Children's Hospital was facing tremendous challenges associated with a reduction in the number of Medicaid reimbursements that they were receiving from the government. To deal with these issues, the balanced scorecard approach was implemented at the facility. This is a tool that allows executives to effectively determine the various risks facing the business by looking at a number of elements to include: the financial, the customer, the internal organization and learning / growth. During the process of implementing these changes, the hospital followed on all encompassing approach. This helped to bring the various staff members into the strategy, which reduced the amounts of animosity surrounding any kind of proposed changes. Once this occurred, is when the staff and managers were working together to deal with these issues. ("Balanced Scorecard Basics," 2011) (Meliones, 2001, pp. 21 -- 29)

Analysis

The hospital focused on three key areas of their internal operations to include: key performance indicators, staff satisfaction and regulatory areas. The key performance indicators are when you are measuring the productivity of each segment. Staff satisfaction is when you are ensuring that the strategy is addressing any kind of concerns that they may have about the process. This will reduce the underlying levels of resistance to any kind of proposed changes. Regulatory is when everyone is concentrating on meeting the requirements of various regulations, during the process of introducing these changes. These different elements are important, because they are showing how this was the major area of focus for the facility. (Meliones, 2001, pp. 21 -- 29)

To measure what was happening, managers were comparing past financial data with the most recent that was collected when the balanced scorecard was implemented. Once this took place, it allowed them to see the impact that their strategy was having on addressing the underlying problem. This is important, because it provided management with a way of objectively evaluating what was happening. (Meliones, 2001, pp. 21 -- 29)

At the same time, they focused on how frequently the facilities balance scorecard was updated on a regular basis. This helped to give executives greater amounts of flexibility in dealing with various challenges that were associated with rising costs. These elements are important, because they are showing how the combination of these measures was used to monitor the effectiveness of the strategy that was implemented. (Meliones, 2001, pp. 21 -- 29)

The biggest changes that were made, is the facility began to start using technology as part of the overall health care solutions they were providing. The reason why there was such a focus on these areas was to give staff members' better tools in: effectively control possible waste and to improve upon the quality of care that they were providing. This is significant, because it is showing how technology helped the facility to reduce the underlying amounts of excess. Over the course of time, this led to a shift in the business model and operating procedures of the hospital. (Meliones, 2001, pp. 21 -- 29)

While simultaneously, there was an emphasis on using increased amounts of collaboration to deal with the challenges that contributed to the losses. This was accomplished by having the staff members work together, in keeping track of all the different issues affecting the patients in the hospital through: a payer specific automatic report. This was a daily summary that was sent to staff members containing: the patient's date of birth, policy number, admitting diagnosis / complaint, type of service and attending physician. Once this occurred, is when everyone was able to reduce the total number of errors and losses from a lack of communication. (Meliones, 2001, pp. 21 -- 29)

Evaluation

Duke Children's Hospital did an excellent job in a creating working strategy that addressed the challenges they are facing associated with rising costs. Evidence of this can be seen with the fact that there was an increase in a number of areas once the strategy was implemented to include: patient / employee satisfaction and improved productivity / operating margins. These elements are important, because they are illustrating how this approach increased the overall quality of products that were being delivered and it reduced the underlying costs. Once this happened, is when the facility was able to adjust to changes that were occurring inside the industry. (Meliones, 2001, pp. 21 -- 29)