Applications of the balanced scorecard for strategic management and performance measurement in the health sector

Abstract

In order to attain a useful balanced scorecard (BSC), appropriate performance perspectives and indicators are crucial to reflect all strategies of the organisation. The objectives of this survey were to give an insight regarding the situation of the BSC in the health sector over the past decade, and to afford a generic approach of the BSC development for health settings with specific focus on performance perspectives, performance indicators and BSC generation. After an extensive search based on publication date and research content, 29 articles published since 2002 were identified, categorised and analysed. Four critical attributes of each article were analysed, including BSC generation, performance perspectives, performance indicators and auxiliary tools. The results showed that 'internal business process' was the most notable BSC perspective as it was included in all reviewed articles. After investigating the literature, it was concluded that its comprehensiveness is the reason for the importance and high usage of this perspective. The findings showed that 12 cases out of 29 reviewed articles (41%) exceeded the maximum number of key performance indicators (KPI) suggested in a previous study. It was found that all 12 cases were large organisations with numerous departments (e.g. national health organisations). Such organisations require numerous KPI to cover all of their strategic objectives. It was recommended to utilise the cascaded BSC within such organisations to avoid complexity and difficulty in gathering, analysing and interpreting performance data. Meanwhile it requires more medical staff to contribute in BSC development, which will result in greater reliability of the BSC. What is known about the topic? Although there was initially a low perception of the BSC within the health sector, over the past decade interest in BSC utilisation has been growing among health service providers around the world in both developed and developing countries. Some papers have described the development or diffusion of the BSC in health settings. Some examples of BSC utilisation for private and public hospitals have been presented in the literature. However, the necessity of a comprehensive review of published articles in the health area is crucial in order to derive the most appropriate way to design and implement the BSC in the health sector in terms of perspectives and KPI. What does this paper add? This paper has analysed articles on the BSC in the health sector published over the last 10 years. The analysis is based on the following items: BSC generations; BSC perspectives; BSC indicators; auxiliary tools. This paper gives an insight into the situation of the BSC in the health sector over the past decade and affords a generic approach of BSC development for health settings in terms of the four items above. What are the implications for practitioners? This paper can be beneficial for managers and decision makers of all healthcare organisations. It can help them to change their thinking about performance assessment and to have a structural BSC approach for performance measurement and strategic management in healthcare. It presents an insight on designing BSC to help managers adopt appropriate performance perspectives and KPI. In addition, it introduces the cascaded BSC, which is useful for large health settings with too many KPI. It also presents all BSC generations to help healthcare managers utilise proper BSC based on their own requirements and strategic objectives.