The balanced scorecard: a potent tool for energizing and focusing healthcare organization management

The current environment for healthcare organizations contains many forces demanding unprecedented levels of change. These forces include changing demographics, increased customer expectations, increased competition, and intensified governmental pressure. Meeting these challenges will require healthcare organizations to undergo fundamental changes and to continuously seek new ways to create future value. This article provides explanation of a potent new management tool-the balanced scorecard-that can be used by healthcare organizations to meet these challenges. The article also presents the opinions of many high-level healthcare administrators that the balanced scorecard can be highly beneficial to healthcare organizations. It also summarizes these administrators' suggestions regarding the goals and measures that can make up an effective scorecard for a hospital as a whole, as well as for a specific subunit of a hospital. Interestingly, while no published report of balanced scorecard implementations in healthcare organizations exists, a number of administrators stated that they had fully implemented systems similar to the scorecard. These actions can be considered support for the scorecard's potential usefulness; at the same time, they suggest that some sharing of experiences will likely be available in the future. As all administrators are well aware, moving from concept to practice is often difficult. While the article includes some suggestions for scorecard development and implementation, each organization must engage in the full range of activities, from defining its mission to the selection of goals and strategies, and develop its own unique scorecard to assist progress toward the selected goals. As a starting point, Table 3 provides a timeline of some general events that may be common to all organizations during this process.