Issues for academic health centers to consider before implementing a balanced-scorecard effort

Because of changes in the health care environment, it is likely that strategic planning and management will become much more important to academic health centers (AHCs) than in the past. One approach to strategic planning and management that is gaining the considerable interest of health care organizations is the balanced scorecard. Based on a year's experience in examining this management tool, and on early implementation efforts, the authors critically evaluate the applicability of the balanced-scorecard approach at AHCs in relation to two fundamental questions: Does the decentralized nature of most AHCs mitigate the potential usefulness of the balanced-scorecard approach? Are the balanced scorecard's four perspectives (learning and growth, internal; customer; and financial) appropriate for AHCs, which are neither for-profit nor manufacturing organizations? The authors conclude that (1) the unique characteristics of AHCs may mitigate the full benefit of the balanced-scorecard approach, and (2) in cases where it is used, some key modifications must be made in the balanced-scorecard approach to account for those unique characteristics. For example, in a corporation, the key question from the financial perspective is "To succeed financially, how should we appear to our stockholders?" But in an AHC, this question must be revised to "What financial condition must we achieve to allow us to accomplish our mission?"