Prior to the 1990s, generous government funding allowed Canadian health care facilities to provide excellent service and quality. In the early 1990s, increasing health care costs have changed government funding, requiring providers to be more financially accountable. In the mid-1990s, hospitals and regional health authorities across Canada were under siege from funding restraints, mergers and forced closures. At the same time, the healthcare industry was focused on delivering high-quality patient care and aligning the key stakeholders to the newly created vision. To evolve and to survive, Peel Memorial Hospital (PMH) implemented the Balanced Scorecard performance management system and that is the focus of this case study. Also highlighted are the value of and the benefits to be gained when best practices from the corporate sector are successfully adapted to the health care environment.
History and Issues
Peel Memorial Hospital (PMH) in Brampton Ontario lacked measurable targets and tired Mission Statement that tried to be all things to all people (Harber, 1998). Internal surveys revealed that employees were unclear on the organization’s strategic direction and the linkage of various programs and initiatives undertaken. In 1994, PMH embarked on a comprehensive Continuous Quality Improvement (CQI) training program for all staff which was followed by a burst of departmental and interdepartmental improvement initiatives. The hospital management looked closely at whether time, money and energy were being focused on the key clinical and business processes.
Meanwhile, the hospital employees wanted to know how the evolving program management structure relates to PMH’s move into a patient focused care model; how these organizational development initiatives tie in with PMH’s move to shared governance models for nursing and the professional discipline; and where the fit for CQI and new computer system were. Working with Xerox Quality Services, PMH identified the “balanced scorecard” solution as a good fit for PMH and an effective vehicle to further evolve the organization. In 1995, PMH adopted the balanced scorecard system to measure its performance.
Performance Management System Analysis
The use of balanced scorecard in hospitals as part of their performance management and strategic management system has increased substantially. These scorecards incorporated the concern of the hospitals’ stakeholders, focused on the hospitals’ processes, and included both financial and non-financial indicators for performance measurement. The balanced scorecard at PMH included six categories of business with 23 data elements that were the drivers of the performance results. At the center of the Integrated Management Model framework was the Patient and Community Focus. The other five categories of business were Management Leadership, Human Resource Management, Patient Care Process Management, Quality Tools and Information Utilization, and Performance Results, and their interrelationship was identified in the framework (Harber, 1998). “The first year of implementation included objectives that identified the need for corporate measurement tools such as patient and staff/team satisfaction” (Harber, 1998, p. 60).
During year two of implementation, the Integrated Management Model was streamlined to reduce the data elements. By now, PMH had become more adept at managing and understanding the causal relationship between performance indicators and performance results. It had a good idea of which performance results help to drive performance results in other areas. Although the development of the balanced scorecard was a major undertaking and the development of performance measures a challenge, the implementation of balanced scorecard at Peel Memorial Hospital was a success as the satisfaction level from patient rose from 89 percent to 95 percent and the staff satisfaction survey participation rose from 33 percent to 75 percent.
Also, PMH achieved a better understanding of where to invest time and money in learning objectives and the ability to relate mission and vision statements to performance. It also enables PMH to become the lowest-cost provider in its peer group. The balanced scorecard provided PMH the ability to translate the hospital’s strategic objectives into a coherent set of performance measures as well as to align the seemingly disparate elements with organizational objectives.
Mello (2011) says that performance management systems can significantly impact organizational performance and process. The achievement of organizational goals requires a sensible balance between managerial commitment to the strategic interests of a business and to the human interests of its everyday operation at every level. The successful in health care management will depend on organizations and top executives balancing quality and customer satisfaction with adequate financing and long-range goals. The balanced scorecard not only provides a framework for establishing performance measurement goals but also incorporates continued quality improvement throughout the organization. Today, more and more Canadian hospitals have adopted balanced scorecard as their strategic management system.
Mellow, J. A. (2011). Strategic Human Resource Management. Mason, OH: South-Western Cengage Learning. Chapter 10, p. 438-454. Harber, B. W. (1998). The Balanced Scorecard Solution at Peel Memorial Hospital. Hospital Quarterly, p. 59-63.