The Balanced Scorecard has been described as one of the most important management innovations in the 20th century. Introduced by Norton and Kaplan in 1992, the Balanced Scorecard has been adopted in industry and health care and is presently in the growth stage of its life cycle. This study reviewed the use of the balanced scorecard in health care and concludes that: (1) it is relevant to health care but modification is necessary to reflect realities of the industry or organization; (2) a wide range of health care organizations use the scorecard; (3) its application has been extended beyond strategic management; (4) it has been modified to include perspectives such as quality of care, outcomes, and access; (5) its use increases the need for valid, comprehensive, and timely information; and (6) two large scale efforts have used the balanced scorecard, but have differed in the units of analysis, purposes, audiences, methods, data, and results.

Background: The Balanced Scorecard has been described as one of the most important management innovations in the 20th century. Introduced by Norton and Kaplan in 1992, the Balanced Scorecard has been adopted in industry and health care and is presently in the growth stage of its life cycle. This study reviewed the use of the balanced scorecard in health care.

Methods: Researchers reviewed the literature to investigate how authors adapted the theory and concepts of the balanced scorecard for health care.

Findings: Among the findings are: (1) Application of the balanced scorecard has extended beyond strategic management. For example, the scorecard has been advanced as a tool for measuring nursing performance, as a tool for measuring managed care organization, as a framework for managing complex and rapid change, and as a tool to diagnose and manage the health of physicians' practices and/or related enterprises. (2) Several types of organizations (with diversity of missions, services, products, and clinical settings) have reported some experience with the balanced scorecard, including hospital systems, hospitals, universities, long term care, psychiatric centres, insurance companies, the federal and local government, and national health care organizations. (3) Use of the balanced scorecard has extended beyond that of strategic management, such as, public information, clinical pathways, hospital department performance, quality of care and outcome measurement, accreditation, managed care evaluation, and performance measurement of a consortium of hospitals. (4) The balanced scorecard has been modified for health care in several ways including: modification of the original framework (which included four perspectives: financial, customer, internal process, and learning and innovation1). For example, a long-term care organization has used the following perspectives: development and community focus, human resources, and quality of care and services. Others were also found to include quality of care as a perspective. (5) Several articles have addressed the critical need for valid, comprehensive, and timely information as an input to the balanced scorecard. For example, one author indicated that it is necessary to establish an organizational data warehouse of clinical, operational, and financial data used in decision support. Duke developed a customized information system for its balanced scorecard. (6) In addition to single organizations, sectors in health care have adopted the balanced scorecard. Examples include JCAHO, HEDIS, and the Hospital Report'99 (in Ontario). Recent attention to the balanced scorecard has focused on improvements in application.

Conclusions: the balanced scorecard: (1) is relevant to health care but modification is necessary to reflect realities of the industry or organization; (2) is used by a wide range of health care organizations; (3) has been used in applications beyond those of strategic management; (4) has been modified to include perspectives such as quality of care, outcomes, and access; (5) increases the need for valid, comprehensive, and timely information; and (6) two large scale efforts have used the balanced scorecard, but have differed in the units of analysis, purposes, audiences, methods, data, and results.

Reference: Zelman WN, Pink GP, Matthias CB. Use of the Balanced Scorecard in Health Care. Journal of Health Care Finance, 2003; 29(4): 1-16.

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