This paragraph discusses the evaluation of the balanced scorecard’s strengths and weaknesses in a specific organization, Montefiore Medical Center. It also provides a brief summary of Montefiore Medical Center, highlighting its establishment in 1884 as a home for chronically ill patients and its subsequent agreement to operate the patient care facility of the Hospital of the Albert Einstein College of Medicine in 1963.
Both hospitals remained separate with their own administrations for the next 13 years. In 1986, Montefiore faced severe management and financial problems, resulting in the selection of Dr. Spencer Foreman as the new president. Dr. Foreman created a new leadership team and divided Montefiore into two sectors: operations and corporate services. He also changed the hospital’s mission to prioritize patient care, teaching, community service, and research. By 1995, MMC, which included two acute care hospitals, 31 community-based primary care centers, a home care agency, and an annual operating budget of $1 billion, once again experienced financial problems. Dr. Foreman promoted Elaine Brennan to senior VP of operations at the acute care division of MMC to address the crisis situation. Ms. Brennan implemented standard functions and eliminated management positions. She formed a strategic management team composed of MMC management at all levels and introduced the GRIP set of strategic imperatives. Ms. Brennan also reorganized and decentralized the acute care center into five clinical care centers and three support centers. Finally, she introduced the Balanced Scorecard. This approach is briefly summarized by R.W.The Hilton of Managerial Accounting book describes a Balanced Scorecard as a model that evaluates business performance in terms of financial measures, internal operations, innovation & learning, and customer satisfaction. This model assists managers in monitoring staff activities and the consequences of their execution. In today’s ever-changing and competitive business environment, every organization requires a balanced scorecard to remain viable. The advantages of using a balanced scorecard for MMC include addressing increased competition, lower payment arrangements, unsatisfied patients, and a $57 million shortfall that occurred during MS Brennan’s tenure as senior vice president of operations.
Ms. Brennan believed that the medical center could overcome its financial difficulties by implementing a balanced scorecard. This approach would create strategic initiatives that adhere to best practices principles, ensuring that the center continues to provide population-based healthcare and develop centers of excellence. By aligning key performance measures with strategy at all levels of the organization, a balanced scorecard would give management a comprehensive view of the center’s business operations. Previously, the medical center had separate functional organizations for nursing, operations, and clinical care, with doctors receiving support from five separate centralized groups.
Ms. Brennan’s decentralization and implementation of the balanced scorecard will provide a focus for expanding market shares and developing more capacity. This will promote communication and understanding of business goals and strategies throughout all levels of MMC, enabling the transformation of these goals and strategies into actionable behaviors.
The introduction of a balanced scorecard at MMC will promote cooperation, teamwork, and ultimately lead to the success of the organization. Ms. Brennan’s promotion came at a time when MMC consisted of 2 acute care hospitals, 31 community based primary care centers, a home care agency, and an annual operating budget of $1 billion. With the implementation of the balanced scorecard, the performances of all levels within MMC can be more easily evaluated. Additionally, the balanced scorecard will stimulate creativity, foster the generation of beneficial ideas, enhance innovation, and provide strategic feedback. Strategic initiatives will be continuously measured and evaluated against both the organization’s standards and those of competitors. Brennan’s balanced scorecard uses a nation-state-city metaphor to assess patient satisfaction, the cost, quality, and cycle times of clinical and administrative processes, with financials being only 10% of the measures.
Drawbacks and limitations of a balanced scorecard for MMC: As Brennan’s balanced scorecard was developed using a nation-state-city analogy, with the nation symbolizing the acute care division, the states representing the five care centers & three support centers, and the cities representing specific services, product lines, and departments within each center, the evaluation and measurement of Balanced Scorecard performance would be subjective. Unlike quality levels, which can be quantified, the assessment in this case would rely on surveys or management opinion.
Each manager at the national, state, and city levels of the balanced scorecard architecture will need to evaluate their staff’s performance individually, creating their own performance and evaluation scorecards. This is because Brennan did not require standardization of all balanced scorecards. However, it is important to involve the people who will be measured and managed by the scorecard, as creating one without their involvement defeats the purpose. Dr. Ravikumar, chair of the surgery department at MMC, provides a clear example of this.
The department’s balanced scorecard was created by Dr Ravikumar without involving his staff. When he submitted it to his staff, he expected comments or feedback, but none were received. His staff didn’t understand the significance of the balanced scorecard and feared for their job security. In contrast, Charles Balancia, vice president of facilities support services, involved his staff in creating their balanced scorecard, resulting in the fastest development and implementation of their city-level scorecards. A balanced scorecard typically does not include direct financial analysis or risk management, and its goal selections usually do not automatically factor in variables such as opportunity cost calculations.
As Elaine Brennan, I would present the balanced scorecard program to Dr. Foreman by acknowledging that it is limited to the acute care division of MMC. I would also be aware that Dr. Foreman prefers using intuition, experience, wisdom, and data over relying on the balanced scorecard.
My approach to presenting the balanced scorecard to Dr. Foreman involves providing him with data that will convince him of its value across all levels of the MMC, not just the acute care division. For example, I will demonstrate that the scorecard has instilled discipline and focused us on the drivers necessary for enhancing our financial performance in the acute care division.
Thanks to the implementation of the balanced scorecard, the Acute care division’s inpatient shares have increased by 8% this year, surpassing our target by 1%. Additionally, there is a projected increase of 5% for the following year. This has allowed us to shift our focus towards our patients and services, ultimately gaining significant credibility as we generate measures that hold us accountable. References: HBS’s Montefiore Medical Center, by Robert S.
Kaplan; Noorein Inamdar * Chapter 1: pg. 9-11 and Chapter 10: pg. 427-433 of Managerial Accounting: Creating Value In A Dynamic Business Environment, by Ronald W. Hilton * Balanced Scorecard – Advantages and Disadvantages, available at http://tamarawilhite.hubpages.com/hub/Balanced-Scorecard-Pros-and-Cons. Accessed on 10/21/2012. * Benefits from using the Balanced Scorecard, available at http://thebalancedscorecard.com/benefits_bsc.htm. Accessed on 10/21/2012
