Montefiore Medical Center Case Analsisy Essay
Evaluate the strengths and weaknesses of the balanced scorecard in this type of an organization. Brief summary of Montefiore Medical Center: * MMC started off in 1884 as a home for the chronically ill that other hospitals couldn’t help, dedicated in honor of Sir Moses Montefiore. * In 1963, Montefiore agreed to operate the patient care facility of the Hospital of the Albert Einstein College of Medicine.
Both hospitals remained as distinct entities with separate administrations for the next 13 years. * By 1986, Montefiore was under severe management and financial problems and a new president was board selected – Dr Spencer foreman, who created a new leadership team, organized Montefiore into 2 sectors – operations & corporate services, and changed Montefiore’s mission from teaching, research and patient care to patient care, teaching, community service and research in that order.
By 1995, MMC (which had 2 acute care hospitals, 31 community based primary care centers, a home care agency and an annual operating budget of $1 billion, 24 academic chairpersons, 800 full time medical center faculty and 750 residents), once again was in a financial problems that were creating a crisis situation and Dr.
Foreman promoted Elaine Brennan (RN. MPH) to senior VP of operations at the acute care division of MMC. Ms. Brennan standardized functions, eliminated 150 management positions, formed a strategic management team developed from all levels of MMC management, introduced the GRIP set of strategic imperatives, reorganized and decentralized the acute care center into 5 clinical care centers and 3 support centers. She last but not the least, introduced the Balanced Scorecard. Brief summary of a Balanced scorecard * According to R. W.
Hilton of Managerial Accounting: Creating Value In A Dynamic Business Environment, a Balanced Scorecard is a model of business performance evaluation that balances measures of financial performance, internal operations, innovation & learning and customer satisfaction. It helps managers formulate strategies to keep track of the performance of activities by their staff and to monitor the consequences arising from the execution of these activities. In a business environment that is continuously changing and increasingly competitive, every organization needs a balanced scorecard to help keep it viable. Advantages/strengths of a balanced scorecard to MMC: By the time MS Brennan became senior vice president of operations, MMC was facing increased competition, lower payment arrangements, unsatisfied patients and a $57 million shortfall.
The medical center needed new business strategies to get the center out of its financial woes and the implementation of a balanced scorecard seemed to Ms. Brennan like the way to go because it was going to: * Create strategic initiatives that allow for best practices principles that will cascade through all of MMC, thus helping the center maintain its standards of providing population-based healthcare and the development of centers of excellence. A balanced scorecard will help align key performance measures with strategy at all levels of an organization, as well as provide management with a comprehensive picture of the organization’s business operations (for instance, for years MMC operated with separate functional organizations for nursing, operations and clinical care with doctors receiving assistance and support from to 5 separate centralized groups).
With Ms. Brennan’s decentralization and introduction of the balanced scorecard, there will be provision of a focus for expansion of market shares as well as the development of more capacity. * It will be a great way to facilitate communication and understanding of business goals and strategies across all levels of MMC as well transform these goals and strategies into action and desired behaviors.
It will maximize cooperation across all levels – that is, it will encourage team members to become more focused on helping one another and hence MMC to succeed. (at the time of Ms. Brennan’s promotion MMC constituted 2 acute care hospitals, 31 community based primary care centers, a home care agency and an annual operating budget of $1 billion, 24 academic chairpersons, 800 full time medical center faculty and 750 residents – the performances of all will be much more easily evaluated via a balanced scorecard). It will help enhance creativity, encourage the birth of unexpected but beneficial ideas and improve innovation as well as provide strategic feedback since strategic initiatives will be continually measured and evaluated against the organization’s standards as well as that of competitors. Brennan’s balanced scorecard was created based on a nation-state-city metaphor and measured patient satisfaction, the cost, quality and cycle times of clinical and administrative processes, with financials consisting of only 10% of measures.
Disadvantages/weaknesses of a balanced scorecard to MMC: Due to the fact that Brennan’s balanced scorecard was created based on a nation-state-city metaphor with the nation representing the acute care division, the states representing the five care centers & three support centers and the cities representing individual services, product lines and departments within each center: * The Balanced Scorecard performance and evaluation was going to be subjective because unlike quality levels, it would not be quantified except by surveys or by management opinion.
Each manager at the nation, state and city levels of the balanced scorecard architecture will have to individually evaluate the performance of their staff based on their balanced individually create their performance and evaluation scorecards, since Brennan did not mandate that all balanced scorecards be standardized. * Creating a balanced scorecard without the involvement of the people who will be measured and managed by it defeats the purpose. A clear example of this could be seen with Dr Ravikumar – chair of the surgery department of MMC.
He created the balanced scorecard of his department without the involvement of his staff and when he submitted it to them expected comments or feedback, none was forthcoming. His staff didn’t know what difference it will make and were scared that their jobs were in jeopardy. Contrast Dr Ravikumar to Charles Balancia – vice president of facilities support services who created his balanced scorecard with the help of his staff, they were the fastest to develop and implement their city-level scorecards. A Balanced scorecard does not usually include direct financial analysis of economic value or risk management and its goal selections usually do not automatically include variables such as opportunity cost calculations. 2. As Elaine Brennan, how would you present the balanced scorecard program to Dr. Foreman? As Brennan, I am fully cognizant of the fact that my balanced scorecard is limited only to the acute care division of MMC and also aware of the fact that Dr Foreman uses or prefers – intuition, experience, wisdom and data to the use of the balanced scorecard.
So how will I present the balanced scorecard to him? I will present Dr Foreman with data to convince him that the balanced scorecard is worth a try across all levels of the MMC and not just the acute care division. For instance I will show Dr Foreman that: * The scorecard has given us at the acute care division discipline and focused us on the drivers needed to improve our financial performance.
Thanks to this, the Acute care division’s inpatient shares have grown by 8% this year, with 1 more percent than we had targeted. Furthermore there is an additional projected increase of 5% for the next year. * Thanks to the balanced scorecard, we now talk about our patients and services and are thus gaining enormous credibility by producing measures by which we will be held 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
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