Internal Business Process Prospective BUS 499 – Strategic Management Module 3 Case February 1, 2013 Duke Children’s Hospital fell into a crisis within the mid-1990s. Expenses were rising while dramatic reductions in net margin were occurring. Staff productivity fell and staff satisfaction was at an all-time low. They overcame the crisis by implementing the balanced scorecard. Their way of designing their scorecard catered to their business in healthcare. The higher officials of Duke Children’s Hospital made a three-step process in designing their balanced scorecard. The three steps of proven rapid-fire approach are to: get connected, get results, and get smarter” (Meliones, 2001). Step one consisted of establishing key linkages. By linking the mission, strategy, objectives, targets, key performance indicators, and initiatives across the organization, stakeholders within the hospital were able to stay on the same end goals. Each stakeholder was given information to diagnose opportunities for improvement. There were three vital areas that helped the scorecard stay connected. Key performance indicators linked the business and clinical aspects of healthcare.
Staff satisfaction was related to preserving or increasing quality of care. Regulatory area maintained the compliance of laws and procedures within the organization. Step two consisted of analyzing performance to get results. Data was collected to enhance the productivity and satisfaction of stakeholders within the hospital. The goal was to “improve performance in stakeholders while enhancing quality” (Meliones, 2001). This affects the customer perspective by increasing customer satisfaction. The key factor to help analyze data and improve efficiency was to implement new technology.
By supplementing telephone calls with fax and email and setting up automated notifications, the “total denials decreased from fifteen percent to less than one percent” (Meliones, 2001). Step three consisted of gaining knowledge and strategic control of your organization by getting smarter. New ideas and approaches result in making new connections. The scorecard was updated accordingly to maintain the key goals. By implementing the balances scorecard, the hospital was able to track stakeholder’s performance data while keeping an eye on the effects of the business process.
Each stakeholder was analyzed with their own data instead of looking at the department as a whole. This stopped stakeholders from pointing fingers at one another when a mistake within the department was made. Physicians, clinicians, and nurses were tracked in an integrated matrix to optimize performance. The balanced scorecard focused on the internal business process of “operations management, customer management, innovation, and regulatory and social clusters” (Niven, 2010). By making certain stakeholders adjust their performance according to data, an increase in productivity was accomplished in an intelligent matter.
By increasing efficiency without compromising quality, cost per case was reduced and patient satisfaction increased. Duke Children’s Hospital became a well-known treatment center for children. Within the customer management, prospective patients were wooed by the increase in acknowledgements and success of the hospital. This may have helped gain and attract new customers. Innovation was a big factor within Duke Children’s hospital. Officials implemented “the use of technology to turn data into information” (Meliones).
By updating their system of keeping track of financial and customer data, shareholders performance and satisfaction increased while gaining efficiency throughout the internal process. The regulatory and social perspective was readily focused in their step one of implementing their balanced scorecard. The hospital was ready to “facilitate regulatory compliance as a collateral benefit of routine clinical practice” (Meliones, 2001). Employees of Duke Children’s hospital were the main characters affected within the change of the internal business perspective.
Before the balanced scorecard was implemented, staff productivity was in decline and staff satisfaction was at an all-time low. The positive shift in staff satisfaction and productivity was seen after the step one and two of implementing the scorecard. Employees were connected with the same mission and strategy of the whole organization. After analyzing their performance results, stakeholders were able to improve the way they work and handle patients. Clinicians, physicians, and nurses were able to provide quality clinical care without dramatically affecting the financial performance.
This aligned each stakeholder within the system into a single platform. The key was “to identify the key drivers of their performance and implement initiatives to optimize them” (Meliones, 2001). The customers of Duke Children’s hospital saw a major change in efficiency within the organization. Without cutting staff, the hospital was able to “improve their performance while enhancing quality” (Meliones, 2001). By implementing a new system of records, patients were able to pay bills on time without suffering through denial claims. Automatic reports gave patients the qualitative data they needed to for physicians and nurses to evaluate.
The hospital was able to work in sync to provide excellent care for new patients. Duke Children’s hospital did a superb job in implementing, planning, and executing their transition to the balance scorecard. Officials of the hospital knew they had a crisis within their hands. If they did not change their ways, the future of the hospital would be at stake. By planning a three-step process of shifting their strategic management, officials were able to improve all perspectives within the hospital. “The cost per case was reduced from $14,889 to $10,500” (Meliones, 2001).
This resulted in a $30 million reduction in cost within four years. The net margin shifted into the positive by $4 million from a previously negative $11 million, all within four years. Productivity and staff satisfaction grew to elevating levels. The significant transition of the hospital is clear evidence that the implemented scorecard positively changed the hospital. The three-step process was the framework that guided their goals. The strategy of Duke Children’s hospital should be guidance for all businesses in any industry to accept and try the balanced scorecard management system. References
CQI (2012) Introduction to Quality. The Chartered Quality Institute. Retrieved August 24, 2012, from http://www. thecqi. org/Knowledge-Hub/Resources/Factsheets/Introduction-to-quality/ Meliones, Jon N. ; Ballard, Richard; Liekweg, Richard; & Burton, William (2001, April). No mission (<–>) no margin: It’s that simple. Journal of Health Care. 27(3): 21-30. Retrieved May 17, 2010, from the library: https://coursenet. trident. edu Niven, P. (N. D. ) Internal Process perspective. EPM Review. Retrieved May 17, 2010, from http://www. epmreview. com/Resources/Articles/InternalProcess-Perspective. html