Ideas at Work
The Balanced Scorecard
Solution at Peel Memorial Hospital
By Bruce W. Harber
ospitals and regional health authorities across
Canada are under siege. From mergers to forced
closures to funding restraints, the healthcare
industry is facing tremendous challenges. To make
matters more complicated, add mediating cultural differences
and the integration of non-acute and community-based
services. At the same time, healthcare entities attempt to
remain focused on delivering high-quality patient care and
aligning the key stakeholders to the newly created vision.
In the midst of these challenges, management must ensure
that it brings as much alignment, direction and purpose as
possible into the organization. A clearly articulated vision
statement, measurable corporate goals and objectives, together
with a strategic plan all help to bring more certainty to staff,
patients and volunteers. The deliverable is the ability of staff
and teams to align accountabilities, activities and resources in
support of the vision and goals of the organization.
For Peel Memorial Hospital (PMH) in Brampton Ontario,
1995 was a watershed year. It was evident that our corporate goals
and objectives had run their course. We lacked measurable targets.
We had a tired Mission Statement that tried to be all things to all
people. Internal surveys revealed that employees werent clear on
what our objectives were, what strategic direction we were taking
and how certain hospital initiatives were inter-related.
However, back in 1994, PMH had embarked on a comprehensive Continuous Quality Improvement (CQI) training
program for all staff that was followed by a flurry of departmental and interdepartmental improvement initiatives.
Management looked closely at whether time, money and
energy was being focused on the key clinical and business
processes. Meanwhile, employees asked, How does our evolving program management structure relate to our move into a
patient-focused care model? How do these organizational
development initiatives tie in with our move to shared-governance models for nursing and the professional disciplines?
Where is the fit for CQI and our new computer system?
To resolve this dicotomy, we chose to partner with Xerox
Quality Services. The company has significant expertise in an
integrated structure that not only addressed our existing issues,
but also enabled the organization to work towards common
objectives. Ironically, we did not go out to the marketplace
looking specifically to find a balanced scorecard solution. We
backed into this initiative because it was a good fit for our
culture, addressed our issues and was considered to be an
effective vehicle to help the organization evolve further.
VALUE OF THE BALANCED SCORECARD
For PMH, the balanced scorecard provides us with:
1. a framework for performance measurement and evaluation;
2. the ability to translate the organizations strategic objectives
into a coherent set of performance measures;
3. the alignment of seemingly disparate elements with organizational objectives;
4. a focus on accountability at all levels; and
5. a balance between productivity and quality, that is, an
interrelationship between the elements in the model.
Essentially, the balanced scorecard specifies desired performance, assesses current performance and identifies the gaps
between the two. Through this technique, PMH was able to focus
on the vital few actions necessary to close the gaps. All teams align
their objectives and activities to the achievement of our performance results (corporate goals and objectives). To do this, they rely
on corporate and team performance indicators, collect and analyze
data, measure progress against targets, and develop action plans.
ASSESSMENT OF THE HOSPITALS PREPAREDNESS
One of the first things we did was to conduct an environmental
assessment to determine the state of readiness of the organization.
Through focus-group discussions, we determined the strengths of
the hospital and of the people involved. In addition, we identified
some areas that required development and were considered necessary for the effective implementation and use of the balanced
scorecard. In essense, the process was like a cultural due-diligence
process. We gathered together people from all levels of the organi-
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The Balanced Scorecard Solution at Peel Memorial Hospital Bruce W. Harber
zation and explained the importance of measuring performance
to improve the underlying capability of the organization.
Together, we focused on identifying our vital few the most
critical elements of our business that had to change.
The initial stages of our partnership with Xerox involved
transforming its corporate-sector model into a model appropriate and relevant to a healthcare organization. The company
also assisted in the development of our vision statement,
which was the critical foundation and the desired state from
which we formulated our performance results. Our motto was
changed to Together We Achieve Great Things which sums
up the essence of our vision statement.
Each of the categories has several data elements (such
as Vision and Strategic Direction, Managing for Results,
and Behaviours and Quality Values within the category
of Management Leadership), a desired state and diagnostic
criteria. The latter include what to measure, how to
measure progress and what objective must be met. The
performance results include these aspects plus annual objectives with targets.
At the centre of the model is Patient and Community
Focus. The collective aspects of the model focus on the patient
and community. No one category is a key driver. The 23 data
elements are drivers of the performance results.
IDENTIFICATION OF MAJOR BUSINESS CATEGORIES
DETERMINING THE VITAL FEW PERFORMANCE INDICATORS
Through the integrated management model PMH next identified six major categories of our business and how they intersect
with each other.
The first year of implementation included objectives that identified the need for corporate measurement tools such as patient and
staff/team satisfaction. In the initial stages, the vital few activities
Integrated Management Model
1. Management Leadership
1.1 Vision and Strategic Direction
1.2 Managing for Results
1.3 Behaviours and Quality Values
1.4 Fact/Based Management
1.5 Communication
1.6 Environmental and Social Responsibility
2. Human Resource Management
2.1 Selection and Recruitment
2.2 People Development
3. Patient Care
Process Management
3.1 Patient Care Process
Management Principles
3.2 Management Processes
3.3 Operational Processes
3.4 Enabling Processes
2.3 Empowering Work Environment
2.4 Total Compensation and Recognition
4. Patient and
Community Focus
4.1 Patient First
4.2 Patient Requirements and
Expectations
4.3 Marketing Segmentation
and Coverage
4.4 Community Communications
4.5 Patient Relationship
Management
4.6 Patient Inquiry and Complaint
Management
5. Quality Tools and
Information Utilization
5.1 Benchmarking and
Best Practices
5.2 General Quality Processes
and Tools
5.3 Information Management
6. Performance Results
6.1 Patient Satisfaction
6.2 Team Member Motivation
and Satisfaction
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6.3 Accessibility and Responsiveness
6.4 Productivity and Utilization
Management
6.5 Financial Performance
6.6 Community Health Leadership
6.7 Environmental Leadership
Bruce W. Harber The Balanced Scorecard Solution at Peel Memorial Hospital
may equate (as they did with us) to the objectives of the organization. Selecting the vital few is part science and part art. Conducted
once a year before the next fiscal year, the process involves brainstorming at the senior level as to which drivers will improve
performance results. Typically, we select at least four vital projects
from the 23 data elements that will require improvement-team
attention. An assessment of these elements based on the diagnostic criteria and progress toward the desired state will prioritize
where to place resources over the next 12 months. Collectively
you anticipate that the action plans associated with these vital few
will impact positively on the next series of quarterly performance
results. Over time and with experience, the organization will
become more sophisticated in the cause-and-effect game.
One of the most important aspects of implementing
organizational change is the ability to sell the rationale to the
organization. People must see the connection between the
past, present and future. Before implementing any change, we
communicate with those involved to explain what were doing,
why were doing it, how it benefits the organization and its
people, what the issues will be, the timetables and the level of
involvement we expect from staff.
STREAMLINING THE MODEL
During Year Two of implementation we have evolved and
streamlined the model, that is, reduced the data elements. As
well, we have become more adept at managing and understanding the causal relationship between performance indicators and
performance results. We now have a good sense of which performance results help to drive performance results in other areas.
After two years of actual implementation, every team is
aware of the model, performance results and their specific
accountabilities. Most teams can report on all performance
results, others can report on most, while some actually collect
data and develop action plans that assist other teams in achieving their objectives. A leadership guide was developed for each
of the team leaders to assist in the process of communicating
the model and expectations of performance and accountabilities to all front-line staff.
All teams make quarterly report presentations to the senior
team. The senior team meets weekly, with the first hour dedicated
to team reports. Teams, usually two representatives, have 15
minutes to present highlights and identify issues that may require
corporate support and action plans overall. We have a process in
place that continuously looks at the format and content of reports.
Team reports are available to everyone in the organization. Teams
are encouraged to share information and the how tos in terms of
successful achievement of performance results. This form of internal
benchmarking is another strategy to achieving corporate performance results. The Board of Directors receives a quarterly roll-up
report of performance reports. This model assists the board and its
accountability for looking at the ends and not the means.
SCORECARD RESULTS
Since implementing the model, positive patient satisfaction
levels have increased from 89 percent to 95 percent. Staff satisfaction survey participation levels have increased from 33
percent to 75 percent. As soon as the organization knew what
we were measuring and the fact that we were being held
accountable for follow-up, the results spoke for themselves.
The use of CQI tools and techniques is alive and well and
integrated. The model has been able to revitalize and sustain
the investment we made in CQI training.
Further, we believe that the model has enabled PMH to
become the lowest-cost provider in our peer group and to
receive a four-year Accreditation Award with Distinction.
LESSONS LEARNED
1. Priorities and strategic directions are positively affected by the
use of the balanced scorecard. Performance results have assisted
us in reinvestment decisions, allocation of resources, use of
space and even the purchase of capital equipment. When we go
out to the marketplace to seek a public/private-sector partnership, that is, in material management, laboratories and support
services, we ask vendors to outline in their proposals how the
partnership will help us achieve our performance results.
2. We now have a better handle on how to invest in our learning objectives. Before we were unclear about the value-added
nature of our investment in training, education and development. The performance results have enabled us to align
funding to improve results, particularly in the area of
staff/team satisfaction. The challenge is to put the resources,
time and energy into areas that get the best bang for the
buck in terms of improved performance results.
3. While the development and implementation of the balanced
scorecard was a major undertaking, the return on investment has
exceeded our expectations. Our corporate partner got us started
but over time we assumed ownership of the tool and its application. This is an important consideration for organizations as they
contemplate the relevance of this model to their organization.
The sooner you take ownership, the more the organization and
its teams will become committed and supportive of the initiative
and integrate it into their day-to-day activities.
4. The development of the performance measures is a
challenge. Although most of the measures were readily
available, we had to go through a structural process to
ensure indicators are aligned to objectives, targets and
performance results. When you start, you will not have it
all in place. Expect to evolve and get on with it. The easiest
and most readily available measures are the financial and
productivity indicators. The soft measures (such as patient
and staff satisfaction) are harder to obtain but they
ultimately help to create a quality-focused and innovative
working culture, which in turn drives the hard measures.
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Bruce W. Harber The Balanced Scorecard Solution at Peel Memorial Hospital
APPLYING THE SCORECARD
IN LABORATORY RESTRUCTURING
The Peel Memorial Hospital's integrated
management model was key to the hospital laboratory's restructuring success. The
Laboratory's restructuring initiatives,
which were implemented in four distinct
phases over a five year period, included:
the introduction of self-directed teams;
a decrease in the previous hierarchical
management structure; and redesign of
work allocations including the crosstraining of staff.
The major achievements from this
restructuring relate primarily to the
performance research of Team Member
Motivation and Satisfaction, and Financial
Performance. Highlights range from:
A $1 M reduction in the former staffing
budget, and a 15% increase in productivity;
Elimination of terratorialism that had
existed between various lab areas; and,
Enrichment of the technologist and
technician roles and empowerment of
all laboratory staff.
5. Often people become too enamoured with using the same measure
over and over again. You must learn to reject some of them those
that didnt initiate any change in performance, where its unclear
about whats being measured and how results should be interpreted,
where theres no display of progress toward strategic objectives,
where theres no ownership for performance.
At the outset, I challenge you to ask yourself how you can
bring out the best in your people. Determine how you can achieve
the highest standard of quality possible and make sure that what
youre doing is very relevant, effective and appropriate. If you
have a vision statement, how do you know that youre constantly
living it? To what extent are you truly a value-based organization?
If you believe in those questions and learn how to operationalize
them, youve got it made. The balanced scorecard is a powerful
tool to accomplish just that!
Bruce Harber is President and
Chief Executive Officer at Peel Memorial
Hospital in Brampton, Ontario.
BRUCE HARBER
CRITICAL SUCCESS FACTORS
Organizations that are already functioning as a team-based
environment, i.e. under a program management structure, are
best equipped for effective roll-out of the scorecard.
An environmental assessment is required in order to evaluate
the state of readiness for the initiative determine what
strengths or underpinnings are in place, identify critical success
factors and what challenges will need to be addressed in preparing for implementation.
A top-down bottom-up approach allows teams to create their
own indicators. This helps to ensure appropriate buy-in and
ownership, especially for the performance indicators.
Accountability for the scorecard lies with the team not a single
person. Often the ownership is assigned to a chief financial officer.
I believe organizations that take this approach do so at their own
peril. The scorecard is a core management tool, the ownership of
which lies with the entire leadership team. Accordingly, we have a
weekly leadership team meeting to compare our performance
measures and progress against the corporate goals.
A commitment to change whatever you measure when neces-
sary. Its easy to constantly review the financial and productivity
measures. But its your progress against the soft, non-financial
measures that really makes the difference, because they drive all
the other performance results. If you are turning on your teams
of employees and your patients, then your financial picture will
take care of itself.
Become disciplined in looking at the cause-and-effect relationships between the data elements or risk putting resources in the
wrong place. This is important, as the power of a balanced scorecard is in the interrelationship between measures and results.
IS infrastructures must support the needs of a balanced scorecard, i.e., financials. There are packaged user friendly software
solutions where programs are loaded from a server that may be
useful to hospitals looking to upgrade their IS.
Commit to a periodic organization-wide assessment of your
performance against all the data elements.
Balanced scorecard structures succeed when they provide relevant
facts and data about current performance and show what needs to
be improved, either immediately or in the future.
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