The balanced scorecard framework-A case study of patient and employee satisfaction: What happens when it does not work as planned?

Marshall University

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Management Faculty Research Management, Marketing and MIS

4-2008

e balanced scorecard framework-A case study of

patient and employee satisfaction: What happens

when it does not work as planned?

Andrea Lorden

Alberto Coustasse

Marshall University, coustassehen@marshall.edu

Karan P. Singh

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Recommended Citation

Lorden, A., Coustasse, A., & Singh, K. P. (2008). e balanced scorecard framework - A case study of patient and employee

satisfaction: What happens when it does not work as planned? Health Care Management Review, 33(2), 145-155.

THE BALANCED SCORECARD FRAMEWORK - A CASE STUDY OF PATIENT AND

EMPLOYEE SATISFACTION: WHAT HAPPENS WHEN IT DOESN’T WORK AS

PLANNED?

ABSTRACT

Background – The successful utilization of the Balanced Scorecard (BSC) framework in

healthcare has been demonstrated in the literature. Given these successes, a financially

struggling hospital implemented a BSC framework intervention which attempted a culture

change centered upon patient satisfaction which it hoped would translate to improved financial

stability. Despite the evidence of BSC successes, the intervention, entitled Route 99 (R99) did

not succeed in this hospital.

Purpose – This case study was conducted to identify learnable lessons and confounding factors

associated with the successes and failures of R99. Metrics for patient satisfaction and employee

satisfaction were examined as reflections of the intervention, the BSC framework, and the

confounding financial condition of the hospital.

Methodology -- Through case study methodology, mean quarterly patient satisfaction scores

tabulated by an outside vendor for inpatient and outpatient services were divided into four time

intervals and compared through Analysis of Variance (ANOVA). Employee satisfaction was

measured through a hospital provided twelve question employee survey, administered through

convenience sampling at the beginning and seven months into R99. Each question utilized a five

point Likert scale, and generated two samples which were verified for sample independence

through Chi-squared analysis. The Mann-Whitney U test was used for comparison.

Findings – Inpatient patient satisfaction scores exhibited a non-significant upward trend.

However, the ANOVA demonstrated a significant rise in outpatient patient satisfaction (p<

0.05). Interestingly, employee satisfaction declined (p< 0.05) significantly for supervisors and

directors in three areas. The inverse relationship between patient satisfaction and employee

satisfaction is in contrast to that found in the literature by the authors.

Practice Implications – Examination of the BSC framework, the hospital’s financial standing,

and the metrics for patient satisfaction and employee satisfaction illuminated the importance of

management transparency, leadership support, appropriate metric selection, and the strength of

the BSC under turbulent circumstances.

INTRODUCTION

The Balanced Scorecard (BSC) framework is a performance measurement model

proposed by Kaplan and Norton in their landmark article in the Harvard Business Review

(Kaplan & Norton, 1992). The management technique is a model which translates an

organization's vision, mission and strategy into a condensed set of performance measures used to

communicate and evaluate progress toward the vision, mission, and strategy of the organization.

To establish a foundation for decision-making, it is necessary to identify reliable

performance measurements, link the measurements to a specific strategy, establish achievable

targets, communicate and educate the staff, encourage individual and unit goal-setting and

develop reward and feedback systems (Jones & Filip, 2000). The BSC emerged in response to

criticisms of traditional budgeting and performance assessment (Johnsson & Kaplan, 1987).

Primarily, in response to the need for improved budget methodologies addressed through

Activity Based Costing also developed by Kaplan, and the shortfall of parameters utilized to

manage activities other than financial activities. Due to their slow and aggregate nature,

traditional internal accounting systems have provided information to management too slowly for

the most effective decision making. Further, organizations should be managed through other

important parameters such as capacity utilization and lead-time to complement the financial

picture (Johnsson & Kaplan, 1987). When fully deployed, the BSC transforms strategic planning

from an academic exercise into the nerve center of an enterprise (Arveson, 2003).

The Balanced Scorecard (BSC) framework is built upon similar key constructs as

Deming’s Total Quality Management including customer defined quality, continuous

improvement, employee empowerment, and measurement based management and feedback. As

in Total Quality Management, the BSC incorporates feedback from internal business processes.

However, the BSC also incorporates a feedback loop reflecting outcomes of business strategies.

Together they are known as "double-loop feedback" (Argyris, 1991; Balanced Scorecard

Institute, 2006). Double loop learning arises from following and changing, if necessary, the

strategic vision. The continual adjustment of strategy is necessary in order to accomplish

permanent change in a business environment (Argyris, 1991). For this study, the BSC

constituted the theoretical framework which guided the organizational research.

The BSC framework is composed of four quadrants including financial indicators,

customer perspective, internal business functions, and learning and growth of the organization

(Kaplan & Norton, 1996). Once each business unit has identified its customer, the business unit

leader must address and answer a question associated with each quadrant. From the financial

perspective, the business unit leader should answer how does the owner view our performance?

From the customer perspective, managers must know if their organization is satisfying customer

needs, so must answer are we meeting customer needs and how does the customer see us? From

the internal business functions perspective, managers need to focus on internal operations which

satisfy customer needs, so must answer what do we need to do to excel at meeting our customer

needs? And finally, from the learning and growth perspective, the business unit leader must ask

how can we continue to create value through innovation, improvement and learning? Through

the answers to these questions, each quadrant can be aligned with appropriate metrics. These

metrics as determined by the business unit leaders are then integrated throughout the business

unit to reflect and coordinate the strategy of the BSC framework. In the end, the goal of the BSC

framework is to maintain the balance among these quadrants while it meets the goals of the

business unit (Kaplan & Norton, 1996). Although Kaplan and Norton have recommended these

four quadrants for the BSC framework, they have asserted the BSC framework is flexible and

should be modified to suit the specific needs of a business unit (Kaplan & Norton, 1996).

Forgione was the first in the literature to link the BSC with health management as an

approach to combine health care financial and quality measures (Forgione, 1997). Forgione

reported the implementation of capitated payment systems and diagnostic related group

reimbursement places powerful incentives in opposition to health care quality. Additionally, just

as financial disclosures are essential for the efficient allocations of capital resources, quality

disclosures are essential for the efficient allocation of health care resources (Pink et al., 2001).

Since that time, the BSC has been implemented as part of a growing trend within the healthcare

industry in a variety of healthcare units including emergency rooms (Huang, Chen, Yang, Chang

& Lee, 2004), psychiatric centers (Santiago, 1999), intensive care units (Meliones, 2000),

women’s services (Jones & Filip, 2000), burn centers (Wachtel, Hartford & Hughes, 1999), long

term care facilities (Macdonald, 1998) and human resources (Fottler, Erickson, & Rivers, 2006).

Some hospital systems have developed a BSC framework to encompass their entire enterprise

(Pink et al., 2001; Yap, Siu, Baker, & Brown, 2005).

Patient satisfaction is an integral part of a health care organization's mission and culture

(Cardello, 2001). Patient satisfaction is a multidimensional construct researchers have

conceptualized in many ways (Nelson, 1990; Brand, Cronin, & Routledge, 1997; Keith, 1998;

Bryant, Kent, Lindenberger, Scbreiber, Canright, & Cole, et al 1998). Depending upon the focus

of the survey instrument, patient satisfaction scores may reflect efficiency of care,

communication with healthcare professionals, treatment outcome, pain management, or state of

the facility. Empirical research on patient satisfaction has demonstrated a lack of an accepted

conceptual or theoretical model, a lack of standardized methods to assess patient satisfaction, and

a continuing need for consensus within the medical profession on the role patient satisfaction

should play in healthcare (Arahony & Strasser, 1993). Studies have shown an association

between hospital patient satisfaction and employee satisfaction (Atkins, Marshall, & Javalgi,

1996), clinical outcomes (Leggitt, Potrepka, & Kukolja, 2003), and market share (Zimmerman,

Zimmerman, & Lund, 1997).

Employee satisfaction is also a multi-faceted metric. Although frequently tracked

through employee turnover, attention has been given to other components of employee

satisfaction including employee workload (Atkins et al., 1996; Mycek, 2001), perception of the

working environment (Atkins et al., 1996), and empowerment or depersonalization in the work

place (Vahey, Aiken, Sloane, Clarke, & Vargas, 2004). Finally, in multiple studies, employee

satisfaction has been positively correlated to patient satisfaction (Atkins et al., 1996; Mycek,

2001; Huey-Ming Tzeng & Katefian, 2002; Leggitt et al., 2003; Corvino, 2005).

In this paper, the authors will elaborate on the process utilized by a community hospital

to implement a BSC framework strategic business plan centered on patient satisfaction.

Additionally, the implications of the relationship between patient satisfaction and employee

satisfaction for this hospital will be discussed along with the confounding issues caused by the

eventual financial failure and closure of the hospital. The paper will conclude with a discussion

of the learning experiences including the importance of leadership support, management

transparency and the strength of the BSC framework even under adverse circumstances.

METHODOLOGY

Case Description

Quantitative research methodology followed a single longitudinal embedded case study

design complemented by qualitative participatory research. Yin (2003) notes that case studies

are the preferred strategy for studies dealing with "how" or "why" questions. Through the

systematic, stand-alone implementation of case study methodology for events and contemporary

phenomena within real life context, increased validity of associated findings was accomplished.

Further, by using a multi method approach, data could be compared and contrasted for

inconsistencies. This control for both construct and external validity resulted in a well rounded

study (Yin, 2003). Through multiple roles, one of the researchers participated and maintained

consistent focus on improvements through the use of collaborative approaches in organizational

management. Theory, research and practice were performed in parallel and were corrected when

necessary to obtain the best knowledge and richest experience of the case study for a naturalistic

generalization (Stake, 1978).

Setting and Intervention

The community hospital was a 150 bed teaching, non-profit hospital. At the time of the

intervention, January, 2003, to December, 2003, the hospital was offering acute care including

but not limited to emergency room, intensive care unit, outpatient surgery, surgery, radiology,

hyperbaric oxygen therapy, and adult psychiatric care.

Based upon the Strengths, Weaknesses, Opportunities and Threats evaluation of the

hospital, the Director’s Steering committee developed institutional values and a vision statement,

“to be the first choice in health care”, to be used in the organizational intervention called Route

99 which was based upon the BSC framework developed by the hospital. The Director’s

Steering committee consisted of the directors from patient care services, business office, quality

management, and the housekeeping departments. The directors of this committee reported to

one of five Vice-Presidents who reported to the Chief Executive Officer. These directors also

held the knowledge and ability to create a long range vision and execute a plan to bring the

vision into action. The main objective of the intervention was to achieve a shared vision of

customer driven service culture. The articulated strategic management plan and the BSC

framework were utilized to develop and implement social and training activities considered

beneficial to the staffs’ ability to translate the learning into culture change. The stated goal of

Route 99 was to achieve 99% excellence in four core areas in order to accomplish the new

vision. The four core areas developed for the BSC framework included 1) customer service, 2)

finance, 3) quality of care, and 4) best people. Within the intervention, these core areas were

analogous to Studer’s “Pillars of Excellence” (Studer, 2004).

The “Connect-the-Dots” team was the name given to the group governing the

implementation of the Route 99 intervention. It consisted of the researcher and nine directors

appointed by the Vice President of Patient Care Services. Due to the broad expanse of the

intervention, the team along with the Chief Executive Officer decided the intervention should be

implemented in phases throughout the hospital. As patient satisfaction was chosen as the driving

indicator of success for the intervention and Patient Care Services was the hospitals major

interface with patients, it was decided implementation of Route 99 should begin with the

customer quadrant of the BSC.

Once the information from the Strengths Weaknesses Opportunities and Threats

evaluation and the strategic business plan were organized into the BSC framework, it was

disseminated to the all employees. With a shared vision of improved patient satisfaction scores,

each department was allowed to develop goals consistent with the intervention and meaningful to

its department. Utilizing instruments with a road race theme introduced at the kick-off event,

departments were to display progress towards improved patient satisfaction within the

department fulfilling the first of the double loop feed back process prescribed by the BSC

framework. The kick-off event included administration of the first staff survey along with the

introduction of instruments for communicating the progress of the intervention to the employees.

A “traffic light” was posted visibly throughout the hospital indicating the status of current patient

satisfaction scores and a “race track” located outside the cafeteria next to the employee bulletin

board displayed the status of each unit for employees to view and changed quarterly with updates

of patient satisfaction scores.

Feedback teams were also incorporated into the intervention. Continuous improvement

teams were comprised of volunteers recruited at the kick off event, one team each for inpatient

and outpatient services. These teams identified patient satisfaction issues and implemented

responses to produce continuing improvement. Additionally, anonymous feedback cards and

drop boxes were available to patients, visitors, and employees for suggestions or complaints.

Upon receipt of a feedback card, temporary feedback teams were formed to appropriately

address the specific issue presented. Monthly celebrations were also held to unveil and

recognize departments achieving patient satisfaction score improvements. These celebrations,

feedback teams, and hospital wide display of patient satisfaction scores worked together to

provide the second feedback loop described by Kaplan and Norton’s BSC framework.

Instruments and Measures

The four quadrants developed for the case intervention BSC framework included 1)

customer service, 2) finance, 3) quality of care, and 4) best people. Within the intervention,

these core areas were analogous to Studer’s “Pillars of Excellence” (Studer, 2004). Consistent

with participatory research methods, Vice Presidents chose metrics within their Pillar of

Excellence. The first Pillar, customer service, was measured through the use of patient

satisfaction scores as chosen by the Vice President of Patient Care Services. The second Pillar,

finance, chosen by the Vice President of Finance, was tracked through multiple quantitative

measures including overall Medicare length of stay, gain from operations, net income, operating

margin, and debt service ratio. The third Pillar, quality of care, utilized occurrences of inpatient

acute myocardial infraction mortality and pneumonia antibiotics coverage within 4 and 8 hours

and were chosen by the Vice President of Medical Services. Finally, the fourth Pillar, best

people, included measures chosen by the Vice President of Human Resources which

encompassed team work, employee turnover, employee satisfaction, and employee involvement

were measured through a twelve question survey administered on two separate occasions during

the intervention. The financial and quality quadrants although described, are beyond the scope

of this publication.

The Inpatient patient satisfaction survey provided and administered by an outside vendor

consisted of thirty eight (38) items measuring ten sub-categories of inpatient patient satisfaction

including admission, room, meals, nurses, test and treatments, visitors and family, physician,

discharge, personal issues, and overall assessment. The outpatient patient satisfaction survey

consisted of registration, facility, test or treatment, personal issues and overall assessment. The

hospital followed the same definitions and constructs of patient satisfaction as the vendor. The

instrument reliability and validity has been tested through sample and large scale testing, client

feedback, and focus groups and has been administered through mail to eliminate selection and

acquiescence biases (Urden, 2002)

The twelve question employee satisfaction survey utilized a five point Likert scale for

each question where values assigned to facilitate analysis were as follows: one: strongly agree,

two: agree, three: neutral, four: disagree, and five: strongly disagree. The survey was a needs

assessment provided by members of Route 99 to the hospital and followed the design of

Buckingham and Coffman (Buckingham & Coffman, 1999) for measuring the strengths and

weaknesses of management to provide an environment conducive to employee satisfaction.

Management position (employee, supervisor, director or higher) was also collected so data could

be analyzed by employment level. No demographic or other identifying information was

collected to assure anonymity of respondents. The construct validity for the twelve question

survey has been estimated through multi-factorial research performed by the Gallup

organization, while each question’s reliability and validity has been estimated through a meta-

analysis by Harter and Creglow (Buckingham & Coffmann, 1999)

Data Collection

Patient surveys were distributed, collected, and tabulated by an outside vendor. Surveys

were distributed via mail post-discharge to patients who utilized the hospital’s inpatient and

outpatient facilities. The patient surveys were returned to the vendor also via mail services.

After removal of any identifying patient information, raw mean patient satisfaction scores were

tabulated and delivered quarterly for inpatient and outpatient services to the quality management

department by the external vendor. Sample sizes varied by quarter, but have been estimated as

approximately 300 and 700 respondents per quarter for inpatient and outpatient areas,

respectively.

The employee satisfaction survey was administered two times during the intervention. At

the beginning of the intervention, it was designed to determine a baseline of employee

perceptions. The second time, seven months after the initial survey, it was intended to measure

any changes in the employee’s needs and perceptions of their work environment.

Data Analysis

Raw mean patient satisfaction scores reflected patient satisfaction on a 100 point scale

whereby 100 would be complete patient satisfaction with the hospital services. To determine if a

statistically significant change had occurred within the hospital, an analysis of the mean raw

patient satisfaction scores from the first quarter of 1998 to two quarters post intervention (June,

2004) was performed. The mean patient satisfaction scores were divided into four time periods.

The first time period started on January 1, 1998, a date which corresponds to the first collected

quarterly mean patient satisfaction scores for the hospital, and ended on June 30, 2000, (Pre-

FTER). The June 30, 2000, date was chosen due to the occurrence of a Full-Time Employee

Reduction (FTER). The second time frame ran from July 1, 2000, to December 31, 2002

(FTER-R99). This time frame included the period from the FTER to the time when Route 99

had begun. The third time frame was January 1, 2003, to Dec 31, 2003, which encompassed the

time period of the intervention (R99). Finally, the two post intervention quarters (Post R99)

included January 1, 2004 to June 30, 2004.

Once the four time intervals were established, Levene’s test for equal variances was

performed to assure comparability among the four groupings of patient satisfaction mean raw

scores. A one-way Analysis of Variance (ANOVA) was then performed to identify any

significant change in mean patient satisfaction score for a given time interval as compared to the

other three time intervals. SPSS, version 12.0, statistical software was utilized to generate the

patient satisfaction score analysis for both inpatient and outpatient areas of the hospital. These

results are limited by the availability of only quarterly mean patient satisfaction scores.

Measures for employee satisfaction were reflected through the use of a 12-question staff

survey administered before the intervention began (n= 227 or 22% of employees) and seven

months into the intervention (n=191 or 19% of employees) utilizing convenience sampling

methods. Sample independence was tested through a Chi-squared test for independence for each

question. The Mann Whitney U test was performed on the responses for each question to

determine if a statistically significant change had occurred from February to September of 2003.

Direction of change in employee satisfaction was inverse to the change in mean rank or, an

increase in mean rank would indicate a decrease in employee satisfaction while a decrease in

mean rank would indicate an increase in employee satisfaction. Inclusion criteria for survey

responses were completion of the survey questions including employee level identification. In

the first survey, 169 respondents failed to identify their employment level and were consequently

excluded from the evaluation. In the second survey, only 9 respondents failed to identify their

employment level which caused exclusion from evaluation. Prior to the start of this case study,

appropriate approvals were sought and received for the protection of human subjects from the

Institutional Review Board at the University of North Texas Health Science Center.

RESULTS

Patient Satisfaction Results

The quarterly raw mean inpatient patient satisfaction scores for the intervention were

79.6, 79.7, 81.6, and 82.3 respectively (Figure 1). These results displayed a moderate upward

trend returning to levels attained two and a half years prior to the intervention. Additionally, the

post intervention quarter demonstrated a continuation of this trend with a raw mean score of

82.7. This trend was not shown to be significant by the ANOVA (p> 0.05), and the second

quarter of 2004 displayed a slight drop in raw mean score to 82.0. Further, ANOVA did

demonstrate a significant difference (p< 0.05) in the mean inpatient patient satisfaction score

between the time frame before the full-time employee reduction (Pre-FTER) and the time frame

FTER-R99 with a difference of 2.48 points in mean patient satisfaction score (Table 1).

Insert Figure 1 about here

Insert Table 1 about here

The corresponding quarterly raw mean patient satisfaction scores for the outpatient area

were 86.7, 89.9, 88.7, and 88.8 respectively (Figure 2). These mean scores reflected three of the

four highest raw mean scores achieved by this hospital through 2003 since it started utilizing the

patient satisfaction survey. The outpatient mean patient satisfaction scores for the intervention

have been shown to be statistically significant (p< 0.05) by the ANOVA when compared to the

two time frames, Pre-FTER, and FTER-R99 with 3.02 and 2.74 point difference in mean patient

satisfaction score respectively (Table 1). Additionally, the two raw mean patient satisfaction

scores for the quarters following the intervention suggest the outpatient area retained elements of

the intervention with regards to patient satisfaction (Figure 2).

Insert Figure 2 about here

Employee Survey Results

For the first survey, 227 respondents divided into 183 employees, 29 supervisors, and 15

directors or higher were analyzed. The second survey included 191 respondents divided into 153

employees, 26 supervisors, and 12 directors or higher. Upon sample independence verification,

the twelve question survey produced statistically significant decreases in employee satisfaction

reflected by the following increases in mean rank. For directors and higher, the availability of

materials demonstrated a 6.98 point change in mean rank (p < 0.05). At the supervisor level, two

questions were statistically significant for 1) whether their supervisor (director) cared about them

as a person, a 12.4 point change in mean rank (p< 0.05) and 2) whether their opinions were

valued, a 8.25 point change in mean rank (p< 0.05) (Table 2). Although the remaining mean

ranks did not demonstrate statistically significant change, the following observations were made.

At the director and higher level, remaining questions demonstrated a decrease in employee

satisfaction reflected by increased in mean rank from February to September except for one

which showed no change and pertained to having a best friend at work. At the supervisor level,

all remaining questions showed a decrease in employee satisfaction reflected by increased mean

rank with one exception which pertained to commitment of co-workers to quality work. Finally,

at the employee level, minimum to moderate increased employee satisfaction reflected by

decreased mean ranks were detected for questions which pertained to availability of materials,

opportunity to do best work, and supervisor cared about employee as a person.

Insert Table 2 about here

Organizational Results

This hospital’s technical financial default for not maintaining its adjusted debt service

ratio of 1.15 for its long term debt became public in April, 2003. Upon disclosure, the Chief

Executive Officer and his team disputed the claim by the owners of the long-term debt. The

resignation of the Chief Executive Officer followed in May of 2003. It should be noted the Chief

Executive Officer was also the Chairman of the Board and maintained the Chairmanship until

December, 2003. An interim Chief Executive Officer was put in place and the intervention was

subsequently downgraded from a strategic business plan to a patient satisfaction initiative.

Additionally, because the entire intervention did not have the opportunity to be implemented,

multiple initiatives were unutilized or unmeasured, and the organizational results were not as

designed.

DISCUSSION

In the case presented, the hospital failed financially and permanently closed its doors in

October of 2004 ending its 57 year service to the community and leaving more than 1,000 staff,

300 physicians, and 60 residents without a hospital within which to practice. Although the

intervention failed to bring about the changes necessary to save the hospital from closing its

doors, the driving indicator for the intervention, patient satisfaction, demonstrated a statistically

significant increase for outpatient patient satisfaction and an increase for inpatient patient

satisfaction mean scores. These statistically significant increased patient satisfaction mean

scores suggested employee comprehension of this hospitals shared vision of patient satisfaction

and translation of that knowledge into improved patient satisfaction. During the intervention,

employee satisfaction metrics demonstrated decreased scores, some statistically significant.

Based upon Vahey et al (2004) and others (Atkins et al., 1996; Huey-Ming Tzeng & Katefian,

2002; Larrabee et al., 2004), increased employee satisfaction mean scores would have been

anticipated.

The combination of outcomes gave rise to two questions. First, the intervention’s driving

indicator of patient satisfaction scores rose, so why did the intervention fail? Second, why did

the patient satisfaction mean scores rise when employee satisfaction mean scores decreased

significantly? Upon examination, the authors have identified three learning experiences which

answer these questions and explain the unusual combination of outcomes found in this case

study.

Learning Experience One – Leadership Support

Kaplan and Norton (1996) have pointed out the relevance of leadership support in

developing, communicating, and establishing a shared vision that is actionable and linked to

departments, teams, and individuals. The level of participation and involvement by a leader in

the process of change signals the importance of that change to the organization (Thomson &

Strickland, 1998). Kaplan and Norton have also discussed experiences of leaders who managed

successful Balanced Scorecard implementations. Each leader emphasized communication and

extensive involvement of middle managers and other employees as vital to the success of visions

becoming operational and institutionalized (Kaplan & Norton, 2001). Although top management

participated in the development of the BSC framework, three of the five Vice-Presidents did not

actively support the intervention. According to Deming the “aim of leadership is to remove

causes of failure and to help the people to do a better job with less effort” (Deming, 1986, p.

248). The leadership support that drove the intervention to accomplish increased patient

satisfaction scores was provided by the Patient Care Services Vice-President. Despite news

regarding upper management changes and financial problems, the Patient Care Services Vice-

President kept the area on track to deliver healthcare with increased patient satisfaction

When raw mean patient satisfaction scores were evaluated by time interval, visible drops

in patient satisfaction scores occurred at a time which coincided with the Full Time Employee

Reduction (FTER) on July, 2000. This finding concurs with Murphy and Murphy (1996) who

found staff reductions have been linked to changes in communications and efficiency which

impact patient satisfaction. Given the closure of this hospital in October, 2004, the anticipated

scores for the metrics patient satisfaction and employee satisfaction preceding this event would

have been to trend downward. The employee satisfaction analysis for supervisors and directors

and higher followed this downward trend. However, where management employee satisfaction

scores demonstrated significant decreases, employee level employee satisfaction scores trended

slightly upward. This observation coincides with the strong leadership push from the Patient

Care Services Vice-President and the ability of the supervisors to buffer management turmoil

from their employees. The first learning experience is a validation of the need for leadership

support as prescribed by Deming (1986), Thomson and Strickland (1998), Beer and Eisenstat

(2000), and Kaplan and Norton (2001).

Learning Experience Two – Management and Financial Transparency

The shared vision of any organization is based upon the underlying assumption of

transparency by management with regards to all areas of the organization when developing the

initial BSC framework. In conjunction with a strategic business plan, the BSC framework

should have addressed the significant financial issues this hospital was facing. Indeed, if the

weak financial status of this hospital had been disclosed to the Directors Steering committee in

the beginning, a better strategic plan or shared vision could have been developed to address these

significant issues.

As the intervention progressed, and it became public this hospital was in technical

financial default of its loan, issues related to leadership support, management and financial

transparency became confounding factors regarding the effectiveness of the intervention.

Because this hospital’s strategic plan was to be implemented in stages, if the financial issues had

been revealed, a different strategy may have been developed and implemented more effectively.

We can only speculate about a potentially different outcome for this hospital, but the evidence

with regards to the rise in patient satisfaction mean scores, and the variety of success seen in

other healthcare settings would lead us to assume a better outcome. The second learning

experience is the need for management and financial transparency.

Learning Experience Three – Strength of the Balanced Scorecard

Even in the failure of this hospital, the BSC framework has demonstrated its strength

through increased patient satisfaction scores. Its ability to guide management from defined

vision to shared vision and onto actionable and measured success was demonstrated through the

rise in patient satisfaction scores despite confounding events. When the strategic plan was

developed, the BSC framework encouraged appropriate evaluation and implementation of

metrics to achieve the goals of the plan. Through the strong leadership support in Patient Care

Services, the shared vision of patient satisfaction defined by the BSC framework remained the

focal point and was translated into action by the employees despite upper management changes

and hospital financial disclosures. Because the metrics were put into place with the specific

purpose to measure the status of the intervention, the BSC framework provided constructive

feedback for attainment of the desired goal, increased patient satisfaction scores.

While inpatient patient satisfaction scores returned to levels attained two and a half years

prior to the intervention, the outpatient patient satisfaction scores were consistently higher than a

peak patient satisfaction score three years earlier. The authors attribute the increases in both

inpatient and outpatient patient satisfaction scores to the successful learning experience of the

employees through the intervention. The third learning experience is the strength of the BSC

framework as a management tool, even in adverse conditions.

PRACTICE IMPLICATIONS

The future of the healthcare industry is certain of one thing, change. For organizations to

flourish with the ever changing technological advances, multiple stakeholders, and consumer

expectations, healthcare management teams need to accurately assess their market and financial

position. In order for this hospital to evolve and survive, it attempted to change through use of

the BSC framework. The failure of the intervention in this case study has validated the need for

leadership support and management transparency as suggested by Deming and as indicated as an

underlying construct of the BSC by Kaplan and Norton.

Where leadership support was present, patient care services, focus was maintained to

achieve the defined vision set forth, in this case, increased patient satisfaction. However, the

responsibility for effective vision communication has to be shared rather than centralized. Due

to most of the senior management team not “buying in” to the strategic plan from the beginning,

this hospital lost the benefit of all vice-presidents serving as communication managers. Without

the cooperation from other departments and the communication necessary to address the source

of problems, improvement efforts could not be incorporated as lasting changes for the

organization.

The successful implementation of the BSC was also hindered in this case by the lack of

transparency by management, particularly in the financial quadrant. The result was an

unfortunate mismatch in metrics and strategic goals. In order to effectively utilize the BSC

framework to achieve strategic goals, metrics must be assessed as to their effectiveness to

measure and communicate specific strategic goals. The correct and accurate selection of internal

and external metrics is essential for successful implementation of a strategic plan. Metrics

selected prior to the start of the intervention, need to be monitored throughout implementation

and changed as necessary based upon their observed ability to reflect the strategic plan. As this

case study illustrates, failure to adapt metrics can result in misleading outcomes. Although

patient satisfaction is an important metric, and significant improvements were achieved, it did

not drive the necessary change to save this hospital from financial failure. Health care

executives must be aware that patient satisfaction is a complex metric. Its all encompassing

nature may not make it suitable as a system performance measure or as a reflection of employee

satisfaction as demonstrated in this case study.

However, the ability of the BSC framework to significantly improve the patient

satisfaction metric has validated the effectiveness of the double loop feedback developed by

Kaplan and Norton and demonstrated the strength of this approach even in adverse

circumstances. With accurate metric selection, a well implemented measurement system can

yield the feedback healthcare managers need to improve clinical care and services.

In an organization which desires to change its culture or strengthen its position within a

given healthcare market, these concepts must align. Alignment must include consistency in

plans, processes, information, resource decisions, actions, results, and analysis in order to

support key organization wide goals (Baldrige National Quality Program, 2005). Without

leadership support, management transparency, and accurate metric selection any tool, even one

that has demonstrated itself as effective as the BSC framework, will not accomplish the strategic

goal set before it.

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FIGURES AND TABLES

Figure 1: Inpatient Patient Satisfaction Raw Mean Scores

Inpatient patient

satisfaction

raw

mean scores.

Data from the QM office of the hospital,

January

1998 to

June

2004

Figure 2: Outpatient Patient Satisfaction Raw Mean Scores

Table 1: Mean Patient Satisfaction Score Summary by Time Intervals

Table 2: Twelve Question Survey Summary