BALANCEDALANCED SCORECORE ARDARD · Strategy = Balanced Scorecard. Barriers to Strategy...
Transcript of BALANCEDALANCED SCORECORE ARDARD · Strategy = Balanced Scorecard. Barriers to Strategy...
BALANCED SCORECARDBBALANCEDALANCED SSCORECORECCARDARD
Translating Strategy intoAction
By Walter Clark, MD, MSHCM
Translating Strategy intoTranslating Strategy intoActionAction
By Walter Clark, MD, MSHCMBy Walter Clark, MD, MSHCM
38 Years of Survival38 Years of Survival38 Years of Survival
Not Accidental!Not Accidental!
Strong leadershipStrong leadership
Traditional management toolsTraditional management tools
Strong balance sheetStrong balance sheet
Advanced quality programsAdvanced quality programs
Sustained position as a safety netSustained position as a safety netproviderprovider
Responsive & ReactiveResponsive & ReactiveResponsive & Reactive
Legacy of high responsiveness andLegacy of high responsiveness andreactivity to challengesreactivity to challenges
Patients and stakeholders are demandingPatients and stakeholders are demandinggreater levels of and more agility in ourgreater levels of and more agility in ourresponsivenessresponsiveness
Much of our time is spent beingMuch of our time is spent beingresponsive and reactiveresponsive and reactive
The remaining time (much less) is spentThe remaining time (much less) is spentbeing proactive and strategic in ourbeing proactive and strategic in ourperformanceperformance
Reasons For Alarm?Reasons For Alarm?Reasons For Alarm?
Patient approvalPatient approval ratings by thoseratings by thosesurveyedsurveyed droppeddropped substantially insubstantially in 20052005compared tocompared to 20042004 resultsresults
Satisfaction with physicians dropped toSatisfaction with physicians dropped to79.8%79.8% compared tocompared to 86.8%86.8% in 2004in 2004
Satisfaction with health center teamsSatisfaction with health center teamsdropped todropped to 64%64% compared tocompared to 74.2%74.2% inin20042004
Reasons For Alarm?Reasons For Alarm?Reasons For Alarm?
Satisfaction with xSatisfaction with x--ray and lab supportray and lab supportstaff dropped tostaff dropped to 66.3%66.3% compared tocompared to76.8%76.8% in 2004in 2004
Survey respondents indicated that a mereSurvey respondents indicated that a mere65%65% of the time that they wouldof the time that they wouldrecommend to a family member or friendrecommend to a family member or friendto come to a NEON Health Centerto come to a NEON Health Centercompared to merecompared to mere 67%67% in 2004in 2004
Reasons For Alarm?Reasons For Alarm?Reasons For Alarm? MedicaidMedicaid Managed Care enrollment hasManaged Care enrollment has
dropped to 16,174 (8/05) compared todropped to 16,174 (8/05) compared to20,294 (2/03)20,294 (2/03) [[--20%]20%]
UninsuredUninsured users are on target for 26,000users are on target for 26,000for 2005 compared to 18,000 in 2002for 2005 compared to 18,000 in 2002[+44%][+44%]
Federal GrantFederal Grant dollars are shrinking notdollars are shrinking notexpandingexpanding [[--5%]5%]
CostsCosts are increasing at a rate thatare increasing at a rate thatexceeds inflation, mainly due to risingexceeds inflation, mainly due to risinghealth insurance premiumshealth insurance premiums [+8][+8]
The Past versus The PresentThe PastThe Past versusversus The PresentThe Present
NEO
N
NEON
OBSTACLES OBSTACLES
Time for Change?Time for Change?Time for Change? Confluence of factors is forcing theConfluence of factors is forcing the
consideration for new organizationalconsideration for new organizationalcapacity and management vehiclescapacity and management vehicles
Nonprofits struggle to invest inNonprofits struggle to invest inorganizational capacity:organizational capacity:•• Seen as a zeroSeen as a zero--sum gamesum game•• Investment at the expense of directInvestment at the expense of direct
servicesservices
Balanced Scorecard (BSC)Balanced Scorecard (BSC) is ais a changechangevehicle that helps an organization to makevehicle that helps an organization to makestrategicstrategic, focused and efficient, focused and efficientinvestments in organizational capacityinvestments in organizational capacity
Time for Change?Time for Change?Time for Change?
““The survivors of any species are notThe survivors of any species are notnecessarily the strongest. And they arenecessarily the strongest. And they arenot necessarily the most intelligent. Theynot necessarily the most intelligent. Theyare those who are most responsive toare those who are most responsive tochange.change.””
Charles DarwinCharles Darwin
““Adapt or perish, now as ever, is natureAdapt or perish, now as ever, is nature’’ssinexorable imperative.inexorable imperative.””
H.G. WellsH.G. Wells
BSC OriginationBSC OriginationBSC OriginationThe philosophy behind the BSC, asThe philosophy behind the BSC, as
originally preached by Kaplan & Nortonoriginally preached by Kaplan & Nortonand evangelized by many others, is thatand evangelized by many others, is thatthe odds of corporate success can bethe odds of corporate success can beimproved substantially by informing,improved substantially by informing,inspiring, involving, and engaginginspiring, involving, and engagingemployees in the enterprise throughemployees in the enterprise throughexploiting a composite structure thatexploiting a composite structure thatembodies a performance measurementembodies a performance measurementsystem, a strategic management system,system, a strategic management system,and a communication tool, alland a communication tool, all--inin--one.one.
BSC OriginationBSC OriginationBSC Origination
Developing a BSC is:Developing a BSC is:
•• A JourneyA Journey
•• Not a projectNot a project
Value comes from opportunity forValue comes from opportunity forcontinuous selfcontinuous self--inquiry and ininquiry and in--depthdepthanalysisanalysis
BSC CompositeBSC CompositeBSC Composite
PerformancePerformanceMeasurementMeasurementSystemSystem
StrategicStrategicManagementManagementSystemSystem
CommunicationCommunicationToolTool
PerformanceMeasurement
System
StrategicManagement
System
CommunicationTool
PMSPMSPMS Strategic Establishment & Alignment ofProgram Goals & Objectives
ProgramAccomplishments
Planning
BudgetingProgramOfferings
ResourceExpectations
Performance Measurement System(Management by Objectives)
Corrective Actions
PerformanceExpectations
Performance Measurement
StrategicManagement System
StrategicStrategicManagement SystemManagement System
Vision &Strategic Goals
StrategicPlanning
OperationsBudget
ResponsibilityCenter
Activities
Reporting(Actual vs.Planned)
PositiveResults
NegativeResults
FeedbackRevision
RevisionReward
Revision
Communication and Double-LoopLearning Opportunities
External Input
Communication ToolCommunication ToolCommunication Tool
BSC communicatesBSC communicates ‘‘changechange’’ totoemployees in answer to the followingemployees in answer to the followingmeaningful questions:meaningful questions:
•• What do you want me to do?What do you want me to do?
•• How will this change affect me?How will this change affect me?
•• WhatWhat’’s in it for me?s in it for me?
•• What will you do to help me?What will you do to help me?
•• How am I doing?How am I doing?
Communication ToolCommunication ToolCommunication Tool
Communication is the Foodof Success!
BSC PurposeBSC PurposeBSC Purpose
The purpose of a BSC isThe purpose of a BSC is tto shine ao shine abright light on thebright light on the uniqueunique andandperhaps differentiating esseperhaps differentiating essentialntialingredients of successingredients of success for afor a pparticulararticularbusiness.business.
BSC ApplicabilityBSC ApplicabilityBSC Applicability
Appropriate for any size organization
Popularized for For-Profit companies
Very applicable to Not-for-Profits
Appropriate for any size organizationAppropriate for any size organization
Popularized for ForPopularized for For--Profit companiesProfit companies
Very applicable to NotVery applicable to Not--forfor--ProfitsProfits
BSC ConceptBSC ConceptBSC Concept
Alignment of:
• Mission
• Vision
• Values
• Strategy
• Customer & Stakeholder requirements
• Day-to-day work
Alignment of:Alignment of:
•• MissionMission
•• VisionVision
•• ValuesValues
•• StrategyStrategy
•• Customer & Stakeholder requirementsCustomer & Stakeholder requirements
•• DayDay--toto--day workday work
BSC = StrategyBSCBSC == StrategyStrategy
Our Mission is our destination, however far this pathway maytake us.
Our pathway is lit by our Vision by which we seeourselves in relationship to our journey and the future.
We pave our pathway with our Values.
Our BSC will be a navigation tool we useto keep us on the pathway and determinethe speed and distance of our progress.
Our Strategy is the roadmap, ourbest guess, on how we are to take
this journey.
MissionVisionValues
Strategy = Balanced Scorecard
Barriers to Strategy ExecutionBarriers to Strategy ExecutionBarriers to Strategy ExecutionOnly 10% of
organizations executetheir strategy
Barriers to Strategy Execution
Vision People Management Resources
Only 5% ofworkforce
understandsthe strategy
Only 25% ofmanagers
haveincentiveslinked tostrategy
85% ofexecutive teamsspend less than
1 hour per monthdiscussing
strategy
60% oforganizations
don’t linkbudgets to
strategy
BSC Balancing ActBSC Balancing ActBSC Balancing Act
MissionMission withwith MarginMargin
StakeholdersStakeholders’’ WantsWants withwith CustomersCustomers’’WantsWants
CustomersCustomers’’ WantsWants withwith OperationsOperations
OperationsOperations withwith Employee CapacityEmployee Capacity
Employee CapacityEmployee Capacity withwith FinancialsFinancials
LeadingLeading withwith Lagging IndicatorsLagging Indicators
BSC Construct SnapshotBSC Construct SnapshotBSC Construct SnapshotMission
Patients &Stakeholders
FinancialCapacity
Internal Business& ClinicalProcesses
Employee &Organizational
CapacityStrategy
BSC PerspectivesBSC PerspectivesBSC Perspectives
BSC allows an organization to translate itsBSC allows an organization to translate itsstrategy into 4 or more dimensions orstrategy into 4 or more dimensions orperspectivesperspectives
Typically 4 perspectives are employed thatTypically 4 perspectives are employed thatneatly fall into the categories notedneatly fall into the categories notedthroughout this presentationthroughout this presentation
MultiMulti--perspective or multiperspective or multi--dimensionaldimensionalview allows execs to lend sanity toview allows execs to lend sanity toendeavors at stewarding the growth andendeavors at stewarding the growth andstrategic needs of the organizationstrategic needs of the organization
BSC PreviewBSC PreviewBSC Preview
InitiativesTargetsMeasuresObjectives
“To satisfy our patients and stakeholders, at whichbusiness processes must we excel?”
Internal Business Processes
InitiativesTargetsMeasuresObjectives
“To achieve our vision, how should we appear toour patients and stakeholders?”
Patients & Stakeholders
InitiativesTargetsMeasuresObjectives
“To succeed financially, how do we add value forour patients and stakeholders; controlling costs?”
Financial Capacity
InitiativesTargetsMeasuresObjectives
“To achieve our vision, how will we sustain ourability to change and improve?”
Employee & Organizational Capacity
Internal Processes
"Doing the right things..."
Employee &Organization Capacity
"If we have the rightstaff with the right stuff"
Financial Capacity
"And we will keep/getmore business..."
Customers &Stakeholders
"Then the customerswill be delighted..."
Theory Z
BSC Cause & EffectBSC Cause & EffectBSC Cause & Effect
High-Performance BusinessHighHigh--Performance BusinessPerformance Business
Stake-holders
Processes
ResourcesOrganization
Set strategies tosatisfy keystakeholders…
Set strategies tosatisfy keystakeholders…
… by improvingcritical businessprocesses…
… by improvingcritical businessprocesses…
… andaligningresources andorganization.
… andaligningresources andorganization.
Mission Impossible?Mission Impossible?Mission Impossible?
EliminateHealth
Disparities;Viable CHCReduce Health
Disparities;Viable CHC
No Change inHealth
Disparities;Viable CHC
Non-ViableCHC
NEON
BSC Navigation ToolBSC Navigation ToolBSC Navigation Tool
Aimless wanderingAimless wanderingwith the potential forwith the potential for'hit or miss'?'hit or miss'?
Strategic courseStrategic courseadjustments to reachadjustments to reachthe harder targets?the harder targets?
Feeling lucky?Feeling lucky?
How do we steer thisHow do we steer thisship?ship?
NEONNEON
BSC Instrument FlyingBSC Instrument FlyingBSC Instrument Flying
ATTITUDEATTITUDE determinesdeterminesdragdrag
Employee capacityEmployee capacityand abilityand abilitydetermines anddetermines andimpacts ourimpacts our ‘‘attitudeattitudetowards servicetowards service’’
Good attitude makesGood attitude makesfor less drag forfor less drag foremployees andemployees andpatientspatients
SPEED
ALTITUDEATTITUDE
FUEL
COORDINATES
BSC Instrument FlyingBSC Instrument FlyingBSC Instrument Flying
ALTITUDEALTITUDE reducesreducesturbulenceturbulence
Patient satisfactionPatient satisfactiondetermines the heightdetermines the heightof their esteem andof their esteem andappreciation for usappreciation for us
The lower we fly, theThe lower we fly, themore hazards wemore hazards weencounter (i.e.,encounter (i.e.,competing interests)competing interests)
SPEED
ALTITUDEATTITUDE
FUEL
COORDINATES
BSC Instrument FlyingBSC Instrument FlyingBSC Instrument Flying
FUELFUEL is needed to flyis needed to fly
Finances andFinances andresourcesresources fuel ourfuel ourability to remain viableability to remain viable
The more efficient weThe more efficient weare, the farther weare, the farther wecan fly towards ourcan fly towards ourMissionMission
SPEED
ALTITUDEATTITUDE
FUEL
COORDINATES
BSC Instrument FlyingBSC Instrument FlyingBSC Instrument Flying SPEEDSPEED must bemust be
maintained to stay inmaintained to stay inflightflight
Speed of internalSpeed of internalprocessesprocesses isisdetermined bydetermined by howhowwell our crew workswell our crew workstogethertogether
Degree of speed isDegree of speed isproportional to ourproportional to ourdegree of ease anddegree of ease andpreparationpreparation
SPEED
ALTITUDEATTITUDE
FUEL
COORDINATES
BSC Instrument FlyingBSC Instrument FlyingBSC Instrument Flying
COORDINATESCOORDINATES mustmustbe established tobe established toreach a destinationreach a destination
Our MissionOur Missionestablishes where weestablishes where weare headedare headed
Our StrategyOur Strategyprovides theprovides thecoordinates requiredcoordinates requiredin order to minimizein order to minimizeobstacles and barriersobstacles and barriers
SPEED
ALTITUDEATTITUDE
FUEL
COORDINATES
What is NEON Worth?What is NEON Worth?What is NEON Worth?
1.1. Balance sheet Net Assets or FundBalance sheet Net Assets or FundBalance?Balance?
2.2. Net Assets + Additional MarketNet Assets + Additional MarketValue upon sale of property &Value upon sale of property &equipment?equipment?
3.3. Something else?Something else?
How About the People?How About the People?How About the People?
PREMIUMASSETS(Goodwill &Intellectual
Assets)
STANDARDASSETS Standard
Liabilities
Fund BalanceNet Assets
IntellectualCapital
IntellectualLiability
STAKEHOLDERVALUE(Market Value)
Intellectual CapitalIntellectual CapitalIntellectual Capital
75% of the75% of thevalue of avalue of atypical companytypical companyis notis not on theon thebalance sheetbalance sheet
Market Value
Net Assets Intellectual Capital
Human Capital Structural
Customer Organizational
Innovation Processes
Intellectual CapitalIntellectual CapitalIntellectual Capital
It would be a shame to ignore thoseIt would be a shame to ignore thoseelements that represent 75% of the realelements that represent 75% of the realvalue of an organization!value of an organization!
BSCBSC’’ss ‘‘hustle and flowhustle and flow’’ helps anhelps anorganization recognize and reflect on theorganization recognize and reflect on theimportance of the human system and onimportance of the human system and oncapacity building through trained andcapacity building through trained andknowledgeable employees and efficientknowledgeable employees and efficientinformation technology systemsinformation technology systems
2 Phases & Nine Steps2 Phases & Nine Steps2 Phases & Nine Steps
Phase 1Phase 1:: Build BSCBuild BSC
Phase 2:Phase 2: Implement BSCImplement BSC
2 Phases & Nine Steps2 Phases & Nine Steps2 Phases & Nine Steps
Phase 1:Phase 1: Build BSCBuild BSC
•• Step 1Step 1:: Review and assess ourReview and assess ourMission, Vision, Values, core beliefs,Mission, Vision, Values, core beliefs,SWOT, external stakeholdersSWOT, external stakeholders ‘‘wantswants’’
•• Step 2Step 2:: Craft a Business StrategyCraft a Business Strategycomprised of overarching strategiccomprised of overarching strategicthemesthemes
•• Step 3Step 3:: Decompose strategy into theDecompose strategy into thegranularity of specific objectivesgranularity of specific objectives
2 Phases & Nine Steps2 Phases & Nine Steps2 Phases & Nine Steps
Phase 1:Phase 1: Build BSCBuild BSC
•• Step 4Step 4:: Create Strategic Map ofCreate Strategic Map ofbusiness strategy using causebusiness strategy using cause--effecteffectlinkageslinkages
•• Step 5Step 5:: Craft Performance MeasuresCraft Performance Measuresto track progress on strategic objectivesto track progress on strategic objectives
•• Step 6Step 6:: Develop Initiatives (keyDevelop Initiatives (keyaction steps) to ensure achievement ofaction steps) to ensure achievement ofstrategic objectivesstrategic objectives
2 Phases & Nine Steps2 Phases & Nine Steps2 Phases & Nine Steps
Phase 2:Phase 2: Implement BSCImplement BSC
•• Step 7Step 7:: Automate the BSC withAutomate the BSC withspreadsheets and/or databasesspreadsheets and/or databases
•• Step 8Step 8:: Pilot BSC at SoutheastPilot BSC at SoutheastHealth Center and within 2 monthsHealth Center and within 2 monthsbegin spread or cascade throughoutbegin spread or cascade throughoutorganizationorganization
•• Step 9Step 9:: Evaluate the businessEvaluate the businessstrategies to determine whetherstrategies to determine whetherexpected results were achievedexpected results were achieved
Overall BSC Process LogicOverall BSC Process LogicOverall BSC Process Logic
Customers
Stakeholders
MissionVisionCore Values
Perspectives STRATEGY Themes
Goals
ObjectivesStrategic Map
Input Process Outputs Measures Outcomes
TargetsInitiatives Budget
BSCBSC ResourcesResources Refraction LogicRefraction LogicEmployee &
OrganizationalCapacity
Magnification
FinancialResource
Focus Operations &Clinical Focus
StakeholderRequirements &Patient ‘Needs’
Patient‘Wants’
Mission = DestinationMissionMission == DestinationDestination
A journey without a destination isA journey without a destination ismere wanderingmere wandering
A mission statement defines the coreA mission statement defines the corepurpose of an organization; itspurpose of an organization; itsreason for beingreason for being
Our mission is to serve the publicOur mission is to serve the public’’ssinterestinterest
Mission StatementMission StatementMission Statement
Mission StatementMission Statement good attributes:good attributes:
•• Simple and clearSimple and clear
•• Not too simpleNot too simple
•• Inspire changeInspire change
•• LongLong--term in natureterm in nature
•• Easy to understand & communicateEasy to understand & communicate
•• Terminal answer to theTerminal answer to the ““5 Whys5 Whys””
‘5 Whys’ to Mission‘‘5 Whys5 Whys’’ to Missionto Mission
KEEP ASKINGHOW
KEEP ASKINGWHY (5X)
Goals
Activities
MISSION
Mission StatementMission StatementMission Statement
Even though the Mission StatementEven though the Mission Statementdoes notdoes not changechange (or does so(or does soinfrequently), it should inspireinfrequently), it should inspirechangechange..
ChangeChange is movementis movement
Mission ClarificationMission ClarificationMission Clarification
6 Questions6 Questions to clarify Mission:to clarify Mission:
1.1. Who are we?Who are we?
2.2. What basic social or political needs orWhat basic social or political needs orproblems we exist to meet?problems we exist to meet?
3.3. How do we recognize, anticipate,How do we recognize, anticipate,respond to these problems or needs?respond to these problems or needs?
Mission ClarificationMission ClarificationMission Clarification
6 Questions6 Questions to clarify Mission:to clarify Mission:
4.4. How should we respond to keyHow should we respond to keystakeholders?stakeholders?
5.5. What is our guiding philosophy orWhat is our guiding philosophy orculture?culture?
6.6. What makes us distinctive or unique?What makes us distinctive or unique?
Mission ClarificationMission ClarificationMission Clarification
GastGast’’ss LawsLaws to clarify Mission:to clarify Mission:
1.1. WhatWhat ““wantwant--satisfyingsatisfying”” service do weservice do weprovide and constantly seek toprovide and constantly seek toimprove?improve?
2.2. How do we increase the quality of lifeHow do we increase the quality of lifefor our patients and stakeholders?for our patients and stakeholders?
3.3. How do we provide opportunities toHow do we provide opportunities toproductively employ people?productively employ people?
Mission ClarificationMission ClarificationMission Clarification
GastGast’’ss LawsLaws to clarify Mission:to clarify Mission:
4.4. How do we create a highHow do we create a high--quality workquality workexperience for our employees?experience for our employees?
5.5. How do we live up to the obligation toHow do we live up to the obligation toprovide just wages?provide just wages?
6.6. How do we fulfill the obligation ofHow do we fulfill the obligation ofproviding a return on the financial andproviding a return on the financial andhuman resources we expend?human resources we expend?
Our Mission?Our Mission?Our Mission?
We exist to:We exist to: provide primary healthprovide primary healthcare, enabling services, and acare, enabling services, and agateway to secondary & tertiarygateway to secondary & tertiarycarecare
For:For: community residents who arecommunity residents who areeconomically challengedeconomically challenged
So that:So that: health disparities due tohealth disparities due toeconomic or racial factors areeconomic or racial factors areeliminated.eliminated.
Vision = FutureVisionVision == FutureFuture
Vision StatementVision Statement should be a wordshould be a wordpicture of our organization in thepicture of our organization in thefuturefuture
Vision statement is the basis forVision statement is the basis forformulating strategies andformulating strategies andobjectivesobjectives
““Only through a compelling visionOnly through a compelling visiondoes a deep sense of purpose comedoes a deep sense of purpose comealivealive”” (Peter(Peter SengeSenge))
Vision StatementVision StatementVision Statement
Vision StatementVision Statement good attributes:good attributes:•• ConciseConcise
•• Balances external and internal elementsBalances external and internal elements
•• Appeals to all stakeholdersAppeals to all stakeholders
•• Consistent with mission and valuesConsistent with mission and values
•• VerifiableVerifiable
•• FeasibleFeasible
•• InspirationalInspirational
Our Vision?Our Vision?Our Vision?
A health care organization thatA health care organization thatprospers because it excels at andprospers because it excels at andprides itself in being aprides itself in being a HealingHealingExperience & NurturingExperience & NurturingEnvironmentEnvironment for its patients andfor its patients andemployeesemployees
Our Vision?Our Vision?Our Vision?
A COMMUNITY HEALTHCENTER THAT IS AN
OASIS OF HEALING FOROUR USERS
&A SECOND HOME FOR
OUR EMPLOYEES
Values = BeliefValuesValues == BeliefBelief
Values are deeply held beliefs in anValues are deeply held beliefs in anorganization that are demonstratedorganization that are demonstratedthrough the daythrough the day--toto--day behavior ofday behavior ofits employeesits employees
““Every manEvery man’’s conduct is ans conduct is anunspoken sermon forever preachingunspoken sermon forever preachingto othersto others”” (Henri(Henri--FredericFrederic AmielAmiel))
The pathway of our Mission is pavedThe pathway of our Mission is pavedby our Valuesby our Values
Our Values?Our Values?Our Values?
How do we like ourHow do we like our R.I.C.E.R.I.C.E.??
•• RR == RRespectespect•• II == IIntegrityntegrity•• CC == CCommunicationommunication•• EE == EExcellencexcellence
BSC SWOT AnalysisBSC SWOT AnalysisBSC SWOT Analysis
Financial SWOT elementsFinancial SWOT elements
CustomerCustomer’’s perspective of NEON SWOTs perspective of NEON SWOTelementselements
Internal process SWOT elementsInternal process SWOT elements
From an employeeFrom an employee--enabling perspective,enabling perspective,culture, leadership, technicalculture, leadership, technicalinfrastructure, and competencies/skillsinfrastructure, and competencies/skillsSWOTSWOT
BSC SWOT AnalysisBSC SWOT AnalysisBSC SWOT Analysis
Our Strengths
Weaknesses
Opportunitie
s
Threats
WildCard
SWOT
BSC
Financial
Employee
Internal
Patient
Market ForcesMarket ForcesMarket Forces
NEONNEON’’ssstrategy isstrategy isshaped by theshaped by thepressures ofpressures ofthethe 5 market5 marketforcesforces
ProperProperresponse toresponse tothe forcesthe forcesleads to aleads to adiamond of adiamond of astrategystrategy
NEONDiamondStrategy
Stan
d-al
one
Com
mun
ity
Hea
lthC
ente
rs
KeyExternal
Stakeholders
Hospita
l
CHC
Imita
tors
CHC NewEntrants
Suppliers
5 R’s to Reacting to the Forces5 R5 R’’s to Reacting to the Forcess to Reacting to the Forces
1.1. RRecognition of market forceecognition of market force
2.2. RReinforcement our market positioneinforcement our market position
3.3. RRestructuring our business strategyestructuring our business strategyor operationsor operations
4.4. RRetaliation at the market forceetaliation at the market force
5.5. RRetreat from our position oretreat from our position orbusiness strategybusiness strategy
Who’s the Customer?WhoWho’’s the Customer?s the Customer? We exist to satisfy theWe exist to satisfy the ‘‘needsneeds’’
andand ‘‘wantswants’’ ofof keykeystakeholdersstakeholders
If we are not on target inIf we are not on target inserving their needs andserving their needs andwants, then our very ownwants, then our very ownexistence is jeopardizedexistence is jeopardized
Fulfilling the needs and wantsFulfilling the needs and wantsof ourof our key customerskey customersensures the continuation ofensures the continuation ofour missionour mission--directed journeydirected journey
Targeted StakeholdersTargeted StakeholdersTargeted Stakeholders
STAKEHOLDERS
EmployeesEmployees
PayorsPayorsPatients
ProvidersProviders
RegulatorsRegulators
PhilanthropiesPhilanthropies
ElectedOfficials
FinancialInstitutions
FinancialInstitutions
TrusteesTrustees
BPHCBPHC
Critical StakeholdersCritical StakeholdersCritical Stakeholders
Which external stakeholders, whenWhich external stakeholders, whencombined, are responsible for 90% orcombined, are responsible for 90% ormore of our economic fuel?more of our economic fuel?
SubSub--classify stakeholders into categoriesclassify stakeholders into categoriesthat reflect differingthat reflect differing ‘‘wantswants’’??
What do our Patient Satisfaction surveysWhat do our Patient Satisfaction surveystell us of thesetell us of these ‘‘wantswants’’, differing or not?, differing or not?
Do theseDo these ‘‘wantswants’’ demand different valuedemand different valuepropositions from us?propositions from us?
What can we learn of theseWhat can we learn of these ‘‘wantswants’’ fromfrom‘‘patient complaintspatient complaints’’??
Top 5 ‘Want’ PrioritiesTop 5Top 5 ‘‘WantWant’’ PrioritiesPriorities
List 10List 10 ‘‘wantswants’’ for each criticalfor each criticalexternal stakeholderexternal stakeholder
Consolidate above into 5Consolidate above into 5 ‘‘wantswants’’
PerformPerform ‘‘55--PACKPACK’’ assessmentassessment
•• PP= Process Adequacy;= Process Adequacy; AA= Ability of= Ability ofStaff;Staff; CC= Capacity of Organization;= Capacity of Organization;KK= Knowledge Base of Staff= Knowledge Base of Staff
•• LikertLikert Scale =Scale = 55
‘5-PACK’ Assessment(Chicken Feet)
‘‘55--PACKPACK’’ AssessmentAssessment(Chicken Feet)(Chicken Feet)
Limited nursingLimited nursingcapacity somecapacity somedaysdaysLack of MR infoLack of MR infoknowledgeknowledge
2. To be able to2. To be able totalk to a nursetalk to a nurseor doctoror doctorduring the dayduring the day
RegistrationRegistrationbogged downbogged downCapacity limitedCapacity limitedsome dayssome days
1. To be seen on1. To be seen ontime by thetime by thedoctordoctor
ExplanatoryRemarks
Assessment of Strength inMeeting those ‘Wants’
Priority ‘Wants’
5 CP
A
K
5 CP
A
K
**
**
**
**
Let’s Talk StrategyLetLet’’s Talk Strategys Talk Strategy
If our strategy is notdriven by ‘value’ thenthere is a good chanceit will get us no where.
Lifetime Patient ValueLifetime Patient ValueLifetime Patient Value
Lifetime patient value (LPV):Lifetime patient value (LPV):
•• Loyalty of patient extends valueLoyalty of patient extends value
•• Loyalty of patient increasesLoyalty of patient increases ‘‘word ofword ofmouthmouth’’ advertisingadvertising
Patient churn:Patient churn:
•• Patient defectionPatient defection
•• Decrease LPVDecrease LPV
•• How much does it cost to decreaseHow much does it cost to decreasechurn?churn?
Churn versus LoyaltyChurn versus LoyaltyChurn versus Loyalty
CSI=Customer Satisfaction Index
Perceptionof Quality
Expectations
Value forthe Price
Interactionwith
SystemCSI
Complaints
Loyalty
CHURN
‘The System’ Value Chain‘‘The SystemThe System’’ Value ChainValue Chain
InboundPatient
Logistics
Clinical &Non-
ClinicalOperations
OutboundPatient
Logistics
Marketing& Appts(a.k.a.,
pre-sales)
Service(i.e.,
phonetriage &non-visitservices)
Mission
&M
argin
ProcurementTechnology Exploitation
Human Resources ManagementNEON INFRASTRUCTURE
SupportActivitiesSupportActivities
Primary ActivitiesPrimary Activities
Value EquationValue EquationValue Equation
Value = (Quality + Service) - PriceValue = (Quality + Service) - Price
However, what is the price of ourservices if very few of our patients havedirect out-of-pocket monetary costs?
Value Equation (Patient’s View)Value Equation (PatientValue Equation (Patient’’s View)s View)
Value = (Benefits) / (Costs)Value = (Benefits) / (Costs)
= (Functional benefits +Emotional benefits) /(Monetary costs +
Time costs + Energy costs +Psychic costs)
Net Patient ValueNet Patient ValueNet Patient Value
To receivehealth care
Costs(time, psychic,energy, money)
Benefits(emotional &functional)
PatientNeedDeliveredPatient
Need
Reg
iste
rfo
rca
re
Get
anci
llary
test
ing
and/
or
mak
eap
pt
Hea
lthC
are
Rec
eive
d&
Dis
char
ged
Wai
tto
See
Pro
vid
er
Fixed (the more costs,the less 'net value')
V =B
C
Patient ‘AIR’ Value PropositionPatientPatient ‘‘AIRAIR’’ Value PropositionValue Proposition
Product/Service AttributesProduct/Service Attributes ImageImage RelationshipRelationship
Fu
nctio
na
lityFu
nctio
na
lity
Qu
ality
Qu
ality
Price
/C
ost
Price
/C
ost
Tim
elin
ess
Tim
elin
ess
Bra
nd
Imag
eB
ran
dIm
ag
e
Intim
acy
Intim
acy
What should be ourstrategic AIR mixture?
Strategic Patient ‘AIR’ MixtureStrategic PatientStrategic Patient ‘‘AIRAIR’’ MixtureMixture
CustomerIntimacy?
ProductLeadership?
OperationalExcellence?
25%25%
50%
Operational Excellence?Operational Excellence?Operational Excellence?
AAttribute of functionalityttribute of functionality
Focus is on lowest price,Focus is on lowest price,convenience, and oftenconvenience, and often ‘‘no frillsno frills’’
Examples: Costco, McDonalds, KaiserExamples: Costco, McDonalds, Kaiser
In Sum:In Sum: Best Total CostBest Total Cost
Operational Excellence?Operational Excellence?Operational Excellence?
Productivity Frontier(state of best practice)
low
low
high
high
Relative Cost Position
Non-priceCustomer
Valuedelivered
orperceived
Michael Porter
Productivity FrontierProductivity FrontierProductivity Frontier
Sum of all existing best practices atSum of all existing best practices atany given timeany given time
Improvement of operations movesImprovement of operations movesorganization toward frontierorganization toward frontier
Frontier is always shifting outwardFrontier is always shifting outwardwith introduction of new technologieswith introduction of new technologiesand management approachesand management approaches
Staying ahead based on operationalStaying ahead based on operationaleffectiveness is very difficulteffectiveness is very difficult
Terminal VelocityTerminal VelocityTerminal Velocity
Productivity frontier takes intoProductivity frontier takes intoaccount an organizationaccount an organization’’ss ‘‘terminalterminalvelocityvelocity’’
At a certain point, organizationAt a certain point, organizationmeets a level of resistance that limitsmeets a level of resistance that limitsthe speed at which it can operatethe speed at which it can operateinternally (i.e., chart pulls, intake)internally (i.e., chart pulls, intake)
To overcome terminal velocity, theTo overcome terminal velocity, thesource of resistance has to be dealtsource of resistance has to be dealtwithwith
Product Leadership?Product Leadership?Product Leadership?
IImage is everything!mage is everything!
Focus is on constant innovation andFocus is on constant innovation andhaving the best product in thehaving the best product in themarketmarket
Often very priceyOften very pricey
Examples: Mercedes, Sony,Examples: Mercedes, Sony,Cleveland Clinic FoundationCleveland Clinic Foundation
In Sum:In Sum: Most Innovative ProductMost Innovative Product
Customer Intimacy?Customer Intimacy?Customer Intimacy?
RRelationshipelationship
Doing what it takes to provideDoing what it takes to providesolutions to unique customerssolutions to unique customers’’ needsneeds
Price is not an issue for customersPrice is not an issue for customers
Examples: Nordstrom, a typicalExamples: Nordstrom, a typicalcosmetic surgeoncosmetic surgeon
In Sum:In Sum: Best SolutionBest Solution
Pleasing Limits!Pleasing Limits!Pleasing Limits!
There areThere arelimits tolimits to‘‘pleasingpleasing’’
CanCan’’t pleaset pleaseall the peopleall the peopleall the timeall the time
StrategicStrategicbalance mustbalance mustbe struckbe struck
Within Budget Constraints
Outside Budget Constraints
Patient'Wants'
BPHC'Wants'
Strategic
Action
Aligned
Performance
Objectives
& Measures
BSC
Mission
Vision
Strategy
BSC =>> Strategic ActionBSCBSC ==>>>> Strategic ActionStrategic Action
Translating Strategyinto Action
Meaning of StrategyMeaning of StrategyMeaning of Strategy
Strategy represents the broadStrategy represents the broadpriorities adopted by an organizationpriorities adopted by an organizationin recognition of its operatingin recognition of its operatingenvironment and in pursuit of itsenvironment and in pursuit of itsmission.mission.
(Paul(Paul NivenNiven))
Art of StrategyArt of StrategyArt of Strategy
The formulation of strategy is an art.The formulation of strategy is an art.The description of strategy, however,The description of strategy, however,should not be an art. If we canshould not be an art. If we candescribe strategy in a moredescribe strategy in a moredisciplined way, we increase thedisciplined way, we increase thelikelihood of successfullikelihood of successfulimplementation.implementation.
(Kaplan & Norton)(Kaplan & Norton)
StrategyStrategyStrategy
Some nonprofits develop a big pile of wellSome nonprofits develop a big pile of well--intentioned programs, ideas, andintentioned programs, ideas, anddirections that try to respond to everydirections that try to respond to everyneed and opportunity that comes alongneed and opportunity that comes alongand might vaguely fit under their mission.and might vaguely fit under their mission.
The hardest thing, is to have enough of aThe hardest thing, is to have enough of astrategy tostrategy to ‘‘just say nojust say no’’ and pass upand pass upopportunities.opportunities.
Strategy is not about being all things to allStrategy is not about being all things to allpeoples.peoples.
StrategyStrategyStrategy
Strategy is a:Strategy is a:
•• Road MapRoad Map
•• Game PlanGame Plan
•• Method of our MadnessMethod of our Madness
•• Our Plan of AttackOur Plan of Attack
•• Our Battle PlanOur Battle Plan
Strategic CompetencyStrategic CompetencyStrategic Competency
Cultural competency is veryCultural competency is veryimportant, but it does not pay theimportant, but it does not pay thebills.bills.
How well we weather the next stormHow well we weather the next stormof competition and competingof competition and competinginterests will depend on theinterests will depend on the ‘‘strategicstrategiccompetencycompetency’’ of our employees.of our employees.
Communication is the Foodof Strategy!
Competitive StrategyCompetitive StrategyCompetitive Strategy
Competitive strategy based solely onCompetitive strategy based solely onoperational effectiveness inoperational effectiveness inhealthcare can be mutuallyhealthcare can be mutuallydestructivedestructive
Competitive strategy is aboutCompetitive strategy is aboutbeing differentbeing different
Essence of competitive strategy isEssence of competitive strategy ischoosing to perform activitieschoosing to perform activitiesdifferently than rivals dodifferently than rivals do
Strategic ThemeStrategic ThemeStrategic Theme
A Strategic Theme represents aA Strategic Theme represents abroad prioritybroad priority within a BSCwithin a BSCperspective.perspective.
A Strategic Theme represents anA Strategic Theme represents anoverall goaloverall goal viewed through theviewed through thelens of a particular BSC perspective.lens of a particular BSC perspective.
Strategic Theme?Strategic Theme?Strategic Theme?
Patient Perspective:Patient Perspective: To achieveTo achieveour MVour MV22 (mission, vision, values)(mission, vision, values), which, whichpatient needs must we serve?patient needs must we serve?
Become a more patientBecome a more patient--focusedfocusedorganization and grow a loyal base oforganization and grow a loyal base ofpatients that reflect an appropriatepatients that reflect an appropriatefinancial mix?financial mix?
Strategic Theme?Strategic Theme?Strategic Theme?
Financial Perspective:Financial Perspective: To satisfyTo satisfyour constituents, what financial andour constituents, what financial andregulatory objectives must weregulatory objectives must weaccomplish?accomplish?
With the sustained support of keyWith the sustained support of keystakeholders, grow financialstakeholders, grow financialresources available for programs andresources available for programs anduse these resources efficiently,use these resources efficiently,effectively, and strategically toeffectively, and strategically tosustain our mission?sustain our mission?
Strategic Theme?Strategic Theme?Strategic Theme?
Operations Perspective:Operations Perspective: To satisfyTo satisfyour patients, in which businessour patients, in which businessprocesses must we excel?processes must we excel?
Continuously improve our clinical andContinuously improve our clinical andnonnon--clinical operations so they areclinical operations so they arealigned with thealigned with the ‘‘wantswants’’ andand ‘‘needsneeds’’of our patients and the requirementsof our patients and the requirementsof the BPHC and other keyof the BPHC and other keystakeholders?stakeholders?
Strategic Theme?Strategic Theme?Strategic Theme?
Employee Perspective:Employee Perspective: To achieveTo achieveand accomplish core activities, howand accomplish core activities, howmust we learn, communicate, andmust we learn, communicate, andwork together?work together?
Build a positive work environmentBuild a positive work environmentand maximize employeesand maximize employees’’ capacity,capacity,abilities, and knowledge so that theyabilities, and knowledge so that theyare equipped and prepared toare equipped and prepared tocontribute efficiently and effectivelycontribute efficiently and effectivelyto strategicallyto strategically--aligned clinical andaligned clinical andnonnon--clinical operations?clinical operations?
Strategy Map DefinedStrategy Map DefinedStrategy Map Defined
““Strategy implies the movement ofStrategy implies the movement ofan organization from its presentan organization from its presentposition to a desirable but uncertainposition to a desirable but uncertainfuture position. Because thefuture position. Because theorganization has never been to thisorganization has never been to thisfuture place, the pathway to itfuture place, the pathway to itconsists of a series of linkedconsists of a series of linkedhypotheses. A strategy maphypotheses. A strategy mapspecifies these causespecifies these cause--andand--effecteffectrelationships, which makes themrelationships, which makes themexplicit and testable.explicit and testable.””
Kaplan & NortonKaplan & Norton
Performance ObjectivesPerformance ObjectivesPerformance Objectives
Strategic themes represent broadStrategic themes represent broadpriorities within a BSC perspectivepriorities within a BSC perspective
Performance objectives arePerformance objectives are actionactionstatementsstatements of what we must doof what we must dowell in order to achieve the strategywell in order to achieve the strategy(or an aspect of it)(or an aspect of it)
Progress on performance objectivesProgress on performance objectivesis tracked with respectiveis tracked with respectiveperformance measuresperformance measures
Strategy Map SnapshotStrategy Map SnapshotStrategy Map Snapshot
Develop needed skillsand competencies
Build a positive workenvironment
Foster customerpartnerships
Deliver servicesaligned with resources
Seek ContinuousQuality Improvement
Communicate regs,standards and op issues
Deliver pt-focusedsatisfying services
Strengthen patienttrust, respect, etc.
Meet legal andreg requirements
Plan & use resourcesstrategically
PatientPatient FinanceFinance
InternalInternal
Learning & GrowthLearning & Growth
To achieve our mission,which customer needsmust we serve?
To achieve our goals and accomplishcore activities, how must we learn,communicate, and work together?
To satisfy our patients, at whatinternal operations must we excel?
To satisfy ourconstituents, whatfinancial and regulatoryobjectives must weaccomplish?
Strategy Map SnapshotStrategy Map SnapshotStrategy Map Snapshot
Develop needed skillsand competencies
Build a positive workenvironment
Foster customerpartnerships
Deliver servicesaligned with resources
Seek ContinuousQuality Improvement
Communicate regs,standards and op issues
Deliver pt-focusedsatisfying services
Strengthen patienttrust, respect, etc.
Meet legal andreg requirements
Plan & use resourcesstrategically
PatientPatient FinanceFinance
InternalInternal
Learning & GrowthLearning & Growth
Performance ObjectivesPerformance ObjectivesPerformance Objectives
Strategic themes are brought to lifeStrategic themes are brought to lifeby linked hypotheses expressed asby linked hypotheses expressed asperformance objectivesperformance objectives
Performance objectives providePerformance objectives providegranularity for strategic themesgranularity for strategic themes
Performance objectives providePerformance objectives providethrust or pullthrust or pull for strategic themesfor strategic themes
Init
iat i
ves
Ini t
iat i
ves
Ini t
iat i
ves
Init ia
t ives
Init ia
tives
Init ia
tives
Strategic ThrustStrategic ThrustStrategic Thrust
PerspectivePerspective’’ssStrategicStrategicThemeTheme
(1 stage)(1 stage)
O1
M2M1
O2
M4M3
O = Objective
M = Measures
Strategic PullStrategic PullStrategic Pull
StrategicTheme
StrategicTheme
PerformanceObjective 1
PerformanceObjective 2
PerformanceObjective 3
How Many PerformanceObjectives?
How Many PerformanceHow Many PerformanceObjectives?Objectives?
MM33
•• ManageableManageable
•• MeaningfulMeaningful
•• MeasurableMeasurable
Generally, 10Generally, 10--2020
Realistically, 10Realistically, 10--12 for starters12 for starters
Weighing Performance ObjectivesWeighing Performance ObjectivesWeighing Performance Objectives
To what extent does the objective boostTo what extent does the objective boostand provide granularity for strategicand provide granularity for strategictheme?theme?
Knowing what we know to be in our realmKnowing what we know to be in our realmof possibility, to what extent is theof possibility, to what extent is theobjective realistic?objective realistic?
To what extent does the objective supportTo what extent does the objective supportthe strategic thrust or underthe strategic thrust or under--pinning ofpinning ofour Value Chain?our Value Chain?
Weighing Performance ObjectivesWeighing Performance ObjectivesWeighing Performance Objectives
To what extent does the objective supportTo what extent does the objective supportour Patientsour Patients’’ Value Chain?Value Chain?
Is the performance objective easilyIs the performance objective easilyunderstood?understood?
Is the performance objective measurable?Is the performance objective measurable?
Performance MeasuresPerformance MeasuresPerformance Measures
People
Systems
Information
Activity Activity Output Outcome
InputMeasures
ProcessMeasures
ResultMeasures
PerformanceMeasures
Inputs
Process Activities Results
Are we doing thingsright?
Are we doing theright things?
Measurement is the Foodof Communication!
Lead & Lagging IndicatorsLead & Lagging IndicatorsLead & Lagging Indicators
HistoricalHistoricalperformanceperformance
Revenues, patientRevenues, patientsatisfactionsatisfaction
Lack predictiveLack predictivepowerpower
Near presentNear presentperformanceperformance
Absenteeism,Absenteeism,missedmissedappointmentsappointmentsproductivityproductivity
Predictive in naturePredictive in nature
Time Horizon
LaggingIndicatorsLagging
IndicatorsLeading
IndicatorsLeading
Indicators
PASTNEAR
NOW
Objectives
Fin
anci
alP
atie
ntIN
OP
E&
OC
Lag Measures ... Lead Measures ...
Grow NEONand keep herviable
Develop aloyal clientbase
Improve andact onknowledge ofclientsIncreaseemployeestrategicproductivity
Measures
Revenuegrowth
Customerloyalty
Additionsto solutionsdatabase
Competencyattainment
Hours spent withcustomers
Solutions offered
System downtime
Ease of system use
Training results
PDP goals completed
The ‘Fish Sign’TheThe ‘‘Fish SignFish Sign’’
Leading Indicator(i.e., absenteeism,employeesuggestions)
Lagging Indicator (i.e.,employee satisfaction)
What’s our sign?
Good signGood signGood sign
The ‘Nose Sign’TheThe ‘‘Nose SignNose Sign’’
Leading Indicator(i.e., absenteeism,turnover)
Lagging Indicator (i.e.,employee satisfaction)
What’s our sign?
Bad signBad signBad sign
Weighing Performance MeasuresWeighing Performance MeasuresWeighing Performance Measures
To what extent does the measure support,To what extent does the measure support,contribute to, or pull performancecontribute to, or pull performanceobjective?objective?
To what extent is the measureTo what extent is the measurequantitative, realistic, not datequantitative, realistic, not date--driven anddriven anddoable?doable?
To what extent does the measure and itsTo what extent does the measure and itsresults support positive behavior asresults support positive behavior asopposed to dysfunctional behavior?opposed to dysfunctional behavior?
Weighing Performance MeasuresWeighing Performance MeasuresWeighing Performance Measures
Easy to understand and gives staff a clearEasy to understand and gives staff a clearsense of the root performance objective itsense of the root performance objective itsupports?supports?
Is the data reasonably accessible or is aIs the data reasonably accessible or is aplan in place to make it so?plan in place to make it so?
Is update frequency requirementIs update frequency requirementmanageable relative to the lead or lagmanageable relative to the lead or lagclass of the measure?class of the measure?
Measure is not reliant on theMeasure is not reliant on the ““Flaw ofFlaw ofAveragesAverages””, right?, right?
Patient Perspective MeasuresPatient Perspective MeasuresPatient Perspective Measures
Our patients wantOur patients want ‘‘EATSEATS’’
•• EEfficiencyfficiency (care that is completed easily(care that is completed easilyand accurately in one stop)and accurately in one stop)
•• AAccessccess (ease of availing themselves of(ease of availing themselves ofservices)services)
•• TTimelinessimeliness (provision of timely services)(provision of timely services)
•• SSelectivityelectivity (choice of services or(choice of services orproviders)providers)
Patient Perspective MeasuresPatient Perspective MeasuresPatient Perspective Measures
Our patients measure us byOur patients measure us by ‘‘PAPA33’’
•• PPartnershipartnership ((““on my side?on my side?””))
•• AAccuracyccuracy ((““service is on the markservice is on the mark””))
•• AAvailabilityvailability ((““when and where I needwhen and where I needthe servicesthe services””))
•• AAdvicedvice ((““just what I needed to pull mejust what I needed to pull methrough this conditionthrough this condition””))
Employees in the ‘SACK’Employees in theEmployees in the ‘‘SACKSACK’’
Satisfaction
Alignment
Communication
Knowledge Fill
SACKSACK measuresmeasuresare critical andare critical andso are criticalso are criticalaction plans thataction plans thatare directed atare directed atputting ourputting ouremployees in theemployees in theSACKSACK
Employee Perspective MeasuresEmployee Perspective MeasuresEmployee Perspective Measures Query observable behavior, not thoughtsQuery observable behavior, not thoughts
or motivesor motives
Measure behaviors that are linked toMeasure behaviors that are linked toperformance objectives or strategicperformance objectives or strategicthemesthemes
1/3 of questions should lead to a1/3 of questions should lead to anegative responsenegative response
AvoidAvoid ‘‘rankingsrankings’’ questionsquestions
Can be completed within 20 minutesCan be completed within 20 minutes
TAKE ACTION ON FINDINGS!TAKE ACTION ON FINDINGS!
Employee Perspective MeasuresEmployee Perspective MeasuresEmployee Perspective Measures
Leading Indicators:Leading Indicators:
•• AbsenteeismAbsenteeism
•• TardinessTardiness
•• Employee suggestionsEmployee suggestions
•• Assessment of strategic competenciesAssessment of strategic competencies
Lagging Indicators:Lagging Indicators:
•• Employee turnoverEmployee turnover
•• Employee satisfactionEmployee satisfaction
Internal Perspective MeasuresInternal Perspective MeasuresInternal Perspective Measures
Internal Operations measures should beInternal Operations measures should bedriven by operations directed at patientdriven by operations directed at patient--centered performance objectivescentered performance objectives
[At which processes must we excel in order[At which processes must we excel in orderto meet our patientsto meet our patients’’ ‘‘wantswants’’]] refers to therefers to thecritical processes that need to be performedcritical processes that need to be performedand measured for their degree ofand measured for their degree ofeffectivenesseffectiveness
Financial Perspective MeasuresFinancial Perspective MeasuresFinancial Perspective Measures
Measures should demonstrate effectiveMeasures should demonstrate effectivestewardship of financial resources so as tostewardship of financial resources so as toremain viable and appease external fundingremain viable and appease external fundingagencies (e.g., BPHC)agencies (e.g., BPHC)
Patient mix (Medicaid/Subsidy) as leadPatient mix (Medicaid/Subsidy) as leadindicator for revenue projectionsindicator for revenue projections
Provider productivity as lead indicatorProvider productivity as lead indicator
Balance sheet lagging indicatorsBalance sheet lagging indicators
Financial Perspective MeasuresFinancial Perspective MeasuresFinancial Perspective Measures
Base Patients
New Patients
Numberof encounters
OptimizeNet IncomeNet
value perencounter
OptimizeCapital Structure
Acquisitions
Cost perencounter
Targets for MeasuresTargets for MeasuresTargets for Measures
““To understand the heart and mind of aTo understand the heart and mind of aperson, look not at what he has alreadyperson, look not at what he has alreadyachieved, but at what he aspires to do.achieved, but at what he aspires to do.””KahlilKahlil GibranGibran
““Targets bring our aspirations to life andTargets bring our aspirations to life andgive us something to shoot for in the questgive us something to shoot for in the questfor improvement.for improvement.”” PaulPaul NivenNiven
““By comparing actual performance resultsBy comparing actual performance resultsagainst a predetermined target, we receiveagainst a predetermined target, we receiveinformation that is imbued with value andinformation that is imbued with value andmeaning.meaning.”” PaulPaul NivenNiven
Targets for MeasuresTargets for MeasuresTargets for Measures
Sources for targets to consider:Sources for targets to consider:
•• Trends and baselinesTrends and baselines
•• National, state, local, industry, BPHCNational, state, local, industry, BPHC
•• Employees who are close to the actionEmployees who are close to the actioncan provide insightcan provide insight
•• Other organizationsOther organizations
•• Feedback from patients andFeedback from patients andstakeholdersstakeholders
Strategic InitiativesStrategic InitiativesStrategic Initiatives
Strategic Initiatives propel performanceStrategic Initiatives propel performanceobjectives to help us achieve our targetsobjectives to help us achieve our targets
Strategic Initiatives vie for human andStrategic Initiatives vie for human andfinancial resourcesfinancial resources
Analyze and prioritize potentialAnalyze and prioritize potential SIsSIs ororcurrent initiativescurrent initiatives
Elimination of initiatives that donElimination of initiatives that don’’ttcontribute to strategic performancecontribute to strategic performanceobjectives frees up scarce resourcesobjectives frees up scarce resources
Init
iat i
ves
Ini t
iat i
ves
Ini t
iat i
ves
Init ia
t ives
Init ia
tives
Init ia
tives
Strategic Initiative PropulsionStrategic Initiative PropulsionStrategic Initiative Propulsion
PerspectivePerspectiveStrategicStrategicThemeTheme
(1 stage)(1 stage)
O1
M2M1
O2
M4M3
O = Objective
M = Measures
The Ship’s HullThe Bottom LineThe ShipThe Ship’’s Hulls Hull
The Bottom LineThe Bottom Line Our MissionOur Mission
changes rarely;changes rarely;however,however,barriers andbarriers andobstacles alongobstacles alongour routeour routechange often.change often.
So how do we:So how do we:•• Keep the right passengersKeep the right passengers
who need to go where wewho need to go where weare going on our NEON ship?are going on our NEON ship?
•• Keep the right crew to doKeep the right crew to dothe work?the work?
•• Keep a properly equippedKeep a properly equippedand fueled vessel?and fueled vessel?
•• Navigate properlyNavigate properly ““SteadySteadyas she goesas she goes””, such that both, such that bothpassengers & crew arepassengers & crew arecomforted and reassured?comforted and reassured?
Employee PerspectiveEmployee PerspectiveEmployee Perspective
SSkillskills
•• that should bethat should belearnedlearned
HHabitsabits
•• that should bethat should bebrokenbroken
IInformationnformation
•• that should bethat should beretainedretained
TTalentsalents
•• that should bethat should beexploitedexploited
Strategic Initiatives should faithfullypropel employees to know their:
Internal Operations (INOP) SIsInternal Operations (INOP)Internal Operations (INOP) SIsSIs
SIsSIs that are crafted for operationalthat are crafted for operationalactivities are poured into respectiveactivities are poured into respectivesections of thesections of the Strategic Value ChainStrategic Value Chain totohelp us remain on coursehelp us remain on course
SIsSIs must be activities that help us standmust be activities that help us stand--out from the proverbial packout from the proverbial pack
SIsSIs must be activities that helpmust be activities that helpdifferentiate us from others and develop adifferentiate us from others and develop aloyal patient base with the appropriateloyal patient base with the appropriatefinancial mixfinancial mix
Patient Intimacy INOP SIsPatient Intimacy INOPPatient Intimacy INOP SIsSIs
Establish and foster patientrelationship
Listen tounderstand patients’ needs, wants,
and wishes
Develop andimplement patient-specific plans
Consistently deliver apositive (‘healing’) experience at every
patient service level
Patient Touch PointsPatient Touch PointsPatient Touch Points
Moments of Truth (MOT)Moments of Truth (MOT)
From patientsFrom patients’’ experiences, our businessexperiences, our businesshas become a stagehas become a stage
A successful business creates positive andA successful business creates positive andmemorable eventsmemorable events
Each memorable event with respect toEach memorable event with respect topatient contact is a MOTpatient contact is a MOT
Sum total ofSum total of MOTMOT’’ss comprise overallcomprise overallpatient experiencepatient experience
MOT 2 MOT 3
MOT 4MOT 1
Positive Experience in MOTsPositive Experience inPositive Experience in MOTsMOTs
MOT 2 MOT 3
MOT 4MOT 1
Negative Experience in MOTsNegative Experience inNegative Experience in MOTsMOTs
Operational Efficiency SIsOperational EfficiencyOperational Efficiency SIsSIs
Develop consistent processeswith optimal cycle times
Understand and shapeclient’s needs and solutions
Educate client aboutbenefits of various service options
Meet client needs in a error-free,consultative, problem-solving fashion
Strategic Value ChainStrategic Value ChainStrategic Value Chain
InboundPatient
Logistics:How &Why?
Clinical &Non-
ClinicalOpera-tions:How &Why?
OutboundPatient
Logistics:How &Why?
Marketing& Appts(a.k.a.,
pre-sales):How &Why?
Service(non-visitservices):
How &Why?
Mission
&M
argin
Procurement: How & What?Technology Exploitation: What & Why?
Human Resources Managment: How & Why?NEON INFRASTRUCTURE
SupportActivitiesSupportActivities
Primary ActivitiesPrimary Activities
A Balanced Scorecard isthe Food of Strategy!
BSC Instrument FlyingBSC Instrument FlyingBSC Instrument Flying
Our MissionOur Missionestablishes where weestablishes where weare headedare headed
CoordinatesCoordinates mustmustbe established tobe established tohead the right wayhead the right way
The BSCThe BSC providesprovidesthe coordinatesthe coordinatesrequired in order torequired in order tominimize obstaclesminimize obstaclesand barriersand barriers
SPEED
ALTITUDEATTITUDE
FUEL
COORDINATES
BSC AutomationBSC AutomationBSC Automation
Reporting needs necessitate pulling infoReporting needs necessitate pulling infofrom disparate sources into one arena forfrom disparate sources into one arena fordisplay and reviewdisplay and review
Software options can range fromSoftware options can range fromspreadsheets to databasesspreadsheets to databases
BSCBSC--specific software options exist on thespecific software options exist on themarketmarket
Organization size and complexity isOrganization size and complexity isultimate determinant of software needsultimate determinant of software needs
HighLow
Low
Hig
h
Internal Operations Employee & Org. Cap.
Financial PerspecticePatient Perspective
Mx11
Mx12a
Mx12b Mx1a
Mx1b
Mx2
Mx3aMx10b
Mx3bMx10a
Mx4aMx9b
Mx4bMx9a
Mx5Mx8
Mx6aMx7bMx6bMx7a
DartoGramDartoGramDartoGram
Hittingthemarksto getthepoints!
BSC Implementation PlanBSC Implementation Plan
At this point we have strategies, theAt this point we have strategies, themeasures, and the means.measures, and the means.
Now,Now, ‘‘JUST DO ITJUST DO IT’’..
Configure start for one location (championConfigure start for one location (championfacility) then spread to other facilitiesfacility) then spread to other facilities
Assign permanent BSC roles and teamsAssign permanent BSC roles and teams
BSC Implementation PlanBSC Implementation Plan
First things first:First things first:
•• Develop and launch a BSCDevelop and launch a BSCcommunication plancommunication plan for stafffor staff
•• Establish routine and schedule forEstablish routine and schedule forperformance measuresperformance measures
•• Perform baseline measuresPerform baseline measures
•• Launch preparation of staff for strategicLaunch preparation of staff for strategicinitiativesinitiatives
•• Launch strategic initiativesLaunch strategic initiatives
Regular BSC CheckRegular BSC Check--upsups
Create an analysis feedback routine to testCreate an analysis feedback routine to testassumptions laden in our BSC strategicassumptions laden in our BSC strategicthemes and objectives:themes and objectives:
•• Organizational learning is criticalOrganizational learning is critical
•• Consider adjustments to objectives, measures,Consider adjustments to objectives, measures,or initiatives based on trendsor initiatives based on trends
•• Add new costAdd new cost--effective strategic initiatives ifeffective strategic initiatives ifwe are not getting the proper propulsion fromwe are not getting the proper propulsion fromestablishedestablished SIsSIs
•• Link planning from feedback to budgetLink planning from feedback to budget
Overall BSC Feedback LogicOverall BSCOverall BSC FeedbackFeedback LogicLogic
Customers
Stakeholders
MissionVisionCore Values
Perspectives STRATEGY Themes
Goals
ObjectivesStrategic Map
Input Process Outputs Measures Outcomes
TargetsInitiatives Budget
Interactive
CommunicationCommunicationCommunication
Communication is more thanCommunication is more than ‘‘tellingtelling’’
Communication is knowing whether peopleCommunication is knowing whether peopleareare ‘‘receivingreceiving’’
BSC success is exceedingly and stronglyBSC success is exceedingly and stronglylinked to the effectiveness of thelinked to the effectiveness of thecommunication plancommunication plan
Strategic competency is fueled byStrategic competency is fueled bycommunicationcommunication
Communication of BSC measures letCommunication of BSC measures let’’sspeople knowpeople know ‘‘how am I doinghow am I doing’’ as anas animportant supplement toimportant supplement to ‘‘changechange’’ effortsefforts
Communication is the Foodof our BSC!
ConclusionConclusionConclusion
Maintainingthe integrity ofour BSC keepsus safely onour journey N
EO
NN
EO
N