Catalyst Balanced Scorecard
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Transcript of Catalyst Balanced Scorecard
© Copyright Kurt Salmon Associates, 2004
The health care consulting group of Kurt Salmon Associates, Inc. (KSA) provides management advisory services in
facility planning, strategy, and information technology to multi-hospital systems, community hospitals, academic
medical centers, children’s hospitals, and physician group practices. Today, the group is among North America’s most
dedicated and experienced resources to health care providers. We work closely with our clients to raise the critical questions,
explore the full range of vision and possible innovation, and develop recommendations that can be implemented.
Foreword
Performance Management Systems | Navigating the Perfect Storm
HEALTH CARE ORGANIZATIONS CONTINUE TO BE BUFFETED BY A PERFECT STORM THAT IS BOTH POWERFUL IN FORCE AND
NATIONAL IN SCALE. This storm is a confluence of forces, including the economy, labor shortages, revenue pressures,
and industry interventions regarding demonstrable patient safety, quality, and performance.
In striving to navigate their local markets and reach their goals, health care organizations are devising and attempting
to implement various strategies, including revenue cycle management, clinical process redesign, and Six Sigma.
Drs. Robert Kaplan and David Norton of the Harvard Business School have observed that it is not necessarily bad
strategies that lead to inferior performance, but the inability to effectively deploy, communicate, monitor, and refine
those strategies.1
As organizations steer their way through dynamic and turbulent competitive environments, the corporate business plan —
a compendium of strategies, objectives, and goals — serves as the navigational chart leading them to superior performance.
The performance management system, as a business planning framework, strategy deployment tool, performance improve-
ment methodology, and measurement approach, is of growing interest throughout the industry as a means of bringing
the corporate business plan into the 21st century. Promising to transition corporate strategic planning from navigation
by the stars and whims of the wind, to a system of information technologies, automation, and the seamless flow of
information, intelligence, and best practices, performance management ensures the entire organization is working
toward a common purpose.
Many of Kurt Salmon Associates’ (KSA) clients, both in the health care and retail/consumer products industries, are
pursuing performance management initiatives to address the tactical gap between strategy definition and deployment.
The performance challenge is how best to link strategic objectives to high-performing operations.
Drs. Kaplan and Norton address this performance management limitation through the introduction of the Balanced
ScoreCard (BSC) in their seminal article and subsequent book, “The Balanced ScoreCard: Translating Strategy into Action”
(1996). The BSC is a performance management system for devising strategic objectives and translating them into a focused
set of performance measures which, in turn, focus and drive decision makers’ tactical and operational activities.
KSA considers the BSC and similar approaches, such as Management-by-Objectives (MBO), Malcolm Baldridge National
Quality Award criteria, and ISO 9000, to be performance management systems. These systems call for the development of
a corporate business plan, its communication to the workforce, and monitoring and feedback to ensure the workforce,
from CEO to staff nurse, is focused on working together in the pursuit of the business plan.
This KSA Catalyst explores the definition and application of BSC performance management systems within health care
provider organizations and considers enabling performance management information technology strategies and solutions
to help health care organizations navigate the perfect storm.
1
1Kaplan, Robert S., Norton, David P., “The Balanced Scorecard: Translating Strategy Into Action,” Harvard Business School Press 1996.
Kurt Salmon Associates | Catalyst, Summer 2004
A CRITICAL ELEMENT OF
ANY ORGANIZATION’S OVER-
ALL PERFORMANCE MAN-
AGEMENT SYSTEM IS KNOW-
ING WHERE THE ORGANIZA-
TION IS RELATIVE TO WHERE
IT WANTS TO BE. This per-
formance monitoring is achieved through the provision
of accurate, timely, and pertinent measurements to the
decision makers of the organization. Managers have long
recognized the need to measure organizational activities.
As the management adage goes: “If you can’t measure it,
you can’t manage it.” However, despite this recognition,
most health care organizations do not manage them-
selves with performance measurement systems that pro-
vide visibility into the full continuum of corporate activ-
ities that result in superior performance. Superior per-
formance is achieved with the effective synthesis of four
perspectives of corporate activities: 1) finances, 2) human
resources, and 3) internal processes, all integrated to
increase 4) the value proposition of health care delivery
to patients and other key stakeholders (see Figure 1).
A performance management system based solely on
measuring a single perspective, typically finances, has
limitations. Current health care performance measure-
ments are dominated by financial reporting indicators
(e.g., operating expenses, gross charges, case mix index,
average length-of-stay, in-
patient/outpatient vol-
ume). These traditional
measurements focus man-
agement attention on past
performance, and provide
only a short-term view of
achieving corporate objectives. Managers hone in on the
previous month’s expense budget numbers, rather than
balancing the evaluation and performance improvement
of the intangible assets: effective processes, skilled and
satisfied human resources, and the patient care value
proposition necessary to maximize performance across
the four perspectives. This is analogous to steering the
Queen Mary II to its port of call across two oceans by
virtue of only a speedometer and a rear-view mirror.
The theory of the BSC performance measurement frame-
work emphasizes the use of financial and non-financial
measures in a balanced manner. These measures are con-
nected to a cause-and-effect view of the organization’s
activities along the four performance perspectives. The
premise is that measuring and managing the learning and
growth of human resources and improving the effective-
ness and efficiency of internal processes will lead to
improved customer satisfaction and loyalty, which results
in superior long-term financial performance.
Performance Management Systems | Navigating the Perfect Storm
The theory of the BSC performance meas-
urement framework emphasizes the use of
financial and non-financial measures in a
balanced manner.
3
Charting the CourseOrganization Performance Measurement
This is Management Theory 101. The innovative heart of
the BSC approach is to explicitly select, gauge, and organ-
ize focused measures of the four performance perspec-
tives, and to deliver them to decision makers in a timely
and actionable manner via a BSC report.
The BSC, however, is more than a scorecard of key per-
formance measures. To truly measure performance for
purposes of evaluation and improvement, and not just
documentation, there must be a cause-and-effect connec-
tion between the business plan objectives and their oper-
ational realization. That is, employees and managers
must use performance measures directly related to their
daily tactical and operational activities — measures that
let Operations know when to turn left, when to slow
down, and when to stop.
Performance indicators that amount to documented
spilled milk (i.e., you lost $2 million in cardiology last
year) do not help managers achieve corporate strategies.
Did we lose $2 million because of missed cost objectives
or revenue objectives, or both? What processes and
essential resource capabilities are critical to improved
performance of the cardiology product line? Are our
patients dissatisfied with key aspects of service delivery
and/or medical care? Why? Each question requires an
element of outcome measurement in the BSC. Each out-
come measurement must also be linked in an explicit
cause-and-effect relationship to the measurement of a
supporting process or driver that enables the achieve-
ment of the goal (see Figure 2).
This outcome measurement is called a lagging indicator in
BSC parlance, as it measures what has already happened:
costs decreased, revenue increased, quality decreased.
The driver measurement is called a leading indicator, as it
measures the capability to achieve performance in the
future: 90% of cases are being managed by a critical path-
way; 75% of case managers have received Six Sigma
training. A scorecard that explicitly connects leading and
lagging measurements allows decision makers to take
action on processes that will improve desired outcomes.
An example: If for no other reason than habit, a cause-
Kurt Salmon Associates | Catalyst, Summer 2004
4
Strategy
FinancialEconomic consequences of past actionsn Incomen Expensesn Profit marginn Cash flown Loss of sale
CustomerValue proposition delivered to customer segmentsn Patient, physicians, payers, communityn Customer satisfactionn Retentionn Acquisitionn Valued services
Business ProcessCurrent and new internal business processes in which the HCO must exceln Supply chain efficiencyn Achieving valued servicesn Effectiveness of caren Surgical infection raten Pathway compliance
Learning and GrowthInfrastructure to build long-term growth and improvementn Employee satisfactionn Human resource reskillingn Information technologyn Wound care training
Source: Illustrative example
FIGURE 1: BALANCED SCORECARD PERSPECTIVES
A “balanced” set of corporate performance indicators goes beyond the financial
Performance Management Systems | Navigating the Perfect Storm
and-effect chain begins with financial outcome measures,
such as product line profitability. One way to reduce
costs and increase profitability, at least for case-based
reimbursement, is to reduce length-of-stay (LOS) in a
medically responsible way. The LOS lagging outcome
measure requires a leading driver measure to indicate
how the desired LOS outcome is to be achieved. The per-
centage of discharges in compliance with developed crit-
ical pathways could be a meaningful driver measure.
An increased patient satisfaction score on the latest Press
Ganey survey indicates proper balance between aggres-
sive case management and patient satisfaction. Have
these improvements led to greater center of excellence
market share, and therefore revenue stream? There should
be a metric in place to answer this question. Dozens of
permutations exist for how performance measures can
relate to each other; and in turn, how the strategic objec-
tives they represent also relate to and affect each other.
Designing a Performance Scorecard
The BSC management system is as effective when
applied to an individual line of business as when applied
to the corporate-level business plan. To illustrate, we will
apply the BSC performance management system to a cor-
porate strategy to develop a cardiology center-of-excel-
lence service line. There are two broad tasks: devising the
service line business plan and designing the scorecard to
monitor and manage the performance of that business
plan. During a planning session, management and the
clinical team have identified three strategic goals for the
cardiology center-of-excellence:
1. Be recognized as the choice for cardiology cost/quality
performance in the region.
2. Identify, target, and lead in the three “customer” seg-
ments (patient, physician, and insurance product).
3. Improve the quality and efficiency of cardiology patient
clinical management.
5
Out
com
eD
rive
r
Learning
Wound care training% of staff decreases
Loss of sales increases
Post-surgery infection rate
increases
Satisfied patients decreases
Profit margin decreases
Process Customer Finance
Source: Illustrative example
FIGURE 2: BALANCED SCORECARD CAUSE-AND-EFFECT CHAINS
A planning team translates these goals into specific
objectives within each of the four performance perspec-
tives (see Figure 3). Outcome measures are then selected
to make each objective operational by answering the sim-
ple question, “How do we know if we have achieved this
objective?” Each objective is then assigned a perform-
ance driver measurement to monitor its achievability. In
this example, each measure is also given a trend indicator
to denote the desired direction, increasing or decreasing.
While there is no magic number of measures, research
supports a total of 25 to 30 performance indicators per
scorecard as ideal from a practical deployment and human
cognitive perspective. Measures should be accessible, rel-
evant, and easily understood. They should be balanced
between leading and lagging performance indicators and
short- and long-term goals. Another criterion for the
measure set is balance, such that no single measure out-
weighs or is improved at the expense of another. The
next step in charting the achievement of the business
plan is to design and build the performance management
system that will manifest the designed scorecard.
Kurt Salmon Associates | Catalyst, Summer 2004
6
Source: Illustrative example
FIGURE 3: CARDIOLOGY CENTER-OF-EXCELLENCE BALANCED SCORECARD
STRATEGIC OBJECTIVES BY
DIMENSION
FINANCIAL PERFORMANCEn Achieve profitable growthn Improve operating performance
PROVIDER OF CHOICEn Improve hospitality of servicesn Improve/reinforce image to customer
segments
INTERNAL PROCESSESn Improve clinical innovationn Improve business productivity
EMPLOYER OF CHOICEn Upgrade staff competenciesn Create climate for action
LEADING DRIVER
i Length-of-stay vs. best-practice benchmark
h Payor contract development vs. plan
i Days to next appointment availability
h Advertising budget per cardiac bed
h $ in cardiology research programs
i % of first-time clean claims
h % of cardiology board certified physicians
h % of staff received Six Sigma training
LAGGING OUTCOME
i Average total cost per case
h Case mix adjusted occupancy rate
h Customer satisfaction survey
h Marketing focus group scores
i Resource consumption (index vs.
benchmark)
h Days in Accounts Receivable
h Strategic skill rating
h Employee satisfaction survey
PERFORMANCE MEASUREMENTS
AT THIS STAGE, THE CARDIAC
CENTER OF EXCELLENCE
PERFORMANCE SCORECARD
IS A TABLE-TOP PLANNING
EXERCISE. It is not radically
different than dozens of
planning frameworks put
forth throughout the histo-
ry of organization management science. The organization
must now determine how the performance scorecard will
be built and delivered to decision makers in a timely and
actionable fashion.
Information technology is one component of the solution.
Performance management information technology (PMIT)
actually encompasses much more than the delivery of a
performance scorecard. It can enable a broader perform-
ance management system, including the acquisition and
management of performance data, assisting with the
business planning cycle, operational and capital budgeting,
Six Sigma support, and information analysis functionality.
This Catalyst will focus on a performance management
system comprised of three capabilities: performance
monitoring, evaluation, and improvement.
PERFORMANCE MONITORING. Like a radar or Doppler
screen tracks a storm, effective performance monitoring
explicitly maps performance measures to the business
plan’s strategic objectives, goals, and initiatives and com-
municates their performance to stakeholders, including
Joint Commission on Accreditation of Health Care
Organizations (JCAHO), patients, payors, Centers for
Medicare and Medicaid Services (CMS), and the commu-
nity. The BSC report is the primary method of communi-
cating to management actual vs. expected performance.
Performance monitoring
can be strategic (long-
term) and operational
(real-time) in the type and
timeliness of its delivered
measures. While manage-
ment may need to under-
stand occupancy trends to
plan bed capacity and allocation for the next two years
(strategic), it must also know this week’s census and acu-
ity to plan adequate RN coverage for next week (opera-
tional). Each type of performance monitoring objective
indicates the need for different types of data sources, data
management processes, timeliness, and analytical meth-
ods for delivering information and actionable knowledge
into the hands of decision makers. Certainly strategic
monthly, quarterly, and yearly reporting is the primary
focus of the BSC. However, steering the organization
according to plan is only possible when measures are
operational and actionable as well.
EVALUATION. Performance monitoring allows manage-
ment to identify negative and positive performance
events and trends in a timely manner. Management must
then conduct root-cause analysis to drill down into layers
of performance information detail and isolate contribut-
ing factors. The ability to evaluate performance indicates
a broader requirement for integrating and normalizing
detailed performance data into a single managed per-
formance data resource. The data resource is made read-
ily available for analysis using a variety of decision sup-
port tools within an integrated performance management
system environment. Decision makers should be able to
navigate seamlessly from performance monitoring to
evaluation, prepared to take immediate action and make
knowledge-based decisions.
Performance Management Systems | Navigating the Perfect Storm
7
Performance management information
technology (PMIT) actually encompasses
much more than the delivery of a perform-
ance scorecard.
The ShipyardBuilding the Performance Management System
IMPROVEMENT. Once the underlying cause of a perform-
ance problem is evaluated, management and analysts
must redirect operational efforts and improve the under-
lying process(es) to stay on the course of the business
plan. The health care industry is increasingly adopting
Six Sigma and other performance improvement tech-
niques and applying them to performance management
systems by exploiting the performance data resource, the
BSC, and the collection of evaluation and analysis tools.
More advanced capabilities include business process
modeling and data mining techniques that can model
and explain variations and create “if-then” models for
improvement interventions.
A BROAD SET OF INFORMATION TECHNOLOGY REQUIRE-
MENTS MUST BE MET TO ENABLE THESE THREE CAPABIL-
ITIES OF THE PERFORMANCE MANAGEMENT SYSTEM.
Information technology is needed to acquire performance
data, organize it for reporting and analysis, and apply
various visualization and analysis tools to the organized
performance data. The performance management IT
components can be organized into three broad categories of
functionality: the BSC, data management, and business
intelligence.
THE BSC. BSC information technology enables manage-
ment to visually monitor and navigate an organization’s
business plan and performance measures against targets.
The BSC Collaborative is an organization that identifies
specific BSC technology functionality and certifies vendors
against that list. Key BSC functionality includes: n STRATEGY MAPPING OR VISUAL NAVIGATION of busi-
ness plan strategies, objectives, goals, and measures.n DATA VISUALIZATION, such as performance status icons
using stop-lighting (red, yellow, green).n DIRECTIONAL ICONS, GAUGES, DIALS, AND OTHER
VISUAL CLUES to alert management to growing prob-
lem areas.n LINE-OF-SIGHT FUNCTIONALITY linking individual staff,
and departmental and service line performance score-
cards to the corporate business plan. This serves the
BSC goal of ensuring every workforce member, depart-
ment, division, and vice president knows how and
how well it contributes to corporate strategy achieve-
ment. n COLLABORATION FUNCTIONALITY allows accountable
management to communicate, document, and collabo-
rate as a team when monitoring and evaluating per-
formance trends. There is no longer a need to play
phone tag with three department directors to explain a
variance to the CEO; an organization can interact
directly with the CEO within the environs of the per-
formance management system, with performance data,
trends, and management explanations all in one place.
DATA MANAGEMENT. Because the goal of the BSC is to
create views of the organization that extend beyond
financial elements, data regarding clinical care, quality,
patient safety, operations, administration, external
benchmarks, and competitor market share are also
required. Data must be sourced from a wide variety of
internal and external information systems and data col-
lection processes. The many disparate information
sources — internal and external, electronic and manual
— must be managed for the expressed purpose of per-
formance monitoring, evaluation, and improvement.
Data must be extracted, integrated, standardized, and
cleansed. The manifestation of this data management
technology and integrated data resource effort is a corpo-
rate performance data warehouse.
BUSINESS INTELLIGENCE. The management of an organi-
zation’s performance data is one side of the coin; the
tools, technologies, and methodologies to exploit that
data to generate actionable knowledge is the other. A set
of what is commonly termed Business Intelligence (BI)
tools provides drill-down, Web-based reporting, statistical
analysis, business activity monitoring, business process
modeling, data mining, data visualization, portal, and
dashboard functionality to complement and complete the
PMIT environment.
Kurt Salmon Associates | Catalyst, Summer 2004
8
MUCH LIKE CLASSIC CORPO-
RATE BUSINESS PLANNING,
HEALTH CARE ORGANIZA-
TIONS NEED TO TAKE A CON-
SIDERED AND STRATEGIC
APPROACH TO DEFINING
AND DEPLOYING A PER-
FORMANCE MANAGEMENT
SYSTEM AND APPLYING INFORMATION TECHNOLOGY AS A
SOLUTION. A three-step PMIT strategy process is recom-
mended to assess where the organization is now, where
it wants to be, and how it will get there (see Figure 4).
STEP 1: The organization assesses the existing perform-
ance management system environment relative to best
practices and identifies corporate requirements. The goal
of the assessment is to identify management require-
ments with regard to access to performance information;
identify current capabili-
ties’ strengths and weak-
nesses; and evaluate exist-
ing applications, skill sets,
tools, and processes. The
assessment should identify
the inhibitors and accelera-
tors to adopting a new per-
formance management system and determine whether
the current analytical culture and management skill set are
able to exploit access to performance data and analytical
tools.
STEP 2: The next step is to define a future-state vision and
perform a gap analysis of the current environment.
Alternative performance management strategies for achiev-
ing the future state, assessing relative value propositions, and
recommending a preferred strategy to pursue are devised.
Performance Management Systems | Navigating the Perfect Storm
The strategy and solution set will depend
on the realities of the future-state vision
relative to the organization’s current PMIT
environment.
Sailing the High SeasPMIT Strategy
9
Examine Project Organization
Set Project Goals and Objectives
Assess Current PMIT Environment
Identify Strengths and Weakness
AssessPMIT Environment
Define Analytical Processes/ Culture Requirements
Define Analytical Requirements
Define Data Management Requirements
Determine Unmet PMIT Needs (Gaps)
Define, Evaluate, andSelect PMIT Strategy
Perform Marketplace Overview
Evaluate Technology Solution(s)
Select TechnologySolution(s)
Formulate Budget and Timeline Projections
Begin PMIT Implementation
STEP 1(Where are we now?)
STEP 2(Where do we want to go?)
STEP 3(How do we get there?)
Source: KSA methodology
FIGURE 4: THREE-STEP PMIT STRATEGY PROCESS
STEP 3: Upon senior leadership’s confirmation of a pre-
ferred performance management strategy, it is translated
into a tactical plan to pursue policy changes; skill set
development; business planning calendars; and technol-
ogy selection, acquisition, and implementation.
Performance management and assessment of the current
environment will undoubtedly give rise to several chal-
lenges for the organization to overcome as it embarks on
improving its strategic planning and deployment
approach. These challenges include:n Holding management accountable for performance.n Enabling accountability through performance-based
reward and compensation models.n Affecting policy and culture changes with respect to
corporate information access.n Building consensus and standardizing corporate per-
formance metrics across multiple perspectives, entities,
and departments.
In addition to organizational behavior and cultural chal-
lenges, a key PMIT strategy challenge is determining how
best to integrate and exploit existing data and analytical
solutions with potentially new PMIT components and
solutions.
Frequently asked PMIT strategy questions include:n Are broader requirements for data management and
analysis, automating the budget cycle, and integrated
business planning required, or is a visual dashboard of
performance indicators sufficient?n Does our Enterprise Resource Planning (ERP) vendor
offer a PMIT solution that can meet our health care-
specific requirements?
n How far can our existing financial decision support
applications take us in pursuing the goals of the BSC?n How well does the existing information technology
environment support the automated capture of clinical
data required for quality and patient safety perform-
ance indicators?
As these probing questions indicate, the scope of a PMIT
strategy and its associated tactical solution(s) can vary
widely. The solution may be as simple as a targeted niche
BSC product; it may include data warehousing, budget-
ing, and business planning within an ERP environment;
or it may include any solution map in between. The strat-
egy and solution set will depend on the realities of the
future-state vision relative to the organization’s current
PMIT environment.
Upon specification of a PMIT solution scope, assessment
of the current PMIT environment, and identification of
the gaps between the current environment and the
future-state vision, the organization must determine how
best to address the gaps and move toward the future-state
vision. Based on numerous technology planning and
selection projects, KSA has identified three broad PMIT
strategies (see Figure 5).
BEST-OF-BREED. Allows each entity, service line, and
department to determine how best to satisfy each of the
three PMIT components with a best-in-class solution for
BSC, data management, and business intelligence.
BEST-OF-FAMILY. Groups the PMIT components into
“functionality families” to be addressed by a smaller set
of vendors, reducing cost, support, implementation, and
Kurt Salmon Associates | Catalyst, Summer 2004
10
Source: KSA methodology
FIGURE 5: THREE BROAD PMIT STRATEGIES
BEST-OF-BREEDn Each PMIT component is satisfied by
the “best” niche vendor solutionn Entity-/department-specific solutions
BEST-OF-FAMILYn Group PMIT solution components into
two “families” of functionality:
– Data Management (DM) and
Business Intelligence (BI)
– The Balanced ScoreCard (BSC)
END-TO-ENDn Further group PMIT solution into a single
suite of functionality: DM, BI, and BSC
integration challenges. Companies should strive to stan-
dardize best-of-family solutions as a single PMIT solution
set across the entire organization. The definition of the
functionality families can differ based on the realities of
an organization’s assessment and the identified gaps in
the PMIT environment. One definition could include data
management and business intelligence as one family
(one vendor) and the BSC as another. The BSC and busi-
ness intelligence could be yet another family coming
from one vendor and data management technology from
another.
END-TO-END. The perceived benefits of the best-of-family
strategy can be further expanded to a strategy in which
all the PMIT components are supplied by a single inte-
grated solution set from a single vendor. This strategy
works best when it is deemed by the organization during
the PMIT assessment that none of the three components
— the BSC, data management, or business intelligence —
are prevalent and/or enjoy a single, consistent strategy
and solution set across the organization.
11
PMIT VENDOR MARKETPLACE
Given the scope of an organization’s PMIT approach,
and the various possible strategies, many vendors
and solutions can be included in an organization’s
PMIT solution set. Several vendors’ business intelli-
gence and BSC products can be considered function-
ality families. Numerous niche vendors specialize in
BSC functionality as well. While accredited by the BSC
Collaborative, many of these niche solutions require the
acquisition and integration of business intelligence
and data management tools if such don’t already
exist. An organization lacking all three PMIT components
can consider a smaller set of end-to-end vendors
claiming to offer the components in an ostensibly inte-
grated environment. Figure 6 provides a PMIT market-
place overview based on KSA analysis. It is not an all-
inclusive depiction of potential vendors, but repre-
sents perceived leadership in the PMIT space.
Source: KSA marketplace analysis
FIGURE 6: PERCEIVED PMIT LEADERSHIP
Performance Management Systems | Navigating the Perfect Storm
VENDOR
ACTIVESTRATEGY
BUSINESS OBJECTS
COGNOS
CORVU
CRYSTAL DECISION
HYPERION
INFORMATICA
ORACLE
PBVIEWS
SAS
PMIT COMPONENT
BSC
BI, DM
BSC, DM, BI
BSC
BI, BSC
BI, BSC
DM
DM, BSC, BI
BSC
BI, DM, BSC
BEST-OF-BREED
PPPPPPPPPP
BEST-OF-FAMILY
PPP
P
PPP
END-TO-END
P
P
P
As the owner of a PMIT solution set, you will embark on the challenging voyage of deploying the policy changes,
process redesign, skill set development, and technology implementation to realize the future-state vision. Great
attention must be paid to ensuring key success factors are in place and managed within a continuous risk man-
agement program.
SECURE EXECUTIVE SPONSORSHIP. Senior management must sponsor a project of this magnitude and strategic
importance. The performance management system and PMIT must be treated as a strategic and mission-critical
initiative owned and sponsored by the CEO or his/her designee, in partnership with the CIO. This project will expose
and create numerous political challenges, require significant funding, and likely cause considerable cultural change.
Committed and astute executive sponsorship is critical to keeping the project alive, focused, and on course for success.
INVOLVE OPERATIONS. The involvement of stakeholders from operations, specifically patient care-related departments,
is also critical. The next level of performance improvement will be in patient care, quality, and clinical operations; not
finance, human resources, and materials. From strategy through implementation, stakeholders from ambulatory,
operating room, clinical, pharmacy, nursing, and senior management should be intimately involved, owning the project
and its success.
COMMUNICATE. Given the dramatic cultural change and broad scope of the project, constant and consistent com-
munication will stoke excitement and adoption of the PMIT environment. Starting with senior management, the “why
and how it will affect you” message should spread through the organization through existing communication channels,
as well as new ones, such as a performance management newsletter.
The BSC is used by more than 60% of Fortune 500 companies to measure performance and align operations with strate-
gies. Strategy is critical to guiding health care organizations through dynamic markets and ever changing competitive
environments. Outside competition, regulatory changes, and more sophisticated patient expectations are just some of
the factors driving organizational change. Only those organizations prepared to execute strategy and maximize business
performance will succeed. Performance evaluation predicated on the BSC helps integrate business and clinical perform-
ance at strategic and tactical levels by measuring, disseminating, and analyzing interrelated key performance indicators.
This Catalyst reviewed the challenges of devising and deploying an information technology strategy to enable the
goals of performance management and measurement in the stormy health care environment. Implementing PMIT
within the BSC performance management system can help align an organization’s mission, vision, and strategic plan
with its success-defining measures. Using PMIT can also create management tools to evaluate opportunities for
improvement and support knowledge-based decision making that will enable organizations to navigate successfully
into the 21st century.
Compass Points
We hope you found this Catalyst insightful and actionable.
For more information about how KSA can help your organization apply BSC performance management systems
and PMIT strategies and solutions to navigate the perfect storm, e-mail [email protected].
www.kurtsalmon.comOffices Worldwide