Feature

Scoring Ahead of the Game

Balanced Scorecard is purely mathematical and works on the principle of what cannot be measured, cannot be managed, informs Jayata Sharma.

Balanced Scorecard or BSC, common to the corporate world, is now in demand even among the healthcare fraternity. And why? Because hospitals are realising that a tool, which takes into account the perspectives of learning and growth, internal business process, customer satisfaction, and financial gains and also improves the overall mechanism of an organisation must have something to it. A more rigorous regulation process, increasingly diverse customer needs and stiffer competition are some of the key reasons for hospitals to adopt BSC.

BSC translates a business unit's mission and strategies into tangible outcomes and brings harmony between functions. The interconnection can be explained as: the focus of a hospital on training and development of staff will work towards an efficient and effective business process. Surely, usage of such a tool will lead to a motivated workforce and also delight patients and their relatives. And last, but not the least, financial objectives too are met, with a healthy top and bottom line.

"Managers who learn methods of the patient management scorecard are in a better position to lead" - Rupak Barua Chief Operating Officer Calcutta Medical Research Institute (CMRI), Kolkata

"Managers who learn methods of the patient management scorecard are in a better position to lead in future. They have the ability to think, plan and assess the success of their hospital," explains Rupak Barua, Chief Operating Officer, Calcutta Medical Research Institute (CMRI), Kolkata. CMRI has been using BSC for the past couple of years.

"Before adopting BSC, the operations at our hospital were far from oriented. Embracing BSC has meant a straight 33 per cent improvement in our top line," says T Karunakar, General Manager-HR, Apollo Hospital, Hyderabad, which adopted BSC four years back.

"Balanced Scorecard increases organisational alignment" - Dr SK Biswas Kolkata-based healthcare management consultant

What makes BSC accountable is that at the end of the implementation, a scorecard is prepared, which is similar to a report card and points are given to each department based on performance. "The report cards include a 'balance' of leading (performance drivers) indicators and lagging (outcome) indicators. It ensures that the leading indicators support the lagging ones on the scorecard," explains Dr SK Biswas, Kolkata-based healthcare management consultant. The points are allotted to the department heads, and they can further distribute them amongst their team members. There is no external body involved in the implementation and it is entirely up to the hospitals to tread the path.

So, how is BSC better than other management tools? Dr Biswas has the answer: "Besides addressing a host of non-financial parameters, BSC concurrently links and addresses the financial objective of an organisation."

BSC encourages improved performance and benchmarking, enhances communication and networking, supports continuous organisational improvement, and demands accountability and calls for action plans. "Since everyone in the organisation begins searching for their own indicators that support the organisation's strategic objectives, BSC increases organisational alignment," avers Dr Biswas.

It emphasises that financial and non-financial measures must be part of the information system for employees at all levels.

In other words, BSC stresses on the fact that financial gains is just one fourth of the total quality enhancement process of an healthcare organisation; and that every department has to play a role in attaining one of the above listed four perspectives.

However, certain problems do arise in measuring healthcare processes in absolute terms. For instance, how can a hospital measure the performance of a surgeon during a surgery?

Right now, although most hospitals do stress on all four perspectives, what is lacking is the sync required to turn these processes into profits. "We are planning to adopt BSC across our group in India," says Kumar Krishnaswamy, Group Head-HRD, Wockhardt Hospitals Group, Bangalore.

But there are certain experts who have reservations. Madurai-based Aravind Eye Care System, although a huge group, prefers not to go in for BSC as "it does not have any BSC champion to initiate this process," says RD Thulasiraj, Executive Director, Aravind Eye Care System. Aravind already has in place various scoring processes, though not connected to each other. "We have no formal budgeting system for management processes. Besides, BSC needs a separate budget for implementation," adds Thulasiraj.

When to Adopt BSC

Adoption of BSC requires a hospital to practice some tenets at some level, as later on, BSC will only bring about a co-ordination among all processes for profit. Like Dr Aninda Chatterjee, Hospital Superintendent, BM Birla Heart and Research Centre, Kolkata, points out, "BSC is like mobil oil in a car. Despite the presence of petrol (say, the four perspectives), BSC (as mobil) will further smoothen the management process."

BSC is just a framework and doesn't say what the specific measures ought to be. "That is a matter for people within the organisation to decide, and the set of measures for each organisation (or even sections within an organisation) will be different," says Barua. Much of the success of the scorecard depends on the agreed benchmark, its implementation and the action taken. "So, the process of designing the scorecard is as important as the scorecard itself," Barua adds.

So when should a hospital adopt BSC?

• When a hospital sees saturation in terms of growth.
• When a hospital finds it difficult to retain customers.
• When a hospital realises huge losses, in spite of providing the best facilities and technologies.
• When employee engagement index is low.

However, there are some industry experts who feel that adoption of BSC early on helps. Like Dr Biswas, who thinks care is what differentiates in these times. "Users are fickle. To stay competitive and keep the organisational objective in line, adopting BSC early on helps in avoiding operational mayhem," Dr Biswas adds.

Prior to implementation, hospitals would first need to create a roadmap through SWOT analysis to define the strategic objective, through a cause and effect diagram (see flowchart). The implementation process is divided into two sets: cost reduction and revenue increase. The first step is handled by the perspectives of training and internal business process. By providing training, the hospital ensures that employees give their best and reduce mistakes. "The head of purchase department can contribute by availing of good bargains for purchases made," says Dr Chatterjee.

The other aspects of increasing revenue is taken care of by the latter perspectives, namely, customer satisfaction, which results in good publicity, and finance, which is directly connected to hospital earnings.

The above processes can be taken care of by dividing the implementation steps into objectives, measures, targets and initiatives.

Objectives: The first step for any department is to set the objectives of the whole exercise. "This includes setting a collection of key indicators that reflect the organisation or a department's performance," says Dr Biswas.

Measures: The departments then set benchmarks and prioritise important matters.

Targets: The concerned departments set their target for a specific period of time. They can analyse the BSC annually, but can devise strategies and targets quarterly.

Initiatives: The last step is the initiatives that need to be taken to achieve set targets.

How BSC Works

BSC works on four key areas of an organisation. It addresses vital management issues, such as finance (how should an hospital appear to shareholders), customers (how should the hospital appear to customers), employees (what business processes must be excelled at), and process (how will an hospital organisation sustain its ability to change and improve).

Internally, the main challenges to healthcare management are: conflicts between management and physicians' interests, conflicts among value proposals for different kinds of customers, lack of performance measurement methods, and inefficient information systems. All these conflicts can be solved by adopting BSC.

There are certain measures that need to be implemented for BSC. These measures can be divided as strategic, organisational and operational measures. "Strategic measures include market attractiveness (industry structure, growth, concentration, innovation, customer power, logistical complexity) and competitive strength (relative market share, relative quality; intellectual property, customer coverage)," informs Barua. Organisational measures consist of culture, leanness, incentives, training and development, structure, purpose, and process. Lastly, operational measures include customer satisfaction, product or service excellence, capacity utilisation, capital intensity, productivity, and outsourcing.

"Embracing BSC has meant a straight 33 per cent improvement in our top line" - T Karunakar General Manager-HR Apollo Hospital, Hyderabad

"However, BSC can be successful only if the organisation has a mission and is keen on achieving its targets," says Karunakar.

The question then arises is: So why is BSC not popular? It lacks in several ways. "There is a lack of awareness, knowledge (of implementation), understanding its benefits and focus on the management issues other then the financial top and bottom line," says Dr Biswas.

Low acceptability of BSC in healthcare industry can be the result of different perceptions about successful businesses. Most hospitals in India are either charitable or doctor-owned, and do not have profit as their mainstay.

Also, corporate hospitals have yet to get serious about competition. Indian hospitals think they are successful only when they achieve an average of 80 per cent occupancy; while in countries like the US, hospitals are happy with 60 per cent. Hence, BSC is more prevalent abroad due to an open economy and high competition. "We take our patients for granted and neglect quality aspects. This will change with the foray of international groups and BSC will then certainly hold firmer ground," says Dr Chatterjee.

Employees too need to understand that if the hospital is profitable and has credibility, the returns will ultimately bounce back to them.

Advantages and Disadvantages

Despite all the advantages, BSC does have its grey areas. There are times when it gets difficult to define and measure outcome and the performance drivers of BSC, i.e. identifying the right indicators of hard work. Also, arriving at a common consensus about key indicators can be a challenge. "Following too many metrics is a constant temptation. More is not necessarily better always," says Dr Biswas. In addition, after selecting the key indicators, employees experience pressure to 'make the numbers'.

In a hospital set-up, where there is lack of IT-enabled environment, collecting data could be a barrier. Problems can arise as the process is time consuming and it is likely that the management gets too busy solving short-term impending problems, and developing BSC.

Dr Ramesh Babu, Administrative Director, Meenakshi Mission Hospital, Madurai, says, "Doctors who are not used to 'manage numbers' may not be comfortable and detest BSC."

However, Dr Biswas has the last word when he says, "The acceptance of BSC is inevitable as the supply will soon exceed demand in the segment, which values an all-round quality in health delivery sector."

jayata.sharma@expressindia.com