Balanced scorecard application in the health care industry: a case study

Balanced scorecards became a popular strategic performance measurement and management tool in the 1990s by Robert Kaplan and David Norton. Mainline companies accepted balanced scorecards quickly, but health care organizations were slow to adopt them for use. A number of problems face the health care industry, including cost structure, payor limitations and constraints, and performance and quality issues that require changes in how health care organizations, both profit and nonprofit, manage operations. This article discusses balanced scorecards generally from theoretical and technical views, and why they should be used by health care organizations. The authors argue that balanced scorecards are particularly applicable to hospitals, clinics, and other health care companies. Finally, the authors perform a case study of the development, implementation, and use of balance scorecards by a regional Midwestern health care system. The positive and negative aspects of the subject's balanced scorecard are discussed. Leaders in today's health care industry are under great pressure to meet their financial goals. The industry is faced with financial pressures from consumers, insurers, and governments. Inflation in the industry is much higher than it is within the overall economy. Employers can no longer bear the burden of rising group health insurance costs for its employees. Too many large companies have used bankruptcy law as a shield to reduce or shift some of their legal obligations to provide health insurance coverage to present or retired employees. Stakeholders of health care providers are demanding greater control over costs. As the segment of un- or underinsured within the United States becomes larger as a percentage of the population, voters are seriously beginning to demand some form of national health insurance, which will drastically change the health care industry.     

An exploration of the leadership attributes and methods associated with successful lean system deployments in acute care hospitals

The lean system has been shown to be a viable and sustainable solution for the growing number of cost, quality, and efficiency issues in the health care industry. While there is a growing body of evidence to support the outcomes that can be achieved as a result of the successful application of the lean system in hospital organizations, there is not a complete understanding of the leadership attributes and methods that are necessary to achieve successful widespread mobilization and sustainment. This study was an exploration of leadership and its relevant association with successful lean system deployments in acute care hospitals. This research employed an exploratory qualitative research design encompassing a research questionnaire and telephonic interviews of 25 health care leaders in 8 hospital organizations across the United States. The results from this study identified the need to have a strong combination of personal characteristics, learned behaviors, strategies, tools, and tactics that evolved into a starting adaptable framework for health care leaders to leverage when starting their own transformational change journeys using the lean system. Health care leaders could utilize the outcomes reported in this study as a conduit to enhance the effective deployment, widespread adoption, and sustainment of the lean system in practice.     

Improving the system of public health financing]

The paper provides data on health status of children and adult population, and medico-demographic situation in the country. An account is also given of organizational and financial issues of medical care in foreign countries. The issues related to the organization of medical care, management of public health financing of the branch under new conditions are dealt with. On the basis of the experiment a new system of health services financing based on the principles of insurance medicine is proposed for introduction. The new system envisages such new organizational structures as health protection funds and insurance organizations. Functions of the existing managerial organizational public health structures at different levels are being changed, the status of medical institutions would also change and their responsibility for the quality of work would increase.     

Whither private health insurance? Self-destruction or rebirth?

The American public increasingly finds itself disenchanted with the system for health care financing in this country. Three forms of reform proposal are examined: those that place the locus of primary responsibility for health insurance coverage on the individual, those that would rely on employer mandates with patients and government bearing the residual responsibility, and those that lodge chief financial responsibility with the government, and act as primary agent for cost control. The second approach, government-mandated employer-provided health insurance, appears to be the most politically viable at this time. However, that option is likely to be acceptable to the business community only if the mandate is coupled with additional regulation of private health insurance. Specifically, private health insurance in such a system likely would be based on mandatory open enrollment, community-rated premiums, and all-payer reimbursement, under which every payer pays a given provider the same fee for the same service.     

The Business Case for Preconception Care: Methods and Issues

Only a limited number of economic evaluations have addressed the costs and benefits of preconception care. In order to persuade health care providers, payers, or purchasers to become actively involved in promoting preconception care, it is important to demonstrate the value of doing so through development of a “business case”. Perceived benefits in terms of organizational reputation and market share can be influential in forming a business case. In addition, it is standard to include an economic analysis of financial costs and benefits from the perspective of the provider practice, payer, or purchaser in a business case. The methods, data needs, and other issues involved with preparing an economic analysis of the likely financial return on investment in preconception care are presented here. This is accompanied by a review or case study of economic evaluations of preconception care for women with recognized diabetes. Although the data are not sufficient to draw firm conclusions, there are indications that such care may yield positive financial benefits to health care organizations through reduction in maternal and infant hospitalizations. More work is needed to establish how costs and economic benefits are distributed among different types of organizations. Also, the optimum methods of delivering preconception care for women with diabetes need to be evaluated. Similar assessments should also be conducted for other forms of preconception care, including comprehensive care.     

Beyond capitation: how new payment experiments seek to find the 'sweet spot' in amount of risk providers and payers bear

A key issue in the decades-long struggle over US health care spending is how to distribute liability for expenses across all market participants, from insurers to providers. The rise and abandonment in the 1990s of capitation payments-lump-sum, per person payments to health care providers to provide all care for a specified individual or group-offers a stark example of how difficult it is for providers to assume meaningful financial responsibility for patient care. This article chronicles the expansion and decline of the capitation model in the 1990s. We offer lessons learned and assess the extent to which these lessons have been applied in the development of contemporary forms of provider cost sharing, particularly accountable care organizations, which in effect constitute a search for the "sweet spot," or appropriate place on a spectrum, between providers and payers with respect to the degree of risk they absorb.     

Provider organizations at risk: a profile of major risk-bearing intermediaries, 1999

Provider organizations have evolved to function as intermediaries between managed care plans and individual providers. These organizations assume much financial risk and care management responsibilities. We profile the characteristics of these organizations in markets across the country. The data, taken from a 1999 telephone survey of sixty-four entities in twenty markets and from interviews conducted during site visits to four markets, highlight the youth of many of these organizations, the large financial risk and functional responsibilities they bear, and the mixed views they hold about the health plans they contract with in terms of their willingness to delegate the authority, support, and collaboration that accompany risk. Policymakers need to evaluate what this means for oversight of managed care.     

Waste and neglect: fraud and abuse in the health care industry

Fraud is not only illegal, but it also increases the cost of health care, reduces the quality of services, and, when the defrauded party is the government, raises taxes. Federal and state law enforcement agencies have tried (and failed) to combat the problem single-handedly, but without the assistance of health care industry members, law enforcement agencies will never find an effective solution. As health care professionals, nurse executives have a responsibility to their patients and their country to make every effort to rid their organizations of fraudulent behavior.     

Small changes lead to large effects

It appears that the U.S. consumer has finally awakened the giant (e.g., Wal-Mart, Target, CVS, Walgreens). Healthcare is now providing its first consumer-driven business model. It is an opportunity for the healthcare system to better serve the needs of the community and improve access to health services. CCCs can be the catalyst that is needed to improve deliverables in primary and urgent care. It can also be the role model for price transparency and be a part of a long-term investment strategy for many healthcare organizations. As with most business opportunities, there is risk. Entering the retail clinic arena may not be the correct path for all health systems, but for some it may present a viable business opportunity and a chance to be on the cutting edge of the growing consumerism movement in our country.     

The quest for quality and productivity in health services

The leaders of health care organizations across the country are facing significant pressures to improve the quality of their services while reducing the rate of cost increases within the industry. Total Quality Management (TQM) has been credited, by many leaders in the manufacturing industry, as an effective tool to manage their organizations. This article presents key concepts of TQM as discussed by quality experts, namely, Deming, Juran, and Crosby. It discusses 12 key concepts that have formed the foundation of TQM implementation at Henry Ford Health System. The process of implementation is presented in detail, and the role of TQM in clinical applications is discussed. Success factors and visible actions by senior management designed to reinforce the implementation of TQM in any organization are presented.     

Critical mandates: prevention and health promotion

Health maintenance organizations are supposed to maintain health, not just contain the cost of treating illness. Prevention and health promotion are critical mandates for managed care organizations, including managed behavioral health plans. More often than not, however, health plans have neglected to include prevention and behavioral health promotion services within their spectrum of covered benefits. In this article, the authors explain why there is a growing trend toward including coverage for prevention and promotion services in managed behavioral health plans, including the financial advantages and cost-containment opportunities that result. The article also illustrates several simple and straightforward models for structuring prevention benefits, managing the utilization and quality of prevention services, and including community-based preventive services organizations in provider networks.     

Corporate image and public health: an analysis of the Philip Morris, Kraft, and Nestlé websites

Companies need to maintain a good reputation to do business; however, companies in the infant formula, tobacco, and processed food industries have been identified as promoting disease. Such companies use their websites as a means of promulgating a positive public image, thereby potentially reducing the effectiveness of public health campaigns against the problems they perpetuate. The author examined documents from the websites of Philip Morris, Kraft, and Nestlé for issue framing and analyzed them using Benoit's typology of corporate image repair strategies. All three companies defined the problems they were addressing strategically, minimizing their own responsibility and the consequences of their actions. They proposed solutions that were actions to be taken by others. They also associated themselves with public health organizations. Health advocates should recognize industry attempts to use relationships with health organizations as strategic image repair and reject industry efforts to position themselves as stakeholders in public health problems. Denormalizing industries that are disease vectors, not just their products, may be critical in realizing positive change.     

Exploring the business case for ambulatory electronic health record system adoption

Widespread implementation and use of electronic health record (EHR) systems has been recognized by healthcare leaders as a cornerstone strategy for systematically reducing medical errors and improving clinical quality. However, EHR adoption requires a significant capital investment for healthcare providers, and cost is often cited as a barrier. Despite the capital requirements, a true business case for EHR system adoption and implementation has not been made. This is of concern, as the lack of a business case can influence decision making about EHR investments. The purpose of this study was to examine the role of business case analysis in healthcare organizations' decisions to invest in ambulatory EHR systems, and to identify what factors organizations considered when justifying an ambulatory EHR. Using a qualitative case study approach, we explored how five organizations that are considered to have best practices in ambulatory EHR system implementation had evaluated the business case for EHR adoption. We found that although the rigor of formal business case analysis was highly variable, informants across these organizations consistently reported perceiving that a positive business case for EHR system adoption existed, especially when they considered both financial and non-financial benefits. While many consider EHR system adoption inevitable in healthcare, this viewpoint should not deter managers from conducting a business case analysis. Results of such an analysis can inform healthcare organizations' understanding about resource allocation needs, help clarify expectations about financial and clinical performance metrics to be monitored through EHR systems, and form the basis for ongoing organizational support to ensure successful system implementation.     

Understanding the health care business model: the financial analysts' point of view

This study focuses on how financial analysts understand the strategy of a health care company and which elements, from such a strategy perspective, they perceive as constituting the cornerstone of a health care company's business model. The empirical part of this study is based on semi-structured interviews with analysts following a large health care company listed on the Copenhagen Stock Exchange. The authors analyse how the financial analysts view strategy and value creation within the framework of a business model. Further, the authors analyze whether the characteristics emerging from a comprehensive literature review are reflected in the financial analysts' perceptions of which information is decision-relevant and important to communicate to the financial markets. Among the conclusions of the study is the importance of distinguishing between the health care companies' business model and the model by which the payment of revenues are allocated between end users and reimbursing organizations.     

Improving the effectiveness of health care and public health: a multiscale complex systems analysis

The US health care system is struggling with a mismatch between the large, simple (low-information) financial flow and the complex (high-information) treatment of individual patients. Efforts to implement cost controls and industrial efficiency that are appropriate for repetitive tasks but not high-complexity tasks lead to poor quality of care. Multiscale complex systems analysis suggests that an important step toward relieving this structural problem is a separation of responsibility for 2 distinct types of tasks: medical care of individual patients and prevention/population health. These distinct tasks require qualitatively different organizational structures. The current use of care providers and organizations for both purposes leads to compromises in organizational process that adversely affect the ability of health care organizations to provide either individual or prevention/population services. Thus, the overall system can be dramatically improved by establishing 2 separate but linked systems with distinct organizational forms: (a) a high-efficiency system performing large-scale repetitive tasks such as screening tests, inoculations, and generic health care, and (b) a high-complexity system treating complex medical problems of individual patients.     

The surprising optimist: why Tom Daschle believes that the country is ready for comprehensive health reform. Interview by Robert Galvin

When Tom Daschle was last a private citizen, Jimmy Carter was president, and the country was embroiled in a debate about how to control health care costs. After a distinguished twenty-six-year career in Congress, Daschle has a lot to say about not only health care costs but overall system reform. With his deep understanding of the inner workings of Congress, Daschle breaks from the prevailing belief that incrementalism is the right approach; comments on the novel use of budget reconciliation to pass reform; and argues that the country, including some business leaders, is ready for comprehensive change with a bigger role for government.     

Competition among hospitals for HMO business: effect of price and nonprice attributes

OBJECTIVE: To investigate patterns of competition among hospitals for the business of health maintenance organizations (HMOs). The study focused on the relative importance of hospital price and nonprice attributes in the competition for HMO business. DATA SOURCES/STUDY SETTING: The study capitalized on hospital cost reports from Florida that are unique in their inclusion of financial data regarding HMO business activity. The time frame was 1992 to 1997. STUDY DESIGN: The study was designed as an observational investigation of acute care hospitals. PRINCIPAL FINDINGS: Results indicated that a hospital's share of HMO business was related to both its price and nonprice attributes. However, the importance of both price and nonprice attributes diminished as the number of HMOs in a market increased. Hospitals that were market share leaders in terms of HMO business (i.e., 30 percent or more market share) were superior, on average, to their competitors on both price and nonprice attributes. CONCLUSIONS: Study results indicate that competition among hospitals for HMO business involves a complex set of price and nonprice attributes. The HMOs do not appear to focus on price alone. Hospitals likely to be the most attractive to HMOs are those that can differentiate themselves on the basis of nonprice attributes while being competitive on price as well.     

Managing the Health Effects of Temperature in Response to Climate Change: Challenges Ahead

Background: Although many studies have shown that high temperatures are associated with an increased risk of mortality and morbidity, there has been little research on managing the process of planned adaptation to alleviate the health effects of heat events and climate change. In particular, economic evaluation of public health adaptation strategies has been largely absent from both the scientific literature and public policy discussion.Objectives: We examined how public health organizations should implement adaptation strategies and, second, how to improve the evidence base required to make an economic case for policies that will protect the public’s health from heat events and climate change.Discussion: Public health adaptation strategies to cope with heat events and climate change fall into two categories: reducing the heat exposure and managing the health risks. Strategies require a range of actions, including timely public health and medical advice, improvements to housing and urban planning, early warning systems, and assurance that health care and social systems are ready to act. Some of these actions are costly, and given scarce financial resources the implementation should be based on the cost-effectiveness analysis. Therefore, research is required not only on the temperature-related health costs, but also on the costs and benefits of adaptation options. The scientific community must ensure that the health co-benefits of climate change policies are recognized, understood, and quantified.Conclusions: The integration of climate change adaptation into current public health practice is needed to ensure the adaptation strategies increase future resilience. The economic evaluation of temperature-related health costs and public health adaptation strategies are particularly important for policy decisions.     

Multiple perspectives on being uninsured and barriers to health coverage in a rural western state

The purpose of this study was to describe the impact of being uninsured and barriers to obtaining health care coverage for people in a rural state. Focus groups and in-depth interviews were conducted with uninsured people, small business owners, health care providers, and key informants (such as state health officials, business leaders, and safety net providers). Uninsured people recognize the difficulties they face trying to obtain insurance and health care because of cost and ineligibility for public programs. Health care providers are frustrated in their care of the uninsured because of inability to obtain needed resources. Small business owners struggle with decisions about whether to provide health insurance or not, and find cost the greatest barrier. The impact of uninsurance on individuals, families, health care providers, and small business owners in a rural state is great, both economically and emotionally. Comprehensive approaches must be taken to increase access to health insurance and health care.