Applying a Balanced Scorecard to Health Care Organizations

Abstract

This article looks at the design and implementation of an integrated performance measurement system at a nonprofit community hospital–Community Memorial Hospital of Menomonee Falls, Wisconsin. In particular, the article discusses how the hospital developed and applied a balanced scorecard. Over the past decade, Community Memorial Hospital faced both market deregulation and strong competition. It responded to these environmental pressures by joining an integrated health service delivery network with other hospitals, physicians, and institutional purchasers of health care services. Ultimately, the hospital's management implemented a balanced scorecard. Its goals were to help translate the vision for the hospital and to gain consensus; to communicate the hospital's objectives, set goals, and link strategies; to allocate the hospital's resources and establish milestones; and to provide feedback and ensure learning. The hospital's balanced scorecard consists of one composite financial performance measure and 12 nonfinancial performance measures. Each performance indicator reflects a quantitative measure of a particular strategic objective. These performance measures are expressed in terms of actual performance as a percentage of expected performance and are integrated into a single, overall performance score through a subjective weighting scheme. The balanced scorecard approach to performance measurement at Community Memorial Hospital has provided an efficient and effective way to link day-to-day operating activities to the hospital's strategic objectives. © 2000 John Wiley & Sons, Inc.