Balancing care and performance: A guide for medical practice excellence

Healthcare leaders consistently face the challenge of balancing quality care and operational performance. Traditional financial metrics often are insufficient, and practice executives must rethink measurement systems and redesign accounting and finance measures to align strategy with daily activities. Success requires a comprehensive approach that monitors both financial and nonfinancial, enabling leaders to adapt and achieve long-term success.

The balanced scorecard (BSC), a strategic planning and management system originally developed by Robert Kaplan and David Norton, provides a framework for achieving this equilibrium.¹ The BSC helps organizations translate vision and strategy into actionable objectives.

This article will guide healthcare executives, practice managers, quality improvement teams, practice administrators and medical practice managers through the steps necessary to implement a BSC effectively.

Implementing the balanced scorecard

For medical practices, implementing a BSC can transform how they manage and monitor performance, ensuring that patient care remains at the forefront while operational goals are met. 

Step 1: Articulate a clear vision and strategy

The foundation of a BSC begins with a clear and compelling vision and strategy. This vision should encapsulate the long-term aspirations of the medical practice, outlining what the practice aims to achieve in terms of quality care, patient outcomes and operational efficiency. The strategy should provide a roadmap of how the practice intends to achieve these goals, detailing specific initiatives and actions.

Step 2: Identify performance categories

Once the vision and strategy are established, the next step is to identify the performance categories that link the vision and strategy to measurable results. The BSC typically includes four main categories: financial performance, patient satisfaction, internal processes, and learning and growth. These categories ensure a holistic approach to performance management, addressing both financial and nonfinancial aspects.

Step 3: Establish objectives that support the vision and strategy

For each identified performance category, establish clear and specific objectives that align with the practice’s vision and strategy. These objectives should be SMART (Specific, Measurable, Achievable, Relevant, and Time-bound) to ensure they are actionable and trackable.

Example:

• Financial objectives: Increase annual revenue by 10% through improved patient retention and acquisition strategies by end of Q3, 2024.
• Patient satisfaction objectives: Achieve a 95% patient satisfaction rate by enhancing the overall patient experience and reducing wait times by end of Q2, 2024.
• Internal process objectives: Reduce surgery turnaround time by 20% to enhance operational efficiency and patient throughput by end of Q1, 2024.
• Learning and growth objectives: Implement a continuous professional development program for all staff members to improve skills and knowledge by end of Q4, 2024.

Step 4: Develop meaningful and effective key performance indicators

As part of a comprehensive performance framework, practice leaders should establish a series of key performance indicators (KPIs) that can provide greater insight into the strengths and weaknesses of their practices. By setting specific goals and tracking progress against those goals on an ongoing basis, leaders can make better decisions on how to improve practice operations or allocate resources more effectively. Additionally, since KPIs are quantitative measurements, they can be compared against industry benchmarks or competitors for a deeper insight into performance optimization opportunities. When developing KPIs, leaders should consider two types: 

1. Lagging indicators — Lagging indicators are metrics that showcase how well the organization has done in the past. These metrics typically show whether an action was successful or unsuccessful after it has been completed or implemented. Examples of lagging indicators include financial statements such as balance sheets, income and cash flow statements, sales numbers or any other metric that indicates post-performance success or failure. 
2. Leading indicators — Leading indicators are metrics that help leaders predict future performance. These metrics are often predictive in nature, that signal what will happen in the near future if certain conditions are met or continue. Examples of leading indicators include customer satisfaction surveys, feedback from employees, market research data or sales projections. 

By measuring these metrics regularly and adjusting organizational strategy accordingly, leaders can take proactive action before problems become major issues. For example, if patient satisfaction scores start dropping on a regular basis, practice leaders can quickly implement new strategies or processes to address any underlying issues that may be causing the drop in satisfaction scores.

Step 5: Secure organization-wide acceptance of the KPIs

For the BSC to be successful, it is crucial to ensure companywide acceptance and buy-in. This involves communicating the importance and benefits of the BSC to all staff members and ensuring that everyone understands how their roles contribute to achieving the strategic goals.

Step 6: Create appropriate budgeting, tracking, communication and reward systems

To support the BSC, it is important to create appropriate systems for budgeting, tracking, communication and rewards. Practice leaders must allocate resources to initiatives that drive performance in the identified categories, establish systems to monitor progress and communicate results regularly. Additionally, the leaders should develop reward systems that recognize and incentivize staff contributions to achieving the BSC objectives.

Step 7: Collect and analyze performance data

Regularly collecting and analyzing performance data is critical to compare actual results with desired performance. This analysis helps identify areas of improvement and ensures that the practice remains on track to achieve its strategic goals.

Step 8: Establish a process for communicating results

Establishing a clear process for communicating results across the organization is essential. Transparent communication ensures that everyone is aware of the practice’s performance and can contribute to continuous improvement.

Prerequisites for success when implementing the BSC

Implementing a BSC requires several prerequisites to ensure its success:

1. Leadership support and governance structure: Strong leadership support and a well-defined governance structure are critical. Leaders must champion the BSC and allocate the necessary resources for its implementation.
2. Stakeholder buy-in: Securing buy-in from all stakeholders, including staff, patients, and external partners, is essential. Engaging stakeholders in the development process and addressing their concerns can foster commitment to the BSC.
3. Accountability and ownership: Clear accountability and ownership of the BSC measures are necessary. Assigning responsibility for each objective and measure ensures that everyone knows their role in achieving the strategic goals.
4. Discipline and consistency: Maintaining discipline and consistency around reporting results is vital. Regularly scheduled reviews and consistent data collection practices ensure the reliability and accuracy of performance data.
5. Lessons learned and continuous improvement: A culture of continuous improvement and learning from past experiences is crucial. Regularly reviewing the BSC and making necessary adjustments based on lessons learned helps the practice adapt and evolve.

Challenges and solutions

While implementing a BSC can significantly benefit a medical practice, it is not without its challenges. Understanding these challenges and developing strategies to overcome them is crucial for success.

1. Resistance to change: Staff may resist the implementation of a new system due to fear of the unknown or perceived additional workload.
   • Solution: Communicate the benefits of the BSC clearly and involve staff in the development process to gain their buy-in. Providing adequate training and support can also alleviate fears and build confidence.
2. Data collection and management: Collecting accurate and timely data can be challenging, especially in a busy medical practice.
   • Solution: Invest in robust data management systems and provide training to staff on data collection and reporting procedures. Automating data collection processes can also enhance efficiency and accuracy.
3. Alignment with strategic goals: Ensuring that all measures and objectives align with the overall strategic goals of the practice can be complex.
   • Solution: Regularly review and update the BSC to ensure alignment with strategic goals. Involve senior leadership in these reviews to maintain focus on long-term objectives.

Conclusion

Implementing a BSC in a medical practice offers a structured approach to aligning vision and strategy with performance measures. By following the outlined steps and ensuring the necessary prerequisites, medical practices can enhance their operational efficiency, improve patient satisfaction and achieve their strategic goals. The BSC not only provides a comprehensive framework for performance management but also fosters a culture of continuous improvement, ensuring long-term success in the ever-evolving healthcare landscape.

The BSC is more than just a management tool — it is a philosophy that integrates strategic planning, performance management and organizational development. For medical practices striving to excel in a competitive and dynamic environment, adopting a BSC approach can lead to sustainable growth and excellence in patient care. By embracing this comprehensive framework, medical practices can not only meet but exceed their strategic objectives, ultimately leading to better health outcomes for their patients and a stronger, more resilient organization. 

Notes

1. Kaplan RS, Norton DP. “The Balanced Scorecard - Measures that Drive Performance.” Harvard Business Review. January-February 1992. Available from: https://bit.ly/3M7GAa9 .