Balance Scorecard of a Hospital

Please see details of the assignment as follows: Questions to be answered after the reading.

Marge Oliphant, the administrator of the South Tifton Hospital, a 150-bed rural hospital, decided to implement the BSC in her hospital. Her approach was to do a pilot test in the materials management department, a nonpatient care area. The manager, Vernon Clance, was a good choice because he had already submitted reports on inventory levels. Clance approached his department by breaking down the scorecard into its customary four areas:
Learning and Growth, Business Processes, Customer Measures, and Financial Measures.

With his staff, Clance arrived at these measures:
Learning and growth
- Staff turnover
- Job satisfaction
- Staff loyalty
- Education (dollars spent)

Business Processes
- Inventory turnover
- Fill rate
- Accuracy rate
- Responsiveness
- Supplier fill rates
- Productivity (deliveries/labor hour)

Customer Measures
- Customer (hospital units) satisfaction

Financial Measures
- Inventory on hand
- Salary expenses
- $/purchase order

Oliphant was impressed with the measurement selection. Clance used job satisfaction and customer satisfaction measurements that he found in a book. Basically, they measured, on a scale from 1 to 5, how happy a person was with the present position, pay, facilities, and so on. The materials management customers were the
individual units that received supplies on a daily business. They were surveyed on the responsiveness and accuracy of the supplies they received. Clance did detect a 93% fill rate (the percentage of orders successfully filled) in the first month, and that became the target of improvement for the next month.

Oliphant then turned to a patient care unit, the intensive-care unit (ICU). This was a 12-bed unit, not as frenetically paced as the emergency room, although the
patients were in serious condition. Bob Tallent was the unit manager, a business school graduate in charge of the administrative details of the unit. Bob relished the
opportunity to come up with an organized measurement scheme and, with the assistance of the staff, devised these measurements:

Learning and growth
- Nursing turnover
- Staff turnover
- Training and education dollars
- Job satisfaction
- Staff loyalty

Clinical and business processes
- Medical errors
- Clerical errors
- In-processing
- Out-processing
- Billing speed
- Responsiveness
- Productivity index

The Balanced Scorecard Approach to Operations

Customer
- Patient satisfaction
- Family satisfaction
- Physician satisfaction

Financial
- Revenue per patient
- Cost per patient
- Salary expenses

After 2 months in the ICU and 4 months in materials management, Oliphant extended the trial to Accounts Receivable. The program was intended to go hospital-wide at the end of the year.

Discussion Questions
1. Do these areas give an accurate description of what is important in materials management
and the ICU?

2. What issues in each area would be important to Accounts Receivable?

3. If the hospital administrator wanted a global scorecard, what would that look like?