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    Balance Scorecard of a Hospital

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    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

    - Patient satisfaction
    - Family satisfaction
    - Physician satisfaction

    - 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?

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    Solution Preview

    The areas chosen by Olivant to study accurately describe the importance of key factors in each of the units, materials management and ICU. The materials management unit represents the supply side of the organization. The ICU unit represents the demand side of the organization. Clance's method of evaluating the materials management unit measures the most important aspects of the unit, in terms of function within the organization and the level in which it may support the hospital. Fill rates measure how well the unit supports processes within other units in the hospital. Employee satisfaction is an indicator of employee performance, which may directly affect fill rates and accuracy. Customer satisfaction is an indicator of how well the materials management supports the needs of the organization as well. The financial measurement indicates the level of efficiency in which the unit operates. This may be an indicator of how much training may be needed or how successful training of employees in the unit is, in developing skills to meet the needs of the organization. It may also indicate whether relationships with current suppliers support the goals of the organization.

    The ...

    Solution Summary

    The expert examines balance scorecards of a hospital. The opportunity of organized measurement schemes are determined.