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Duke Children's Hospital Implementing the Balanced Scorecard

The internal business process perspective of the balanced scorecard turns attention to the aspects of the organization's operations that are within the possibility of direct control by its managers and employees. Here is a useful brief summary of the approach:

Niven, P. (N.D.) Internal Process perspective. EPM Review. Retrieved May 17, 2010, from

Analysis of business processes is closely bound up with the assessment of quality; in fact, most of the literature in this area is dominated by the vocabulary of the quality analysts. The Chartered Quality Institute offers a good overview of product and service quality concerns, and how they affect customer loyalty and satisfaction (note the intersection of the Business Process and Customer Perspectives). Here is a useful summary of this approach that meshes nicely with the internal business process perspective; although it does not explicitly mention the balanced scorecard, you should have no trouble applying its recommendations to your case analysis here:

CQI (2008) Introduction to Quality. The Chartered Quality Institute. Retrieved May 17, 2010, from

Our example in this case is Duke Childrens Hospital in Raleigh-Durham NC. Here's how this process has been described:

The authors describe their experience in developing a strategy-focused organization using the balanced scorecard methodology. They achieved this at Duke Children's Hospital by aligning the clinicians and administrators around a single integrated platform that linked improving business processes with achieving quality clinical outcomes. By organizing in this manner, they reduced cost by $30 million and increased net margin by $15 million while improving outcomes and staff satisfaction. This article describes a methodology to achieve strategic control of the organization, increase the knowledge of key stakeholders, and transform the organization to optimize the organization's performance.

The article from which this summary is taken can be found here:

Meliones, Jon N.; Ballard, Richard; Liekweg, Richard; & Burton, William (2001, April). No mission (<-->) no margin: It's that simple. Journal of Health Care. 27(3): 21-30. Retrieved May 17, 2010, from

For this solution carefully review this article, and then (in 3-4 pages) prepare an analysis of how Duke Children's Hospital implemented the balanced scorecard and its apparent effects.

Introduction: What process did Duke Children's Hospital follow in creating a balanced scorecard? Why did the hospital decide to use the balanced scorecard to evaluate its stakeholder relationships and its business processes? What was the reaction of the staff?

Analysis: In the balanced scorecard Duke University Children's Hospital developed, on what internal business process did the hospital focus? What measures were used? What changes were made in that business process?

Conclusion: Describe how the changes in its business processes affected both employees and customers (patients); this involves considering multiple perspectives, both those of participants and those of stakeholders.

Evaluation: Did Duke Children's Hospital do a good job in designing and using its balanced scorecard? Agree or disagree with the issue, then defend your position. Use your readings to help you decide whether the implementation was done well or poorly.

Solution Preview

Duke Children's Hospital (DCH) is an academic children's hospital within the Duke University Health System in North Carolina. The hospital was experiencing an increasing in cost and its average length of stay was over the target. The previous process improvement initiatives were unsuccessful and the staff was dissatisfied. The problem at the DCH was that different groups of people were directing their efforts for welfare of their own self rather than focusing on realizing goals of the hospital. The primary goal of Duke Hospital was to improve patient care while at the same time reduce costs and keep people involved. Thus, to successfully implement clinical improvement strategies, three approaches were outlined-Balanced Scorecard, Six Sigma, and Team Training.
DCH saw that to bring its mission into alignment with stakeholder's relationships, it was necessary to keep them involved in the process of strategic planning and decision making. Balanced Scorecard was used because it aligns all areas of concern DCH had; finance, patient satisfaction, internal business, and staff satisfaction. The staff initially viewed the approach of the hospital to organize them into teams as one which would cause their powerhouse to shift. There was dissatisfaction among staff regarding the systematic approach aimed towards cost reduction. It required a good deal of persuasion, reassurance, and persistence to get the staff involved the implementation process.
The DCH ...

Solution Summary

The solution discusses how the Duke Children's Hospital implements the balanced scorecard.