What is a Balanced Scorecard (BSC)? Can your practice benefit from implementing the concept? At our 14-surgeon orthopaedic practice, implementing a BSC resulted in a more systematic focus on key performance metrics that impact the patient experience and monitor the effectiveness of a range of internal processes.

The BSC is a reporting and strategy tool that has been used since the 1990s in a range of industries outside of healthcare. It was developed in response to a belief that management focused excessively on short-term financial metrics—revenue, overhead, and operating margins—to the exclusion of other factors that were critical to the long-term health of the enterprise. Financial performance is always a trailing indicator, and the BSC seeks to bring into focus the service and strategic factors that combine to ensure ongoing success. For most practices with an increasing reliance on health informatics, the problem can be too much data, and the BSC can be a vehicle to distill that mass of information and help focus on what is really important.

Creating the scorecard
The BSC can be visualized as four domains: Organizational Knowledge and Learning, Internal Processes, Patient Experience, and Financial (Fig. 1).These domains interrelate strategically, each building on the other. Well-trained, reliable staff enable the effective execution of complex internal processes, which increases patient and provider satisfaction, leading to increased practice financial success.

Our management team held a series of brainstorming sessions to explore each of these domains and determine what set of outcomes would reflect success in each area and what processes were critical to achieve those outcomes. For example, one of the desired outcomes under the domain of Patient Experience was to improve patient access.

We then worked to identify available metrics that would provide a meaningful indication of the practice’s performance in these areas (Table 1).Within the goal of improving patient access, for example, one of the metrics selected was the number of patients who were seen within 7 days of contacting the office for an appointment. Throughout the process, we used the following guiding principles to shape our decisions:

• Because we did not want to create a significant new burden for practice staff, we gave preference to data that were already being generated, although perhaps not being reviewed on a consistent basis. Measures that require an overstressed medical assistant to remember to make a hash mark are inherently unreliable.
• Likewise, because many measures will vary from period to period simply because of changes in the tempo of practice demand, we decided to gather the data for the BSC on a quarterly rather than a monthly basis. This also provided a more stable sample size for measuring progress.
• Just because measures have no externally validated benchmarks does not mean that they are not useful and valid proxies for performance. The goal of the BSC is to track meaningful measures over time in a consistent way. If results change significantly in a positive or negative direction, we wanted to try and understand the cause.
• We tried to choose measures where the connection between management’s decisions and the metric’s performance was clear.

Metrics and changes
Including volume metrics in the BSC is important to aid in interpreting why measures may have changed. For example, a 10 percent increase in appointment calls during a period could result in an understandable increase in the average time to answer a call and could indicate the need to add another scheduler. On the other hand, if appointment calls decreased, yet average answer times increased, then staff productivity or training might need to be assessed.

Table 1 shows the outcome areas and the metrics our practice chose to measure.

In the Financial domain, our goal was to maximize returns to stakeholders. This is generally the easiest domain to measure because many financial and productivity metrics already exist in most practices. We focused on tracking resource utilization in relation to practice productivity.

Delivering high-quality, high-touch orthopaedic care was our goal in the Patient Experience domain. Although this domain could encompass a wide range of criteria, we chose two fundamental questions regarding patient satisfaction that could be gathered at low cost through simple internal surveys.

In the domain of Internal Processes, we identified areas in which effective processes such as appointment scheduling and provider availability were crucial to the overall functioning of the practice. A wide range of metrics that reflect performance in these key process categories are available.

The last domain—Knowledge and Learning—tends to be the most challenging from a measurement perspective, and some measures may only be meaningful when calculated once or twice a year. Staff absenteeism, however, is an important issue that can negatively affect practice performance if it is not managed.

Summary
Administrative teams in many practices spend most of their time troubleshooting operational processes, managing human resources, and responding to a wide range of time-sensitive requests. Not uncommonly, anecdotes rather than measured criteria create a collective impression of the responsiveness and quality of service for the practice that may not always be accurate.

The BSC provides a structure that ensures that management maintains a focus on measuring service-related performance and creates a fact-based context within which both management and physician stakeholders can evaluate service levels. Our practice’s Board of Directors regularly receives a BSC report comparing the most recent quarter to the prior quarter, as well as to the same period in the previous year.

The BSC process resulted in increased engagement and ownership for the management team and was a positive exercise that created agreement about what processes and results are really important to our success. In some cases, the BSC may also enable physicians to address areas for improvement among medical staff. For example, reporting on the incidence of late dictation by systematically measuring and sharing everyone’s performance is different than isolating and focusing on a single physician. Finally, BSC measures can be leveraged to create goals for individual work groups.

The measures do not need to be as extensive as those adopted for our practice, and a practice’s measures will necessarily reflect the data available from its information systems. More important than a particular set of metrics is that the practice attempts to measure and monitor information that reflects the health of important operational processes and how well patient and provider expectations are being met.

Chris Dugger is executive director for the New England Orthopedic Surgeons in Springfield, Mass., and the American Association of Orthopaedic Executives representative to the AAOS Practice Management Committee.