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The balanced scorecard in healthcare is a performance management tool used by healthcare organizations to identify and track strategic objectives. The balanced scorecard was first developed by Dr. Robert Kaplan and Dr.David Norton in the early 1990s to help align a business’s organizational activities with its strategy. It provides a framework for translating an organization’s strategy into measurable objectives and performance indicators in four key areas:

  • Financial
  • The needs of customers and patients
  • Internal processes
  • Learning and growth

The scorecard was then adopted by healthcare organizations of all sizes in order to improve communication of strategy, track progress towards goals, and identify areas for improvement. When used correctly, the balanced scorecard in healthcare can be a powerful tool for strategic planning and management, as it enables leaders and decision-makers to:

  • Align their strategic plan with business activities: Leaders can define and track progress towards goals by monitoring key performance indicators in each of the four key areas mentioned above.
  • Get an overview of the execution of their strategic plan: By tracking progress across all four key balanced scorecard areas, decision-makers can identify areas where performance is lagging and take corrective action. 

The balanced scorecard in healthcare helps leaders communicate the strategy to all members of the organization. This is highly beneficial as it ensures that all healthcare and long term care staff understand their roles, responsibilities, and contributions towards the organization’s shared goals, which is an essential part of team building in long term care facilities. 

It is worth noting that healthcare facilities are under immense pressure to provide high-quality, cost-effective care. This particularly holds true for long term care facilities, which are regulated by the U.S. Department of Health and Human Services (HHS) via the Centers for Medicare and Medicaid Services (CMS).

Long term care organizations, in particular, are increasingly being held accountable for their performance via strict rules and regulations and are expected to have effective long term care software that is HIPAA compliant. Hence, a balanced scorecard can help healthcare organizations manage and improve their performance by providing a clear and concise way to track progress and identify areas of improvement.

In addition to the aforementioned benefits, a balanced scorecard in healthcare facilities helps to:

Align the activities of all departments in the facility

Leaders can use a balanced scorecard to align various department activities in a healthcare facility with one another. By creating a common language and framework, the balanced scorecard ensures everyone is working towards the same goal. The balanced scorecard format also allows leaders to see how their goals are interlinked with those of other departments, highlighting potential collaboration opportunities.

Improve transparency and accountability

In large healthcare facilities, employees don’t always understand how their roles and responsibilities contribute to the organization’s success. To make matters worse, some healthcare facilities fail to communicate the organization’s strategy and goals to their staff members, which only makes it harder for the goals to be achieved.

A balanced scorecard in healthcare can help to improve transparency and accountability in long term care facilities by providing a clear way for caregivers to track their progress and identify areas of improvement. When the team understands the organization’s goals and how their actions contribute to these goals, they are more likely to hold themselves accountable. Additionally, by using the balanced scorecard, leaders can communicate the organization’s strategy to the team, which is essential for team building in long term care facilities.

Simplify performance management and measurement

One of the main challenges that large healthcare organizations face is big data. With so much data being collected, it can be challenging to know what to track and how to use data effectively to improve performance. The balanced scorecard in healthcare simplifies performance management by identifying the key indicators that are most important for each area of the business and focusing on the areas in which data will have the greatest impact.

In addition, the balanced scorecard provides a clear and concise way to measure progress, which is extremely important in healthcare organizations where leaders need to identify areas of improvement and quickly take corrective action.

The 3 Nursing Home Quality Measures

Long term care facilities will use a balanced scorecard to ensure that their facility performs or ranks well in the nursing home quality measures that are used by the CMS, as this performance can affect census levels. Hence, a balanced scorecard in healthcare should ideally be used by facilities based on these three quality indicators.

1. Nursing Home Deficiency Citations

Surveyors from the state department of health and social services or CMS contractors write nursing home deficiency citations after conducting an on-site visit to a nursing home. All deficiency reports are published on the Nursing Home Compare website. Prior to this, though, surveyors will discuss findings with administrators and directors of nursing.

Citations are not fines, but they are public records that are used by families and other interested parties when choosing a nursing home. Nursing homes with multiple deficiencies are often considered to be lower quality than those with fewer or no deficiencies.

There are three nursing home deficiencies that are listed in a surveyor’s chart: immediate jeopardy, actual harm, and potential for more than minimal harm. Immediate jeopardy deficiencies are the most serious and can result in a nursing home losing its Medicaid or Medicare certification and being closed down. Actual harm deficiencies involve problems that have already resulted in some harm to residents. Potential for more than minimal harm deficiencies are issues that could lead to substantial harm if not corrected.

Nursing home deficiency citations are often used to identify problem areas in a facility so that they can be corrected. However, it is essential to note that not all citations are created equal. Some citations may be minor infractions that do not seriously threaten residents, while others may be more serious and could lead to actual harm. Ultimately, it is up to the nursing home to correct all deficiencies and maintain a high level of care for its residents.

2. Skilled Nursing Facility (SNF) Quality Reporting Program (QRP)

The Skilled Nursing Facility (SNF) Quality Reporting Program (QRP) is a CMS program that requires SNFs to report data on specific quality measures to receive reimbursement from Medicare. The SNF QRP quality measures were selected based on input from various stakeholders, including SNF providers, residents, family members, advocates, and CMS experts.

Data for the SNF QRP are collected and submitted through:

Nursing home staff analyzing their nursing home quality measures
Data for the SNF QRP are collected and submitted through: Minimum Data Set (MDS) 3.0, the Centers for Disease Control and Prevention (CDC) National Healthcare Safety Network (NHSN) and the Medicare Fee-For-Service Claims.

SNFs must submit data on these quality measures to the CMS to participate in the SNF QRP. If an SNF does not submit data or does not meet the data submission requirements, they will be subject to a two percent payment reduction. The purpose of the QRP is to promote quality improvement in SNFs and to ensure that Medicare beneficiaries receive the highest quality of care possible.

The SNF QRP is an integral part of the Skilled Nursing Facility Five-Star Quality Rating System. The CMS uses the rating system to help beneficiaries and their families compare SNFs. The system takes into account quality measures from the QRP as well as other data sources in generating a star rating for each SNF.

3. The National Nursing Home Quality Improvement (NNHIQ) Campaign

The NNHIQ Campaign is a national effort to improve the quality of care in nursing homes. It is led by the CMS and was launched in 2006. Previously known as the Advancing Excellence Campaign, this campaign is designed to improve the quality of care in nursing homes by focusing on:

  • Medication management
  • Infection prevention and control
  • Residents’ rights
  • Food and nutrition
  • Restraints
  • Pain management
  • Staffing levels and training

Contact us here if you would like to test drive our long term care EHR to improve your facility’s quality reporting.

5 Steps To Successful Balanced Scorecard Implementation

An incorrect visualization of a balanced scorecard in healthcare.
An incorrect view of a balanced scorecard

During balanced scorecard implementation, a common mistake that healthcare leaders make when visualizing the balanced scorecard is as shown:

This approach to implementing a balanced scorecard in healthcare is wrong. The balanced scorecard is not a collection of equally weighted viewpoints. Rather, it’s a method for moving from the bottom to the top of each perspective with the goal of delivering the finest overall product or service.

If a long term care facility wants the benefits of a balanced scorecard in healthcare and has already implemented an effective long term care EHR, then it should first view its process as such:

A visualization of correct balanced scorecard implementation in healthcare
Visual of what a balanced scorecard in healthcare should look like.

As shown in the image, the ultimate goal is financial (profitability), which is something that all businesses aspire to have. By having such a balanced scorecard in healthcare, nursing home quality measures are observed and both census numbers and profits increase.

There are five steps that healthcare leaders can take to ensure that a balanced scorecard is successfully implemented and that the quality measures in nursing are observed:

1. Agree on the used terms and their meanings

As an example of terminology that may be confusing, let’s look at “balanced scorecard” and “KPI scorecard.” These two words don’t have the same meaning. “KPI” stands for key performance indicators, which are a subset of balanced scorecards. “Balanced scorecard” is the name of the entire strategy, while “KPIs” are the metrics used to help implement it.

To avoid confusion and use these terms appropriately, it is important that everyone in the organization agrees on the meaning of both balanced scorecards, KPIs, and other confusing terminology that the healthcare may use (such as the difference between a long term EHR and an EMR).

2. Know the goals and the expected results

The balanced scorecard is designed to help an organization achieve its goals. It’s important that everyone in the organization understands what those goals are and how the balanced scorecard will help to achieve them.

For example, if the goal is to increase patient satisfaction, then the balanced scorecard should be designed with that in mind. It should include measures that will increase patient satisfaction, such as lowering waiting times and improving staff friendliness and cleanliness.

If the goal is to improve financial performance, though, then a balanced scorecard should be created to include measures that will help to improve financial performance, such as revenue growth, cost reduction, and profitability.

3. Have an open discussion on the strategy to be used to achieve the set goals

A balanced scorecard in healthcare is all about strategy and execution to achieve set goals. this means that all staff should be included during strategy creation, as each individual role has a part to play.

This means that staff must:

  • Agree on the company vision
  • Define the strategy (challenges the organization faces and potential solutions)
  • Describe the strategy in detail (what role each healthcare staff plays)

4. Add KPIs and an action plan

After the strategy has been created, it’s time to add KPIs and an action plan. The KPIs should be specific, measurable, achievable, relevant, and time-bound (SMART). They should also be aligned with the organization’s goals.

The action plan is a roadmap that details how the balanced scorecard will be implemented. It should include who is responsible for each task, the completion date, and the allocated budget for the task.

5. Check that there is a cultural shift

After the implementation of a balanced scorecard in healthcare, leaders should notice a cultural shift in their facilities. They should see a greater focus on the quality of care and teamwork, and staff should feel more motivated and empowered to make decisions.

If leaders do not see this shift, then it’s likely that the balanced scorecard has not been properly implemented. If this is the case, they may need to go back to the drawing board to make sure that the balanced scorecard in healthcare is properly implemented for the organization’s goals to be achieved.

Criticism of the Balanced Scorecard in Healthcare

The balanced scorecard in healthcare is an essential tool for organizations that are looking to improve their performance. By aligning the activities of all departments, improving transparency and accountability, and simplifying performance management, the balanced scorecard can help healthcare organizations to provide high-quality, cost-effective care.

It is worth noting, though, that there are some criticisms that have been raised about the balanced scorecard. These criticisms include:

  • It takes too much time to implement a balanced scorecard in healthcare
  • It is not always fully understood by healthcare staff
  • A balanced scorecard in healthcare fails to take into account any sudden industry changes, such as new regulations.
  • It is too focused on the internals of an organization and does not focus on external factors

These criticisms may seem valid, but they only apply when the balanced scorecard is viewed as a reporting framework rather than a management and cultural shift framework. If applied correctly, though, the above criticisms do not hold. Instead, leaders can expect to reap the benefits of implementing a balanced scorecard in healthcare.

For more on recent trends in long term care, read our blog and subscribe to the LTC Heroes podcast.

Elijah Oling Wanga
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