US Healthcare and the Potential Benefit the Balanced Scorecard

Healthcare system is large, spending accounted for 17% of the GDP in 2011 and was expected to increase (Kaplan & Porter, 2011). By 2014 this had risen to 17.5% of GDP, with a monetary value of $3 trillion, equal to $9,523 per capita, employing approximately 10 million people within the sector (CDC, 2016). The largest single costs are those associated with hospitals, accounting for 32.1% of all healthcare expenditure, providing approximately 1,200 stays for every 10,000 members of the U.S. population, with physician and clinical services accounting for 19.9%, prescription drugs 9.8% and nursing care/continuing care retirement facilities 5.1% (CDC, 2016). The cost of healthcare far exceeds costs seen in other high income countries, for example in 2013 when healthcare costs were 17.1% of GDP in the U.S., they were 11.6% in France, 11.5% in Sweden and 8.8% in the UK (Squires & Anderson, 2016). Despite this higher spending level, there are poorer healthy outcomes and life expectancy compared to other developed nations (Squires & Anderson, 2016).

There are numerous reasons for the differential, including a higher use of technology in the U.S. a, but there are also higher healthcare process (Squires & Anderson, 2016). The structure of the healthcare industry in the U.S. is different, with healthcare provided through private decentralised suppliers, without any significant Federal Presence. There are different ownership structures and organisation type. Of the 5,627 hospitals register in the U.S., 4,926 are community hospitals, with 213 Federal hospitals, 403 non-Federal psychiatric hospitals, 75 non-federal long-term care hospitals, and 10 institutional hospitals, such as prison hospitals will contribute in families et cetera (AHA, 2016). Of the 4926 community hospitals, 2870 operate as nonprofitmaking, 1053 are for profit facilities, and 1003 are operated by state or local government as community hospitals (AHA, 2016). The majority of hospitals are located in urban areas, with 3071, and only 1855 or in rural areas (AHA, 2016). Committee hospitals are part of the larger group, with 3183 being part of a system, where membership is made up of at least three different hospitals, and 1690 part of a network, working with other agencies (AHA, 2016).

This indicates the fragmentation within the U.S. health service. With this in mind, it may be unsurprising that Kaplan & Porter, (2011) argue that one of the main problems with the service is the inability to accurately cost the way in which healthcare is delivered resulting in reimbursement that is based on inaccurate, or arbitrary assumptions regarding care. Furthermore, they argue that where different elements of the service cannot be measured accurately, there are likely to be misunderstandings regarding the way in which costs are incurred, as well as reduced ability to improve performance or reduce costs (Kaplan & Porter, 2011). At One approach which may be utilised to help improve control over healthcare, by providing accurate input information including consideration is the use of the balanced scorecard (BSC). This has been demonstrated as useful, for example Motorola reduced costs by trimming 33% of the time of their manufacturing cycle using results from the BSC (Morgan, 1998). The BSC can be designed to meet the needs of different organisation, and also used as a tool for benchmarking, while giving a holistic view of the organisation. Performance is measures on four dimensions; financial, internal business processes, learning and growth, and customer (Kaplan & Norton, 1996). Each dimension will have different measures, set against objectives and targets that are directly linked to the vision and strategy, and maybe benchmarked against other similar facilities. For example, it may be determined that the customer satisfaction level should be measured as part of the customer perspective, with measures taken from a customer satisfaction survey, and a predetermined average score to be attained. Another approach may be to measure the number of patients taking part in preventative programs in order to reduce treatment costs, with the measures being the number of patients, measured against previous years. Business processes may include measures of quality of care, and quality of outcomes, financial measures may include measurements such as the average cost per case/per visit incurred by the facility, the operating profit margins, and patient safety measured through accident logs, examining number and cost of those accidents. Learning growth objectives may be considered in the context of training development, including a number of individuals gaining post-qualification training, number of training hours, as well as measures such as the level of innovation within the facility. By bringing all these elements together, a good overview may be gained of the facility.