1

Using the Balanced Scorecard

to Manage Lab Performance
Using the Balanced Scorecard
to Manage Lab Performance
Andrew Bridgeman, MBA Andrew Bridgeman, MBA
DISCLOSURE DISCLOSURE
Relevant Financial Relationship(s)
None
Off Label Usage
None
Relevant Financial Relationship(s)
None
Off Label Usage
None
2
Todays Discussion Todays Discussion
The Balanced Scorecard
What it is
Where it came from
Balanced Scorecard vs. Dashboard
Balanced Scorecard in the Laboratory
Steps to implement
Example - Division of Anatomic Pathology at
Mayo Clinic
Questions/discussion
The Balanced Scorecard
What it is
Where it came from
Balanced Scorecard vs. Dashboard
Balanced Scorecard in the Laboratory
Steps to implement
Example - Division of Anatomic Pathology at
Mayo Clinic
Questions/discussion
Life of a Laboratory Manager Life of a Laboratory Manager
Staffing issues/shortages
Complex technology
Growing supply expenses
Competition for resources
Regulatory constraints
Challenging IT systems
Decreased reimbursements
Multiple stakeholders to satisfy
Planning + Communication + Implementation
A management tool to help = the Balanced Scorecard
3
What is a Balanced Scorecard? What is a Balanced Scorecard?
A well-rounded set of quantifiable measures
derived from an organizations strategy
A well-rounded set of quantifiable measures
derived from an organizations strategy
Scorecard acts as..
measurement system
communication tool
tool to manage
strategy deployment
The Balanced Scorecard
- some history.
The Balanced Scorecard
- some history.
Originated from research on how managers measure
operational performance Kaplan and Norton, 1992
Their findings:
Financial statements are not enough to manage a
business
Managers want a balanced view of both
operational and financial measures
Lack of measures to ensure strategic plans were
being deployed
4
Financial
Objectives
Measures
Targets
Initiatives
Customer
Objectives
Measures
Targets
Initiatives
Learning and
Growth
Objectives
Measures
Targets
Initiatives
Internal Business
Processes
Objectives
Measures
Targets
Initiatives
What must
we excel at
internally?
Are we
performing
financially?
What is
important to
our
customers?
How do we
adapt and
improve?
Vision &
Strategy
The Kaplan
Norton Model
Key Characteristics of the
Balanced Scorecard
Key Characteristics of the
Balanced Scorecard
Quick and comprehensive view of the business
Links vision and strategy to operational activities
Method for aligning organization to common
goals
Quick and comprehensive view of the business
Links vision and strategy to operational activities
Method for aligning organization to common
goals
What you measure is
what you get
5
Balanced Scorecard in Healthcare Balanced Scorecard in Healthcare
Applicable to all types/levels of healthcare
organizations
Henry Ford Healthcare System
Dukes Children Hospital
Department of Anesthesiology, Yale University
Nursing units, Operating rooms, Long-term care centers
Connects practices, outcomes, quality, values,
and costs in a health care organization Castenada-
Mendez, 1998
BSC adopters have improved quality of care and
financial results Park Huber, 2007
Balanced Scorecard vs. Dashboard Balanced Scorecard vs. Dashboard
Balanced Scorecard
Focus: overall
organization
Strategy deployment
Measures versus
strategic goals
Quarterly to monthly
report
Specific design
Dashboard
Focus: can be sub-set of
organization
Operational monitoring
Measures versus specific
operational targets
Monthly to real-time
reporting
User design
Scorecards and Dashboards can co-exist and support
each other
6
Scorecard Implementation Scorecard Implementation
Generic steps for implementing a Balanced
Scorecard (from Niven, Kaplan/Norton)
Steps illustrated using Division of Anatomic
Pathology at Mayo Clinic
Generic steps for implementing a Balanced
Scorecard (from Niven, Kaplan/Norton)
Steps illustrated using Division of Anatomic
Pathology at Mayo Clinic
Steps for Balanced Scorecard Steps for Balanced Scorecard
Step 1 Select the organization level
Step 2 Purpose, vision, and strategy
Step 3 Strategy map
Step 4 Balanced Scorecard: Measuring your
objectives, setting targets, focusing initiatives
Step 5 Aligning organization through cascading
scorecards
Step 6 Implementation and beyond
Step 1 Select the organization level
Step 2 Purpose, vision, and strategy
Step 3 Strategy map
Step 4 Balanced Scorecard: Measuring your
objectives, setting targets, focusing initiatives
Step 5 Aligning organization through cascading
scorecards
Step 6 Implementation and beyond
7
Step 1 Select the Organization
Level
Step 1 Select the Organization
Level
What is your product/service? Who is your
customer?
Clear strategy
Executive sponsorship of Balanced Scorecard
Division of Anatomic Pathology
Interpretation of biopsies, surgical
specimens, cytology, 2
nd
opinion consults for
Mayo clinicians/patients and MML clients
9 labs (i.e. Histology, Cytology, IP, Molecular)
51 pathologists; 300+ allied health staff
Step 2 Purpose, Vision, and
Strategy
Step 2 Purpose, Vision, and
Strategy
Foundation of scorecard
Mission statement why we exist
Values guiding principles
Vision picture of the future
Strategy set of activities to guide the organization to
achieve its vision
Anatomic Pathology Strategy
Mayos Primary Value: The needs of the patient come first
Anatomic Pathologys vision is to deliver high value, patient
centric pathology services through the integration of our
clinical knowledge, research and educational endeavors.
Annual strategic planning involves medical leadership,
administration, and lab management

8
Financial
Objectives
Measures
Targets
Initiatives
Customer
Objectives
Measures
Targets
Initiatives
Learning and
Growth
Objectives
Measures
Targets
Initiatives
Internal Business
Processes
Objectives
Measures
Targets
Initiatives
What must
we excel at
internally?
Are we
performing
financially?
What is
important to
our
customers?
How do we
adapt and
improve?
Vision &
Strategy
The Kaplan
Norton Model
Strategy Map: Anatomic Pathology
Financial
Organization
growth and
learning
Hire and retain
best people
Reduce costs
Customer
Develop new
tests / services
Provide the best
pathology services
Expand knowledge
In science
Improve operation
efficiency
Highest quality
of service
Develop culture of
continuous
improvement
Fast turnaround
time
Funded
mission
Clinical
Practice
Step 3 - Strategy Map
Translating your strategy into specific objectives for
the scorecard
Step 3 - Strategy Map
Translating your strategy into specific objectives for
the scorecard
9
Steps for Balanced Scorecard Steps for Balanced Scorecard
Step 1 Select the organization level
Step 2 Purpose, vision, and strategy
Step 3 Strategy map to define objectives
Step 4 Balanced Scorecard: Measuring your
objectives, setting targets, focusing initiatives
Step 5 Aligning organization through cascading
scorecards
Step 6 Implementation and beyond
Step 1 Select the organization level
Step 2 Purpose, vision, and strategy
Step 3 Strategy map to define objectives
Step 4 Balanced Scorecard: Measuring your
objectives, setting targets, focusing initiatives
Step 5 Aligning organization through cascading
scorecards
Step 6 Implementation and beyond
Step 4 Balanced Scorecard:
Measuring your Objectives, Setting
Targets, Focusing Initiatives
Step 4 Balanced Scorecard:
Measuring your Objectives, Setting
Targets, Focusing Initiatives
Each objective needs a way to measure success
Measure details that need to be considered
How measured exactly?
Where does data come from?
Who owns the measure?
Frequency of reporting?
Each objective needs a way to measure success
Measure details that need to be considered
How measured exactly?
Where does data come from?
Who owns the measure?
Frequency of reporting?
10
Employee retention
Turnover
Employee satisfaction
Education/training
events
Measuring Potential Measures
Revenue
Net income
Expenses
Test turnaround time
Number of events and
number of errors
Number of revised reports
Tests per FTE
Perspective
Customer
Organization
learning and
growth
Financial
Internal
business
processes
How do we know we are
meeting our customers
needs?
Are we performing financially?
What must we excel at
internally?
How will we satisfy both our
customers and our financial
needs?
How do we support our goals and
improve as an organization?
People requirements
Organizational culture
IT infrastructure
Customer satisfaction
Customer retention
Quality reputation
Market share
Test volume
Complaints
Number of tests offered
Profit as % of sales
Revenue from new
tests
Reimbursement rate
Space utilization
New tests introduced
Waste reduction
Regulatory audit results
Continuous improvement
projects
Research projects
Peer reviewed articles
IT improvements
Measures and targets Measures and targets
After measures are determined need targets and
a way to achieve them
Setting targets
Executive interviews
Benchmarking
Historical trends
Executive support for measures and targets
After measures are determined need targets and
a way to achieve them
Setting targets
Executive interviews
Benchmarking
Historical trends
Executive support for measures and targets
11
Initiatives Initiatives
Initiatives - Specific tactics/projects that drive
achievement of objectives
Example
Objective Reduce operational costs
Measure Supply expenses
Target - Achieve annual plan goal
Initiative Supply chain optimization
Develop systematic ordering processes for lab
supplies
Retention rate
Number of IRBs
Number of
publications
Education events
Objectives Measurement
Revenue
Net income
Supply expenses
Tests per FTE
Case TAT
Events & errors
New tests
introduced
Perspective Initiative
Staffing to workload
Practice
standardization
MAPDOG
Supply chain optimization
Target
At plan
At plan
Below plan
Improve
Case specific
targets
Drive to 0
Achieve plan
Customer
Organization
learning and
growth
Financial
Clinical
practice
Provide the best pathology
services
Funded mission
Reduce operational costs
Improve operation efficiency
Fast turnaround time
Highest quality services
Develop new tests
Hire and retain best people
Expand knowledge in science
Develop culture of continuous
improvement
Histology & Cytology
school, PA intern
program
Lean program
Case volumes
Client surveys
Increasing
High marks
Test status
communication
Report delivery pilot
Staffing to workload
Improve
Increase
Increase
Achieve plan
12
AP Division Scorecard AP Division Scorecard
CUSTOMER
Patient case
volumes and
turnaround
time
FINANCIAL
CLINICAL
PRACTICE
Productivity,
Tests/FTE
CLINICAL
PRACTICE
Quality trends:
Events, Errors,
Amendments, Safety
incidents
ORGANIZATIONAL
New tests developed
Research activity
ORGANIZATIONAL
Staff recruitment,
retention, education
Process
improvement
projects
Process Improvement and Balanced
Scorecard
Process Improvement and Balanced
Scorecard
Balanced Scorecard can..
Focus continuous improvement
Scorecard initiatives drive the project priorities
Metrics demonstrate areas needing work
Measuring benefits of continuous improvement
Impacts to organizational metrics
Holding gains after project completion
Lean Tool Box
13
Supply Chain Optimization Supply Chain Optimization
Strategic initiative to improve how supplies were managed
in the labs
Goals:
a. Reduce expense and excess inventory
b. Implement business controls
c. Free up clinical space and staff time
d. Improve vendor quality, cost, delivery and service
Strategic initiative to improve how supplies were managed
in the labs
Goals:
a. Reduce expense and excess inventory
b. Implement business controls
c. Free up clinical space and staff time
d. Improve vendor quality, cost, delivery and service
Manual Inventory System Manual Inventory System
Re-order Point
Supplies Arrive
Item Description
ROP
Item ID Number
Re-Order Qty
Source
14
Automated Inventory System Automated Inventory System
Most of our labs now use an automated inventory
system
Principles are the same as the manual system
with benefit of automatic order placement
Most of our labs now use an automated inventory
system
Principles are the same as the manual system
with benefit of automatic order placement
Chose six key
metrics
Financial and
operational
Designed with
the customer in
mind
Sent out
regularly each
month
Supply Chain Dashboard
15
AP Division Scorecard AP Division Scorecard
CUSTOMER
Patient case
volumes and
turnaround
time
FINANCIAL
CLINICAL
PRACTICE
Productivity,
Tests/FTE
CLINICAL
PRACTICE
Quality trends:
Events, Errors,
Amendments, Safety
incidents
ORGANIZATIONAL
New tests developed
Research activity
ORGANIZATIONAL
Staff recruitment,
retention, education
Process
improvement
projects
Step 5 Aligning Organization through
Cascading Scorecards
Step 5 Aligning Organization through
Cascading Scorecards
Scorecards at each level which supports the
highest level scorecard
Lower levels should focus on what
measures they can impact
Aligns entire organization around
leaderships strategy
Scorecards at each level which supports the
highest level scorecard
Lower levels should focus on what
measures they can impact
Aligns entire organization around
leaderships strategy
16
Lab
Scorecards
Strategic
Plan
AP Balanced
Scorecard
- Strategic
objectives
- Support of
Division goals
- Lab performance
to lab measures
- Performance
to plan
- Division measures
- Performance targets
- Division initiatives
AP Strategy and Execution
Test volumes,
Productivity
Process improvement
projects
Quality: events, errors
Staff retention,
Education
Financials
Test TAT
Test
development
Lab Scorecard
17
Staffing vs. Workload
(1250 blocks, Cut finish at 12 noon, Delivery 2pm)
0
5
10
15
20
25
2
:
0
0

P
M
3
:
0
0

P
M
4
:
0
0

P
M
5
:
0
0

P
M
6
:
0
0

P
M
7
:
0
0

P
M
8
:
0
0

P
M
9
:
0
0

P
M
1
0
:0
0
P
M
1
1
:0
0
P
M
1
2
:0
0
A
M
1
:
0
0

A
M
2
:
0
0

A
M
3
:
0
0

A
M
4
:
0
0

A
M
5
:
0
0

A
M
6
:
0
0

A
M
7
:
0
0

A
M
8
:
0
0

A
M
9
:
0
0

A
M
1
0
:0
0
A
M
1
1
:0
0
A
M
1
2
:0
0
P
M
1
:
0
0

P
M
Hour
F
T
ETotal Techs required
Tech schedule
Lab Initiative Staffing to Workload
1120 block avg
6 days 1200+
TAT Management - Workflow Monitoring
18
Tracks orders for
four different lab
areas
Manage turn
around time
Monitor
rework trends
Packet
summary
Instrument preventative
maintenance info
Lab Dashboard
Lab Dashboard Example Lab Dashboard Example
Easily accessible to the lab staff
Gives a current snapshot of
what is going on
Real-time data to make
operational decisions
The dashboard is updated
real-time and displayed in
the entrance to the lab
19
Cascading Scorecards Key Points Cascading Scorecards Key Points
Measures that directly relate to each other
Lab scorecard supports the Division
scorecard
A powerful way to align entire organization
around common vision and goals
Lab initiatives and activities are focused by
key AP strategic goals
Measures that directly relate to each other
Lab scorecard supports the Division
scorecard
A powerful way to align entire organization
around common vision and goals
Lab initiatives and activities are focused by
key AP strategic goals
Step 6 Implementation and Beyond Step 6 Implementation and Beyond
Data collection and reporting
Develop systematic methods for data
collection
Leverage existing IT resources: LIS, financial
systems, other
Timely publishing/reporting in your scorecard
format
Review process
Investigate areas not meeting targets
Prioritize improvement efforts
Data collection and reporting
Develop systematic methods for data
collection
Leverage existing IT resources: LIS, financial
systems, other
Timely publishing/reporting in your scorecard
format
Review process
Investigate areas not meeting targets
Prioritize improvement efforts
20
Step 6 Implementation and Beyond,
continued.
Step 6 Implementation and Beyond,
continued.
Communication
Publish the scorecard for the organization
Educate staff on what the scorecard is telling
them
Review with leadership - demonstrates daily
activities support the strategic vision
Scorecard evolution
Doesnt have to be perfect first time
Link to annual planning cycle
Periodically review measures for relevance
Communication
Publish the scorecard for the organization
Educate staff on what the scorecard is telling
them
Review with leadership - demonstrates daily
activities support the strategic vision
Scorecard evolution
Doesnt have to be perfect first time
Link to annual planning cycle
Periodically review measures for relevance
Steps for Balanced Scorecard Steps for Balanced Scorecard
Step 1 Select the organization level
Step 2 Purpose, vision, and strategy
Step 3 Strategy map
Step 4 Balanced Scorecard: Measuring your
objectives, setting targets, focusing initiatives
Step 5 Aligning organization through cascading
scorecards
Step 6 Implementation and beyond
Step 1 Select the organization level
Step 2 Purpose, vision, and strategy
Step 3 Strategy map
Step 4 Balanced Scorecard: Measuring your
objectives, setting targets, focusing initiatives
Step 5 Aligning organization through cascading
scorecards
Step 6 Implementation and beyond
21
Summary Benefits Summary Benefits
Balanced scorecard provides a tool to deploy
your organizations strategy, links operational
activity to long term vision
Provides a set of measures to help manage the
organization
Sets direction for supporting work units and
improvement efforts
A communication tool, a common lens to view the
operation
Balanced scorecard provides a tool to deploy
your organizations strategy, links operational
activity to long term vision
Provides a set of measures to help manage the
organization
Sets direction for supporting work units and
improvement efforts
A communication tool, a common lens to view the
operation
References References
Castaneda-Mendez, K., Mangan, K., Lavery, A. (Jan 1998). The Role and
Application of the Balanced Scorecard in Health Care Quality Management.
Journal of Health Care Quality, pp. 10-13.
Kaplan, R. & Norton, D. (1996). The Balanced Scorecard, President and
Fellows of Harvard College
Kaplan, R. & Norton, D. (2001). The Strategy-Focused Organization,
Harvard Business School Publishing Corporation
Niven, P. (2006). Balanced Scorecard Step-By-Step , John Wiley & Sons
Park, E. & Huber, D. (Jan 2007). Balanced Scorecards for Performance
Management. The Journal of Nursing Administration, pp. 14-20.
The Senalosa Group. Pyramid Graphic. Retrieved October 15, 2008 from
http://www.senalosa.com/services/consulting
Zelman, W.N., Pink, G.H, & Matthias,C.B. (2003, Summer 2003). Use of the
Balance Scorecard in Health Care. Journal of Health Care Finance, pp. 1-
16.
Castaneda-Mendez, K., Mangan, K., Lavery, A. (Jan 1998). The Role and
Application of the Balanced Scorecard in Health Care Quality Management.
Journal of Health Care Quality, pp. 10-13.
Kaplan, R. & Norton, D. (1996). The Balanced Scorecard, President and
Fellows of Harvard College
Kaplan, R. & Norton, D. (2001). The Strategy-Focused Organization,
Harvard Business School Publishing Corporation
Niven, P. (2006). Balanced Scorecard Step-By-Step , John Wiley & Sons
Park, E. & Huber, D. (Jan 2007). Balanced Scorecards for Performance
Management. The Journal of Nursing Administration, pp. 14-20.
The Senalosa Group. Pyramid Graphic. Retrieved October 15, 2008 from
http://www.senalosa.com/services/consulting
Zelman, W.N., Pink, G.H, & Matthias,C.B. (2003, Summer 2003). Use of the
Balance Scorecard in Health Care. Journal of Health Care Finance, pp. 1-
16.
22
Questions? Questions?
Balanced Scorecard
Baldwin Lab Services
Measures Freq Target Units jan feb mar apr may jun jul aug sep oct nov dec
Patient Wait time M 80 % 85 85 86 80 82 69 86 71 61 74 69 79
0-3Pediatric success rate M 90 % 93.44 92.80 89.93 94.68 94.12 94.07 93.48 89.21 93.46 89.91 84.88 90.09
4-12Pediatric success rate M 95 % 94.44 95.89 95.65 98.59 97.87 98.77 98.65 97.09 95.00 98.00 90.63 98.67
Adult Patient SatisfactionSurvey - Overall Q % 94.79 97.44 95.63 99.39
Adults patient satisfactionsurvey - Wait Time Q % 95.8 94.9 95.0 100.0
Adults patient satisfactionsurvey - Discomfort Q % 89.6 94.9 92.5 97.6
Adults patient satisfactionsurvey - Courteous Treatment Q % 95.8 100.0 97.5 100.0
Adults patient satisfactionsurvey - Physical Environment Q % 97.9 100.0 97.5 100.0
Pediatric Patient SatisfactionSurvey - Overall Q % 100.0 100.0 100.0 100.0
Pediatric patient satisfactionsurvey -
Courteous &Professionalism
Q % 100.0 100.0 100.0 100.0
Pediatric patient satisfactionsurvey -
Treated inPositive Manner
Q % 100 100 100 100
Cost of redraws M $ 458.64 $ 240.24 $ 305.76 $ 414.96 $ 414.96 $ 338.52 $ 273.00 $ 338.52 $ 294.84 $ 262.08 $ 382.20 $ #####
Inventory waste (tubes) M # 93 140 318 118 251 23 13 21 181 24 103
Inventory Turnover Rate (TURNS) M >13 24.8 23.5 22.8 22.9 23.1 34.3 35.1 36.8 36.6 36.8 36.9
Hand Hygiene M 100 % 100 100 100 100 100 100 95 98 98 100 100
Number of Needle RelatedInjuries M 0 % 0 0 0 0 0 0 0 0 0 0 0 0
Redraws per 1000Collections M <5.0 6.47 3.56 4.07 5.45 5.46 4.21 4.11 4.24 3.85 3.60 5.11 5.84
Number of patient Mis Identification(CEM) M 0 # 0 0 0 1 0 0 0 0 1 1 1
Unlabeledtubes M 0 # 0 0 0 0 0 0 0 0 0 0 0 0
Employee Turnover Rate Q <4.5 % 0.00 2.00 0.00 1.00
Overtime hours M hr 0.50 1.00 3.00 0.00 0.00 1.25 0.25 0.50 0.25 0.00 1.00 0.00
Customer
Financial
Internal Process
Organizational capacity
Area of Concern Not meeti ng target At or better than target