How to use scorecards to change performance problems

Linking application info with financial or other business objectives lets you see how you're doing in key areas, and quickly.


At the 600-bed Maine Medical Centre, information comes pouring in faster than ambulances rushing in with the wounded - or at least it can seem that way. Hospital officials felt they needed a more efficient way to gauge their performance in areas including clinical outcome, patient satisfaction, doctor performance and safety, and then coordinate all of the data and make it available 24/7.

"We had PowerPoints, paper, Excel worksheets, and nothing was standardised," explains Peter Chingos, data analysis manager at the medical centre, in Portland, Maine.

Executives wanted to centralise that information and get data to senior-level administrators in a standardised way so it had the same look and feel, he says. The idea of creating balanced scorecards was tossed around, and, after observing an implementation at Boston's Brigham & Women's Hospital, Maine Medical Centre also decided to deploy Strategic Performance Management software from SAS.

The hospital has created dozens of scorecards. Among the metrics: how often staffers wash their hands and whether a patient with both congestive heart failure and pneumonia is offered a flu vaccination. The scorecards allow hospital staffers to see how these changes - compliance with best practices, process redesign and team building - affect patient care and the hospital's finances. By checking progress on the Intranet, staff members can see how their groups are doing on a monthly basis.

Today there are between 50 and 60 scorecards in use, each with some 25 metrics that give the ability to do subsequent drilldown to get charts, graphs and tables that provide more granular information, says Chingos. The hospital selects measures where improvement is needed, which makes the scorecards a tool for focusing employees on top priorities.

Maine Medical's leadership identifies these measures each year to reflect the hospital's quality - and safety-related strategic priorities. The current batch shows a focus on internal policies as well as regulatory issues, Chingos says.

It's an up-and-coming area. Business intelligence is scorecards' "parent on the software evolutionary tree," notes Ezra Gottheil, an analyst at Technology Business Research in Hampton, N.H. Performance management software is a refinement and a refocusing of business intelligence data so it is now matched up with goals and budgets, he adds.

Companies are using this approach to refine or outright change their current methods for measuring performance. Another way to use the technique is if the competition is gaining market share and they want to figure out what to do about it, Gottheil says.

Digging deep

Officials at Trican Well Service, an oil and gas well servicing company, found they were spending way too much time organising and analysing financial data and then getting the information into a forecasting model for each of the company's worldwide geographic regions. All told, some 80% of the time used for financial data was spent organising the information, and 20% was spent on analysis.

"The immediate problem was replacing" the old budget-forecasting tool - Pillar from Hyperion - with something that would allow Trican to get information out quickly to the regions, says Randal Wichuk, director of finance corporate development at Trican, in Calgary, Alberta.

Executives wanted the different regions to take ownership of their financial performance so they could maximize profitability by looking at how to increase sales and decrease costs in each geographic location, Wichuk says.

After looking at performance management software from Cognos and SAS, Trican chose Hyperion's Performance Management Software and implemented it in September 2007. The software lets finance officials enter the data and run multiple scenarios to do very quick "what-if" analyses, Wichuk says.

He estimates that the tool has saved a minimum of six days each month in terms of loading data into the models and then doing the actual forecasting.

Keeping score

Now, Wichuk says, "what we're doing is measuring our key performance indicators." The software lets Trican analyze the data in multiple ways and drill down to the root cause of most issues.

One recent example: The ability to identify an area of the operation where sales were lower than expected. Once staffers drilled down further into the data, they discovered the company was losing market share in that region because salespeople weren't targeting the right customers, Wichuk says. Trican adjusted its prices for the region, "which helped us increase market share and revenues."

The real value of the software is its ability to see data in real time and conduct analyses, Wichuk says. "You're not gaining a value-add in terms of organising the data; it's in terms of analysing it to make quicker decisions" and react more quickly to the market."

Maine Medical's Chingos says the use of the balanced scorecards is voluntary, but in some areas, the metrics have been very high profile and have helped move the hospital in a more positive direction. For example, the hospital has a medication reconciliation metric that tells officials whether hospital staffers are comparing the medications a patient was on when he or she arrived to the medications that were prescribed during their stay.

"It's a step that would sometimes get done, but not always get documented well," Chingos says. Officials started measuring medication reconciliation about two years ago, and the results were "abysmal." It was in the 40% range, but using the scorecard to broadcast the issue has helped raise the number to the 90% range.

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