International Journal for Quality in Health Care 1998; Volume 10, Number 4: pp.

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Project report

Performance improvement:
a multidimensional model
J. WOLFERSTEIG AND S. DUNHAM
Quality Management Division, Hudson River Psychiatric Center, Poughkeepsie, NY, USA

Objective
We believe that the next step in the evolution of performance
measurement and improvement systems will center on the
integration of an organizations strategic plan with performance measurement and improvement activities. This
project demonstrates how Hudson River Psychiatric Center
(HRPC) has achieved this integration.
Kaplan and Nortons Balanced Scorecard [1] model was
selected because it is used increasingly in the business world
to maintain a competitive position in the marketplace and
because of its potential applicability to health care. The
Balanced Scorecard provides a means to measure and manage
the success of the organizations strategy from four interrelated perspectives: financial, customer, internal business,
and innovation and learning. The model is used to clarify the
organizations strategy, link strategic objectives with specific
measures, develop initiatives and enhance organizational
learning.
The Balanced Scorecard concepts have been applied to a
behavioral health care setting and incorporate an additional
management focus the development of performance improvement priorities based on scorecard results.

Medicare funded. It is anticipated that new models for

providing and funding specialized inpatient services will be
developed in the future.

Description of project activities

In preparation for a new service delivery model HRPC
embarked on a process designed to refocus the work of the
organization. The steps included:
assessment of the organizations readiness for managed
behavioral health care;
comparison of identified needs with Joint Commission
on Accreditation for Healthcare Organizations
(JCAHO) Hospital Standards [2] and the existing clinical indicators to assure that critical areas were addressed;
development of a strategic plan that enhances the
organizations readiness for managed care while meeting JCAHO standards;
development of operational plans to support the strategic plan;

Setting

development of a Balanced Scorecard following Kaplan

and Nortons framework;

HRPC is part of a public mental health care system that has

downsized and responded to significant changes in the delivery of treatment and psychiatric rehabilitation services.
One aspect of change has been the move toward prepaid
services and capitated models of funding. For the past 2
years, HRPC has managed a network of prepaid mental
health services for outpatients as a part of the New York
State Office of Mental Health Prepaid Mental Health Plan.
To date, there is no comparable model in New York State
for public inpatients who are predominantly Medicaid and

use of Balanced Scorecard results in the selection and

prioritizing of performance improvement activities.
Historically, public health care organizations have not had
to compete for market share. In the rapidly changing health
care environment, it has become clear that public organizations will have to develop competitive strategies to
survive. The workbook, How to Respond to Managed Behavioral Healthcare [3] contains self assessments in nine
managed care functions to help organizations identify their

Address correspondence to J. Wolfersteig, Quality Management Division, Hudson River Psychiatric Center, 373 North Road,
Poughkeepsie, NY 12601, USA. Tel: +1 914 452 8000 ext. 7235. Fax: +1 914 452 8040. E-mail: hrqajlw@omh.state.ny.us
The opinions presented in this report are those of the authors and do not necessarily represent those of the New York
State Office of Mental Health.

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J. Wolfersteig and S. Dunham

competitive strengths and weaknesses. These functions include leadership and vision, human resources, service delivery,
quality improvement, service utilization, financial planning
and management, consumer and financial accounting, management information and marketing and public relations.
At HRPC, 60 key managers worked in groups to rate the
organizations managed care readiness using the scoring in
the workbook.
The range of potential ratings included minimally prepared, beginning, moderately prepared, well along and
prepared. With respect to HRPCs findings, no functions
were rated minimally prepared or prepared. Three functions
were rated well along: Leadership and vision, Human resources and Quality improvement. Four functions were rated
moderately prepared: Service delivery, Service utilization,
Consumer and financial accounting and Marketing and public
relations. Two functions were rated beginning: Financial
planning and management and Management of information.
Needs identified were:
establish specific goals and objectives linked to daily
activities;
develop clinical specialty areas with clear outcome
expectations;
enhance performance appraisal programs, staff training, and competence assessments to support clinical
specialty areas;
shift measurement focus to satisfaction, access, utilization, quality and cost related to mission and vision;
establish public budgeting databases that integrate revenue and expenditure data with clinical information;
develop an integrated clinical information system, centering on an automated medical record;
establish a positive public awareness campaign.
The next step in the process compared these results with
JCAHO standards and existing clinical indicators to assure
all elements were addressed. This analysis yielded additional
needs in environment, safety and stakeholders. These results
were incorporated into the organizations mission, vision,
values, goals and objectives.
Following the development of the organizations strategic
plan, the Chief Executive Officer established corresponding
operational plans in eight areas:
development of product lines requiring the reorganization of inpatient services around the organizations specialized strengths (e.g. cognitive
remediation, externalizing disorders, polydipsia, mentally ill chemical abusers, secure care, evaluation/
stabilization);
development of a staff training and competence assessment plan to support the product lines;
development of performance measurement and improvement processes focusing on clinical outcomes

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assessment and evaluation of progress with the strategic

plan;
increase of staffs fiscal awareness of costs of activities;
automation of the medical record;
development of a proactive public relations plan;
increase of stakeholder awareness of safety and environmental issues;
reduction of the rates of restrictive practices (restraint
usage) and occupational injuries.
Once operational plans were established, a new performance measurement and improvement system was developed. The organizations Quality Improvement Committee
had oversight of the transition from the existing system to
the new integrated model. The system in existence consisted
of six subcommittees of the Quality Improvement Committee
and corresponded to the JCAHO patient care functions.
Each of these subcommittees identified and/or developed
indicators, drawing largely on the existing clinical performance
measurement system. Reports were designed around these
functions and were used to guide performance improvement
activities.
As the development of the Balanced Scorecard model
evolved, the subcommittees phased out their activities on a
schedule coinciding with implementation of the Balanced
Scorecard. Achievements were summarized and recommendations were made for addressing outstanding issues.
A cross section of the staff was then selected to participate
in groups convened around the four areas of the Scorecard:
financial perspective: How do we look to stakeholders
and are we meeting customer needs within budget?
customer perspective: How do our customers see us
and what do our customers want?
internal business perspective: At what must we excel
and are these services provided in the highest quality,
safest most humane environments?
innovation and learning perspective: How can we
continue to improve and create value and what are
the organization supports needed to provide these
services?
The charge of these groups was to identify desired outcomes related to the goals and objectives, develop indicators
for measurement and identify data collection methods.
As part of this effort, an overall strategy assumption and
underlying assumptions for all indicators were developed to
ensure cause and effect relationships between objectives and
measures. The overall strategy assumption was articulated as
follows: if we provide excellent clinical services to meet needs
as identified by our customers and do so within budget, we
will be recognized as a facility of clinical excellence. If we
increase HRPCs recognition as a facility of clinical excellence,
we will increase our market viability. Each element of the
scorecard was related to the overall strategy. For example, if

Performance improvement

Figure 1 HRPC Balanced Scorecard

HRPC develops new product lines (and measures effectiveness) for targeted populations, we will be likely to meet
the treatment needs of these populations; if we meet the
treatment needs of these targeted populations, patients are
likely to feel satisfied with their treatment outcomes. If
patients are satisfied with their treatment outcomes, recognition of HRPC as a facility of clinical excellence and
market viability will increase.
Following development of the underlying assumptions,
existing methods of data collection and measurement were
reviewed and new data collection and measurement strategies
were identified. With the exception of certain quality control
and risk management indicators, all existing performance
measurement indicators were discontinued and replaced by
process improvement projects, customer satisfaction instruments, clinical outcome assessment instruments and other
indicators. A total of 44 outcome measures was developed.
The JCAHO scoring model was adapted for use as it
provided a single uniform measurement process that could
be applied to all four areas of the Balanced Scorecard. This
system also allowed for weighting of certain measures and
provided a method for measuring areas under development
through capping of scores. Figure 1 depicts the general areas
included in the HRPC Balanced Scorecard [4,5].

Project results
Development of the HRPC Balanced Scorecard has consolidated many of the organizations measurement efforts
into a single document that provides greater clarity of focus.
This approach has afforded staff the opportunity to participate
in the establishment of HRPCs goals and objectives. The
staff has developed a sense of ownership for achieving the
organizations strategy and a greater awareness of their own
roles, thereby increasing the likelihood of success. The model
has also provided a framework for including all staff in
performance improvement activities organized around the
goals and objectives.

Implications for others

The model designed by the authors provides an integrated
method for implementation of initiatives and objectives that
are linked directly to the organizational strategy. This design
also provides a process for ongoing review of progress toward
achieving organizational goals and for directing performance
improvement activities. The measurement of progress and

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J. Wolfersteig and S. Dunham

the accountability designed into the Scorecard combine to

form a powerful management plan.
We believe that the Balanced Scorecard developed at
HRPC represents the next logical step in the performance
improvement evolution. It is customer driven, assesses customer expectations, measures progress toward implementation of the strategic plan, and assesses quality and
effectiveness of services. The process designed and used may
serve to guide others faced with the same exigencies.

Acknowledgements
The authors wish to acknowledge the following people at
HRPC for their contributions to the project: James R. Regan
PhD, Chief Executive Officer; Martha Horning MSED, Supervisor of Rehabilitation; Jed Baumgold MPA, Director for
Administrative Services; and the staff who participated in the
process.

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References
1. Kaplan RS, Norton DP. Translating Strategy into Action. Boston,
MA: Harvard Business School Press, 1996.
2. Joint Commission on Accreditation of Healthcare Organizations.
Comprehensive Accreditation Manual for Hospitals, the Official Handbook.
Chicago, IL: Joint Commission on Accreditation of Healthcare
Organizations, 1996.
3. Mauer B, Jarvis D, Mockler R, Trabin T. How to Respond to
Managed Behavioral Healthcare: a Workbook Guide to Your Organizations
Success. Tiburon, CA: Centralink Publications, 1995.
4. Wolfersteig J, Dunham S, Regan J. Balanced scorecard development in a public behavioral healthcare organization. 14th
International ISQua Conference on Quality in Health Care,
Chicago, IL, 1997 (poster).
5. Wolfersteig J, Dunham S, Regan J, Horning M, Baumgold J.
Balanced scorecard development in a public behavioral healthcare
organization. Tenth Annual New York State Office of Mental
Health Research Conference, Albany, NY, 1997 (poster).
Accepted for publication 9 April 1998