Case Study 5 and 6

THE INTERNATIONAL JOURNAL OF HEALTH PLANNING AND MANAGEMENT
Int J Health Plann Mgmt 2013; 28: 181–201.

Published online 19 October 2012 in Wiley Online Library
(wileyonlinelibrary.com) DOI: 10.1002/hpm.2132
Applying the Balanced Scorecard approach

in teaching hospitals: a literature review
and conceptual framework
Annarita Trotta1*, Emma Cardamone1, Giusy Cavallaro1 and
Marianna Mauro2
1
University of Catanzaro ‘Magna Græcia’, Department of Legal, Historical, Economic and
Social Sciences–DSGSES, Catanzaro, Italy
2
University of Catanzaro ‘Magna Græcia’, Department of Clinical and Experimental
Medicine, Catanzaro, Italy
SUMMARY
Teaching hospitals (THs) simultaneously serve three different roles: offering medical treatment,
teaching future doctors and promoting research. The international literature recognises such
organisations as ‘peaks of excellence’ and highlights their economic function in the health
system. In addition, the literature describes the urgent need to manage the complex dynamics
and inefficiency issues that threaten the survival of teaching hospitals worldwide. In this
context, traditional performance measurement systems that focus only on accounting and
financial measures appear to be inadequate. Given that THs are highly specific and complex, a
multidimensional system of performance measurement, such as the Balanced Scorecard (BSC),
may be more appropriate because of the multitude of stakeholders, each of whom seek a specific
type of accountability. The aim of the paper was twofold: (i) to review the literature on the BSC
and its applications in teaching hospitals and (ii) to propose a scorecard framework that is suitable
for assessing the performance of THs and serving as a guide for scholars and practitioners. In
addition, this research will contribute to the ongoing debate on performance evaluation systems
by suggesting a revised BSC framework and proposing specific performance indicators for
THs. Copyright © 2012 John Wiley & Sons, Ltd.
KEY WORDS: Balanced Scorecard; performance measurement; teaching hospitals
INTRODUCTION
In the healthcare sector, special attention has been rightfully devoted to teaching
hospitals on the basis of their threefold mission that includes care, teaching and
research. Within academia, teaching hospitals (THs) are believed to play an important
economic role in achieving ‘effectiveness as a social tool’ (Bevan and Rutten, 1987;
Bluementhal et al., 1997). Studies in this area have investigated both the relationship
*Correspondence to: A. Trotta, Department of Legal, Historical, Economic and Social Sciences–DSGSES,
University of Catanzaro ‘Magna Græcia’, Catanzaro, Italy. E-mail: trotta@unicz.it
Copyright © 2012 John Wiley & Sons, Ltd.

182 A. TROTTA ET AL.
among activities and the effects of the tripartite mission on patients and stakeholders
and, therefore, on the entire healthcare system (Rosko, 2004; Carbone et al., 2007;
Schreyögg and Von Reitzenstein, 2008). Synergies among the three main functions
of THs have been considered a main point of strength and have prompted consideration
of university medical centres as ‘peaks of excellence’ of national health systems. These
centres are able to combine clinical care, teaching and research; provide unusual or
particularly serious treatments for complex diseases; and generate profiles of highly
specialised and innovative care (Topping and Malvey, 2002). The tripartite mission
complicates the management of THs, especially considering the varying time
perspectives of these activities. Clinical care occurs within a short period and requires
urgent responses to patient needs; teaching occurs during a medium-length period and
is required to train future professionals (who must continually update their knowledge);
and research (e.g. basic research, clinical trials and innovative assistance applications)
occurs over a long period (Borgonovi, 2010). Several studies have also highlighted the
complexity of THs in terms of governance and coordination as well as the highly
specific nature of managing the multiple interests and aims of THs (e.g. Smith and
Whitchurch, 2002). The existence of diverse business missions generates more critical
concerns for the financial viability of teaching hospitals in turbulent markets
(Langabeer, 1998; Liu and Tseng, 2006). The international literature highlights the
centrality and importance of THs in health systems and indicates the urgent need to
solve what is considered a general concern for THs: the current lack of and need for
efficiency, which seriously threatens the survival and development prospects of
these organisations.
Major reforms have increased the complexity of the health environment, and there
is a growing need to reconcile the quality improvement of services with economic
sustainability and fair financial systems. Accordingly, researchers have become
increasingly interested in inefficiency issues, the complex dynamics of THs and
performance measurement.
Several international studies have analysed changes in variables that are linked to
profitability and the volume of health services that are provided to attempt to
understand how to measure the performance of university hospitals and improve
their accountability. These studies have generally shown that THs are less efficient
than non-THs (Grosskopf et al., 2001; Rosko, 2004; Langabeer, 2006; Lambiase
and Harrison, 2007; Schreyögg and Von Reitzenstein, 2008).
Studies in the literature on efficiency valuation and financing dynamics indicate that
it is difficult to allocate costs to the functions of THs, and such studies challenge the
congruity of the funding system by analysing resource consumption (Lopez-
Casasnovas and Saez, 1999; Huttin and de Pouvourville, 2001; Linna and
Hakkinen, 2006). According to Foster (1987), THs have higher costs than non-
THs for the following reasons: educational programmes, research, case-mix
severity, quality of care and innovation in treatments. With regard to quality of care,
several researchers have shown that the care that is provided by university hospitals
is superior to that provided at non-THs (Culbertson, 1996; Langabeer, 1998;
Kassirer, 1999; Taylor et al., 1999). For example, THs are able to provide atypical
or particularly serious treatments for complex diseases and thus enable patients
to receive highly specialised and innovative care (Pardes, 2000; Topping and
Copyright © 2012 John Wiley & Sons, Ltd. Int J Health Plann Mgmt 2013; 28: 181–201.
DOI: 10.1002/hpm
BALANCED SCORECARD IN TEACHING HOSPITALS 183
Malvey, 2002). In this context, traditional tools that are focused only on financial
indicators do not provide an adequate measurement of teaching hospital performance.
Rather, multidimensional systems may be more appropriate, including the Balanced
Scorecard (BSC) by Kaplan and Norton (1992). Several studies have demonstrated
how the BSC leads to improvements in business performance (Curtwright et al.,
2000; Meliones, 2000; Kaplan and Norton, 2001). Thus far, few THs have adopted
integrated approaches to measuring performance.
The aim of this paper is twofold: (i) to review the literature on the BSC approach
and its applications in teaching hospitals and (ii) to propose a scorecard framework
that is suitable for assessing the performance of THs, and that may serve as a guide
for scholars and practitioners. This study may have additional value in that it will
contribute to the ongoing debate regarding the application of BSC to THs and
suggest a revised framework of the original Kaplan and Norton (1992) model that
better suits these organisations. Specific indicators are also proposed in this article.
The model aims to manage the peculiarities of the core activities of THs, including
different time perspectives in hospital functions, daily operation measures from the
perspective of patient care and high-level management indicators with respect to
teaching and research.
This paper is organised as follows: first, we provide a comprehensive review of
the literature on the BSC model (The use of BSC in healthcare: a focus on THs)
and the proposed applications for this model (Applying the BSC to THs: results of
prior studies) in THs. In ‘Discussion: is there any conceptual framework to be
drawn?’, the conceptual framework proposal is discussed. The final section identifies
the limitations of this study and highlights areas for future research.
THE USE OF BSC IN HEALTHCARE: A FOCUS ON THs
Recently, the application of BSC to the health sector has increased, primarily
because the BSC can accommodate the complexity of healthcare organisations (HCOs)
by developing a multidimensional system to measure and manage organisational
effectiveness (Aidemark, 2001; Kaplan and Norton, 2001; Inamdar et al., 2002;
Zelman et al., 2003; Josey and Kim, 2008). Traditional performance measurement
systems focus only on accounting and financial measures (Otley, 2002). A
multidimensional system of performance measurement is more appropriate because
of the multitude of stakeholders, each of whom seeks a specific level of accountability
(Slack, 1991). Among the multidimensional performance tools that are used in the
healthcare setting, the international literature has focused on the BSC as a performance
measurement system (Rimar and Garstka, 1999; Chan and Ho, 2000; Modell, 2004;
Ten Asbroek et al., 2004; Baraldi, 2005). Specifically, the use of this system for
defining a set of performance indicators is increasing (Zelman et al., 2003).
In essence, the BSC is a strategic measurement and management system that
translates an organisation’s mission and strategy into a balanced set of integrated
performance measures (Chan and Ho, 2000). Unlike traditional methods, the BSC
has the following characteristics: (i) it provides management with a ‘balanced’
business overview that includes intangible assets and is correlated with critical
DOI: 10.1002/hpm
outcome areas (Kaplan, 2010); (ii) the system facilitates the alignment of individual
behaviour with organisational goals (Zelman et al., 1999; Kaplan, 2010); (iii) the
BSC not only investigates past events but predicts also future performance through
the use of forward-looking measures (MacStravic, 1999); and (iv) this ‘strategic
management’ tool has an important role in implementing company strategies
because it provides, with a system of management by objectives, a framework for
the formulation, implementation and sharing of corporate strategies (Kaplan and
Norton, 1996; Zelman et al., 1999; Meliones et al., 2001; Gumbus et al., 2002,
2003; Niven, 2003; Radnor and Lovell, 2003; Kaplan, 2010).
The BSC was discussed as an appropriate tool for healthcare organizations as
early as 1994 (Griffith, 1994). Several authors have suggested methods of imple-
menting the model, and other scholars have noted that the BSC should be modified to
reflect the specific characteristics of HCOs (Baker and Pink, 1995; Kaplan and Norton,
1996, 2001; Zelman et al., 1999, 2003; Inamdar et al., 2002; Pieper, 2005; Paranjape
et al., 2006). For example, Kaplan recently stated as follows (Kaplan, 2010, p. 23):
(. . .) the performance of Nonprofit and Public Sector Enterprises (NPSEs) cannot be
measured by financial indicators. Their success has to be measured by their effectiveness
in providing benefits to constituents. The BSC helps NPSEs select a coherent use of non-
financial measures to assess their performance with constituents.
Among scholars who support the use of the BSC in HCOs, the discussion
currently centres on ‘how many’ and ‘which’ perspectives should be included in the
framework and the order of priority that each perspective should be given (Pineno,
2002; Kumar et al., 2005; Schmidt et al., 2006). Research in this field has consistently
addressed the application of the BSC to HCOs by presenting case studies that highlight
reasons to adopt the BSC and discussing barriers to development and benefits of
implementation (Chan and Ho, 2000; Aidemark, 2001; Pink et al., 2001; Kocakulah
and Austill, 2007; Josey and Kim, 2008). In particular, by examining the main case
studies related to HCOs, one can identify at least three applications of the BSC: (i) cases
that used the original framework, including financial, customer, internal process, and
learning and growth perspectives (Rimar and Garstka, 1999; Person, 2001; Inamdar
et al., 2002; Huang et al., 2004); (ii) a partial revision of the framework of the BSC
in its logic architecture (Aidemark, 2001; Kaplan and Norton, 2001; Radnor and
Lovell, 2003); and (iii) cases in which the original framework has completely changed
both in the number and types of perspectives (Curtwright et al., 2000; Meliones et al.,
2001; Gumbus et al., 2002, 2003; Pink et al., 2003; Josey and Kim, 2008). For complex
organisations such as teaching hospitals, which are characterised by management
complexity, organisational fragmentation and inefficiency issues, the BSC approach
has proven to be an effective tool for defining specific strategic goals that are linked
to the threefold mission. The BSC approach is particularly helpful both for converging
the actions and behaviour of personnel involved (managers, physicians, academic staff
and administrators) towards these objectives and for assessing to the extent to which the
results that are achieved are consistent with these aims (Kaplan and Norton, 2001;
Meliones et al., 2001; Ross, 2001). Empirical analyses that focus on the application
of BSC in teaching hospitals often describe financial success stories. Scholars illustrate
how university hospitals have been able to reduce costs and resolve financial crises
DOI: 10.1002/hpm
(Jones and Filip, 2000; Meliones et al., 2001). Specifically, Meliones et al. (2001)
analysed Duke Children’s Hospital and showed that the adoption of the BSC has
increased hospital performance in terms of the satisfaction of patients and healthcare
professionals and in terms of average cost reduction. In other cases, as noted by Kaplan
and Norton (2001) and Ross (2001), the implementation of a multidimensional
performance system leads to increased interest in performance measurements among
administrators and physicians. Montefiore Hospital is a case in which the BSC has
provided useful solutions for economic problems that arise from organisational
difficulties that are linked to the hospital’s institutional mission. The ability to adapt
the BSC to THs is considered in view of the many goals that this system can
achieve including: building a framework for managing complex changes; aligning
organisational strategies with performance measurement and management; reporting
on critical outcomes and developing new information systems; and measuring
performance and encouraging continuous improvement (Kaplan and Norton, 2001;
Gumbus et al., 2003; Zelman et al., 2003).
With respect to applying the BSC to THs, the reviewed literature indicates that
the logical architecture of the Kaplan and Norton model was amended. Scholars
highlight the different choices that were made regarding the perspectives to render
the model more suitable for the threefold mission and the strategies that are
established in such hospitals. To critically discuss the major findings that emerged
from the literature review and to better understand ‘whether’ and ‘how’ the BSC
could be applied, one must consider the following aspects of applying this model
to THs: (i) the motivations for adopting the BSC, (ii) the strategic goals that a TH
aims to achieve, (iii) how many and which perspectives are used, (iv) the specific
key performance areas (KPAs) and key performance indicators (KPIs) that are
identified, and (v) the benefits that are gained or the barriers that are encountered
by a TH in adopting the BSC. To this end, the next section offers a detailed analysis
of the application of the BSC to THs and devotes significant attention to the
healthcare environment, health providers and scorecard construction to review the
specific characteristics and critical problems that are addressed.
Applying the BSC to THs: results of prior studies

In the following section, we will analyse how the BSC was applied in THs by
examining prior case studies and attempting to identify the main differences from
the original framework that was developed by Kaplan and Norton in the 1990s. In
the remainder of the section, a group of scorecard applications in four different
THs organisations is presented: Montefiore Medical Center, Duke Children’s
Hospital, the European Institute of Oncology (IEO) and Ospedale Pediatrico
Bambino Gesù (OPBG). According to the Italian law (Decree n. 288/2003), the last
two organisations are known as Istituto di Ricerca e Cura a Carattere Scientifico,
and although they perform the three characteristic functions of THs, they are
particularly oriented towards research activities. In the first case study (Table 1),
the original model is partially modified; in the other cases (Tables 2–4), the structure
of the original framework is completely revised, and several perspectives are added.
In fact, although a few studies suggest that one can simply review the order of the
DOI: 10.1002/hpm
186
Table 1. The application of the BSC to the Montefiore Medical Center

Why did the
organisation use Top-down
Framework use Mission/vision the BSC? perspectives Key performance indicators Source
Partially revised ‘To heal, to teach, to Strategic management Customer Satisfaction scores Kaplan and Norton
framework discover and to advance the tool Point of service surveys (2001) Montefiore
health of the communities Complaints/compliments Medical Center
we serve. To be a premier Waiting time for first visit web site
academic medical centre Innovation Market share
that transforms health and and growth Associate surveys

enriches lives’ Rate of technological
obsolescence
% Revenues from new
programmes referring physicians
Average number of patients
referring physicians
A. TROTTA ET AL.
Economic and Revenues for services

financial Costs for services
Units of service provided
Operations Length of stay
Employment rate
Utilisation of facilities
Denial rate (admits and days)
Percentage of patients followed at
a distance
Patient satisfaction
Service times
Outcome indices
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Table 2. The application of the BSC to Duke Children’s Hospital
Why did the
organisation use Top-down Key performance areas and key
Framework use Mission/vision the BSC? perspectives performance indicators Sources
Completely ‘To offer to patients, to Strategic management Customer Patients (% satisfied, % willing to Meliones et al.
revised families and to general tool recommend the hospital to others, % (2001); Kaplan and
framework with practitioners the best parents able to articulate a plan of Norton (2001)
additional healthcare service, as well care, resignation timing)
perspectives as promote excellence in General practitioners (% satisfied for

the communication’ the communication systems, %
parents able to identify physicians)
Economic/ % Operating margin
financial Unit costs per case
Revenues from neonatal therapy
Internal Waiting time (admission and
processes discharge)
Quality (infection rate, rate of blood
contamination of crops, use of clinical
pathways/top 10)
Productivity (length of stay,
readmission rate, daily relationship
BALANCED SCORECARD IN TEACHING HOSPITALS
between employees and clients)

Research, Incentive plan (awareness and
education implementation)
and teaching Strategic database (availability, use)
187
DOI: 10.1002/hpm
188
Table 3. The application of the BSC to the European Institute of Oncology (IEO)
Why did the

organisation Top-down
Framework use Mission/vision use the BSC? perspectives Key performance areas Sources
Completely revised ‘To ensure excellence in the Strategic Institutional Hospital image Baraldi (2005)
frameworkwith prevention, diagnosis and treatment management Risk management European Institute
additional of cancer through the development tool Attractiveness of Oncology
perspectives of clinical and scientific research Sustainable development web site

and innovation in the organisation Co-marketing
and management by consistently Efficiency
devoting attention to the quality of Economy
service provided’ Research Scientific production
Trial management
Fund raising
A. TROTTA ET AL.
Clinical Clinical innovation

Quality
Patient satisfaction
Teaching Customer satisfaction
Break even
Educational offer development
Renewal and Know-how and skills
development Technological excellence
Motivation and climate
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Table 4. The application of the BSC to Ospedale Pediatrico Bambino Gesù (OPBG)
Why did the

Framework organisation use Top-down
use Mission/vision the BSC? perspectives Key performance areas Sources
Completely ‘To achieve excellence Strategic management International Increase research activity at the international level Baraldi (2005)
revised in healthcare through tool and performance level Research publications OPBG—strategic
framework advanced research and measurement system Increase staff units in international missions plan 2009–2011
with clinical activities while International clinical training centre web site
additional managing resources to National level Increase attraction level for highly specialised care

perspectives ensure administrative/ Transplant centre
financial balance and Metropolitan Emergency department
constantly improving level Protected post- hospital care
processes to ensure the On-site activities
progress of biomedical Patient Increase space for families
science’ Facilitate procedures’ access
Online reports
Economic/ Staff operational efficiency
financial Operational efficiency (medical devices)
Fund raising
Technological Updating technology capability
innovation and Staff turnover
BALANCED SCORECARD IN TEACHING HOSPITALS
development Healthcare processes’ organisation

Aggregated transmissive capacity
Server elaboration
Client’s elaborative capacity
Level of cooperation among SW applications
189
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perspectives in the framework (Kaplan and Norton, 2001), most studies include new
perspectives that are relevant to the institutional missions of THs and thus make
noteworthy changes to the original model (Kaplan and Norton, 2001; Meliones
et al., 2001; Baraldi, 2005). We analysed only reports of the BSC as it is applied
to THs in scientific publications; although other applications have been reported
by scholars (Baraldi, 2005), these reports do not provide all of the information that
is necessary for research purposes. The cases that are analysed are particularly rich
in material and can offer interesting opportunities for more detailed analyses (Patton,
2002). All of these major academic hospitals are recognised as centres of excellence
in their respective specialties. As shown in the following tables, for each case study,
we provide the hospital’s mission, the top-down perspectives, and the KPAs and/or
the KPIs. The BSC is essentially used as a strategic tool to improve internal
capabilities and support organisational development. It is useful at this stage to
deepen the analysis of each case separately.
The first case study is the Montefiore Medical Center, which is located in New
York and provides primary and specialty care for people from the Bronx and nearby
Westchester County. As a hospital for patients with chronic illnesses, this institution
is the university hospital for Albert Einstein College of Medicine. Table 1 contains a
scorecard model for the Montefiore Medical Center. The logic architecture of this
model has been partially revised. The BSC was developed within a reorganisation
plan in which two large hospitals were merged into a single division, and the strategy
was focused on product leadership (in the centres of excellence) and excellent
relationship with clients (through the new patient-oriented care centres) to increase
the hospital’s market share. In this model, although the innovation and growth
perspective and economic and financial perspective were preserved, the operational
perspective replaced the internal process perspective in the original framework.
Additionally, particular attention was devoted to the customer perspective, which
was shifted to the top of the model. Customer satisfaction is assessed by considering
the clinical and administrative processes that are necessary to produce benefits for
patients. Both operative and strategic measures are used. The operative measures
are focused on cost, quality and timing improvement from the customer, economic
and financial, and operational perspectives. The aim of the strategic indices in the
innovation and growth perspective was to assess (i) market penetration and the
ability to attract patients from neighbouring areas (market share), (ii) technological
innovation and the presence of advanced medical equipment in the hospital (the rate
of technological obsolescence) and (iii) the hospital’s growth strategies (the percentage
of revenues resulting from new programmes and the activities of practitioners).
The tables 2, 3 and 4 provide an overview of three different cases in which the
BSC was applied, and the original framework was completely changed both in the
number and types of perspectives. Duke Children’s Hospital (Table 2) is a paediatric
centre that is attached to Duke University in Durham, North Carolina. Duke
Children’s Hospital provides comprehensive care in 28 paediatric specialties. In this
case, the BSC project was initiated because the hospital was losing money, and the
implementation of the BSC was designed to manage the increasing costs and
hospitalisation. As a consequence, the design of the scorecard’s structure and
performance indices reflect the mission of the hospital and account for the original
DOI: 10.1002/hpm
conditions of the organisation. The learning and growth perspective was replaced in
research, education and teaching as a starting point of the hospital’s processes
because this perspective represents a crucial mission for a treatment unit set in a
university medical centre. The purpose of this perspective is to involve people in
the change process (by using an incentive plan) and to improve paediatric science
(by providing a strategic database). By performing research and teaching future
doctors, the hospital is able to ensure appropriate levels of care in the quality of
service that is provided (internal processes perspective). KPAs for internal processes
are referred to as waiting time, quality and productivity measures. By considering the
needs of the primary hospital stakeholders (customer perspective) and efficiently
using the available resources (economic/financial perspective), the university
hospital achieves its institutional mission. In particular, attention to customers is
focused on the satisfaction of patients, parents and general practitioners, whereas
financial measures monitor economic and financial balance.
The European IEO is a national and international referral centre for cancer research.
Clinical activities commenced in 1994 at the current site in Milan. The BSC was
applied in response to changes in the hospital environment (Table 3). An increasing
claim for benefits occurred against a growing scarcity of resources, inadequate
reimbursement and a lack of physical space in the IEO. Using the BSC, the hospital
was able to redefine its business model, reengineer some processes and ensure more
efficient use of resources to guarantee sustainable development with respect to all
hospital stakeholders (i.e. patients, professionals, researchers and funders). The KPAs
that refer to economic and efficiency dimensions are included in the institutional
perspective; these areas address the need to evaluate and improve the ability of the
hospital to effectively fulfil its statutory mandate (in terms of the hospital’s image, risk
management, attractiveness, sustainable development, co-marketing, efficiency and
economy) with respect to institutional stakeholders. However, this task is possible only
if the following conditions are fulfilled: the hospital must foster innovation through
research activities within the scientific community (thus enhancing the IEO know-
how through scientific production, trial management, and fund-raising activities),
ensure excellence in patient care (quality and patient satisfaction performance areas),
optimise the use of research investments (clinical innovation performance area), attract
and train (as a school) the optimal professional resources to satisfy student needs
(customer satisfaction), ensure the self-sustainability of training activities (break even)
and develop teaching activities (educational offer development). Three specific
perspectives (research, clinical care and teaching) were included to appropriately
measure the hospital’s results in this regard. The renewal and development perspective
is important in the framework because it reflects the ability of the hospital to invest in its
future, enhance the skills of professionals and researchers and provide them with the
most advanced technologies, and develop organisational mechanisms to ensure that
IEO remains a high-quality workplace (know-how and skills, technological excellence,
motivation and climate).
Finally, OPBG is the largest paediatric hospital in Central-Southern Italy and an
international referral centre for research and the care of children and adolescents;
the institution encompasses four locations in the province of Rome. The hospital
began using the BSC when it implemented the Strategic Plan for 2002–2004 and,
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thus far, has continued to utilise the tool in support of the Strategic Plan for 2009–2011
(Table 4). The BSC has been improved, extended and progressively adapted to the
hospital’s requirements. The BSC was initially applied in a conventional manner and
specifically focused on ethical and risk management issues. The current application
has provided a complete review of the framework. The strategic objectives have been
re-aggregated on the basis of their effects on the following measures: technological
innovation and development (technology facilities and organisational measures),
economic/financial (operational efficiency and fund-raising activities), the positions
of patients (family spaces, procedure access and online activities) and the hospital in
three dimensions (metropolitan, national and international). Following this process,
the hospital defined project lines and timing as well as the variables to be monitored
through a set of indices to enable its administrators to assess the effectiveness of each
action. At the international level, the OPBG wants to both increase research activity
financing for international ‘special purpose’ projects and invest in scientific publica-
tions. The goals of the hospital also include cooperating with major international
research institutions (creating an international centre for paediatric clinical training)
and missions with developing countries (increasing staff units in international
missions) that aim to transfer expertise and provide direct interventions. At the national
level, the hospital would like to be identified by the healthcare and scientific communi-
ties as a national referral centre for highly specialised care and ‘non-classified activities’
as well as serving as a leader in clinical research and translating scientific findings into
healthcare practices (also in terms of a transplant centre). At the metropolitan level, the
aim is to provide a timely response to patients in emergency situations (through the
emergency department) and to guarantee access to preventive medicine and continuity
of care (increasing protected post-discharge care and on-site activities). The hospital is
also focused on its relationships with socio-medical institutions to protect children’s
health, especially underprivileged children.
Apart from the unique aspects of the specific applications of the BSC, some overall
conclusions can be drawn. First, there are no original uses of the BSC (as suggested by
Kaplan and Norton, 1992) in THs. In fact, on the basis of their organisational
characteristics, teaching hospitals apply the BSC tool after implementing significant
changes in terms of both the order and types of perspectives, KPAs and KPIs. Second,
consistent with the threefold mission of THs, patient requirements in care processes are
specifically recommended for inclusion in the architecture of the BSC (especially using
both satisfaction scores and service utilisation measures in terms of costs, quality and
productivity). The importance of teaching and research are also recognised. The
relevance of such a hospital’s three core operations will require the innovation and growth
perspective (Duke Children’s Hospital) to be emphasised, will provide three ad hoc
perspectives (IEO) or will necessitate the creation of ad hoc KPAs (OPBG). Compared
with the other HCOs, THs exist in a multi-stakeholder format that requires particular
attention to be devoted to patients, the academic community, graduate students and
various institutional partners. Finally, economic and financial dimensions should be
adapted to the specific medical field. The apparent links between customer and financial
perspectives are absent because the financial aspects consider only the conditions for
economic and financial balance on which teaching hospitals should aim to achieve their
institutional mission, the joint production of care, teaching and research.
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DISCUSSION: IS THERE ANY CONCEPTUAL FRAMEWORK TO BE DRAWN?
Given the conclusions of the literature review, the aim of this section is to propose a
framework that could serve as a guide for any TH that is considering applying the
BSC as a performance measurement system. As shown in the analysis of BSCs from
several hospitals, such a strategic measurement and management system allows
administrators to translate an organisation’s mission and strategy into a balanced set
of integrated performance measures (Zelman et al., 1999, 2003; Jones and Filip,
2000; Kaplan and Norton, 2001; Meliones et al., 2001; Pink et al., 2001; Gumbus
et al., 2002). In adopting the BSC, the management of a TH must first define the
organisation’s vision and subsequently identify strategic goals, prioritise the activities
that are performed and the interests of different hospital stakeholders, and effectively
progress towards these strategic objectives by using the available resources (Baraldi,
2005). Figure 1 provides a definition of the logical structure of the BSC and represents
both a summary of TH strategy and a framework for measuring their performance. The
selection of perspectives, critical performance areas, specific measures and their
relationship to one another are determined by the strategic goals of each TH.
According to the international literature, the selection of BSC perspectives should
account for the institutional mission of a university hospital (Zelman et al., 1999;
Kaplan and Norton, 2001; Meliones et al., 2001; Ross, 2001; Baraldi, 2005). As a
consequence, the scorecard framework has been integrated with ad hoc perspectives.
Basically, if the raison d’être of a teaching hospital is to create value and represent
the peak of excellence in the health system, improving the quality of life of the commu-
nity, then an initial crucial point concerns the correct identification of stakeholders who,
in the case of THs, may not be limited to patients (Bluementhal et al., 1997; Pardes,
2000; Topping and Malvey, 2002). The stakeholders should at least include the scien-
tific community (the direct customers of research activities), postgraduate students of
medicine and doctors (direct customers of teaching activities) and the entire community
because each person is a potential patient and is interested in improving the quality of
life in his community. As a result, the KPAs that are associated with the stakeholder
dimension are related to patient, student and researcher satisfaction as well as hospital
attractiveness. Consistent with the studies that were analysed, the stakeholder perspec-
tive should have a place on the top of the BSC (Rimar and Garstka, 1999; Kaplan and
Norton, 2001; Meliones et al., 2001; Baraldi, 2005). By creating value for stakeholders,
a TH becomes more attractive, increases the volume of care that is delivered and
improves its competitive position. In addition, the financial and economic perspective
should be ranked highly on the BSC. Even if THs are non-profit organisations, eco-
nomic sustainability is a stringent constraint (Kaplan and Norton, 2001; Baraldi,
2005). This is especially true given the significant financial and economic problems
that these organisations are confronting and that threaten their survival in the new com-
petitive environment (Huttin and de Pouvourville, 2001; Linna and Hakkinen, 2006;
Liu and Tseng, 2006). For this reason, it is necessary to focus on the optimisation of fund-
ing sources (KPAs: cost containment and sustainable development) and the ability of
organisations to attract financial resources from both the public and private sectors to
encourage advances in scientific research, teaching and clinical care (KPAs: fund raising).
As stated previously, teaching hospitals are encountering several critical issues, including
DOI: 10.1002/hpm
Figure 1. The BSC logical structure for application to THs
DOI: 10.1002/hpm
the following: (i) they are less efficient (Grosskopf et al., 2001; Schreyögg and
Von Reitzenstein, 2008), and cost differences persist compared with non-teaching hospi-
tals (Foster, 1987; Lopez-Casasnovas and Saez, 1999); and (ii) the integration of the three
core activities could offer multidimensional objectives, synergies and economies of joint
production (Topping and Malvey, 2002). However, the alignment of these functions has
proven difficult, primarily because of their varying time perspectives (Borgonovi, 2010).
As a result, the internal processes of THs must be evaluated with special emphasis on the
threefold objectives; the BSC can enable the assignment of appropriate weight and signif-
icance to each of these factors.
The proposed model investigates the characteristic activities of teaching hospitals by
dividing the internal processes into patient care, teaching and research. From the
conventional ‘internal perspective’ (Kaplan and Norton, 1992), the result is a framework
with three different perspectives, including those of care, teaching and research.
Specifically, a TH can meet its statutory mandate if the following goals can be fulfilled:
(a) generate innovation while maintaining a high level of research (KPA: scientific
research at the national and international levels);
(b) establish itself as a school that teaches the highest level of professional skills in
the scientific and medical fields (KPA: implementation of teaching activity);
(c) use research, teaching and care activity results (KPAs: experimental and
clinical research projects; contribution of the clinical area to teaching activity
and clinical and process innovation) to ensure excellence in patient care
(KPA: quality and effectiveness of patient care).
Hence, by improving the education of future doctors and investing in scientific
research, a hospital can improve the quality of care that is provided (KPA: quality
and effectiveness of patient care). Investing in research also creates opportunities
to increase efficiency and productivity in the process of care (KPAs: productivity
and clinical efficiency; waiting time).
When internal processes are analysed, particular attention should be devoted to both
the ability to innovate, with the goal of achieving levels of excellence that should be
specific to a TH, and the organisational complexity. The proposed framework provides
a specific dimension (i.e. the innovation and growth perspective) to serve this purpose.
A review of previous studies reveals that organisational complexity and coordination
are crucial problems related to the tripartite mission of THs (Smith and Whitchurch,
2002; Carbone et al., 2007). The critical problem in the context of THs involves
realising the interdependence of the three functions and integrating them to achieve
a joint service (Zelman et al., 1999). Therefore, the innovation and growth perspective
plays a fundamental role by emphasising the implementation of the levels of
satisfaction and the training of all human resources (teachers, doctors, administrators
and nurses), creating a cooperative climate (KPAs: work climate and employee
motivation) and promoting relationships and interdependencies among the three core
activities to assist in resolving conflicts. In addition, the implementation of internal
and external communication activities (KPA: internal and external communication)
contributes to the attainment of optimal results by emphasising the aspects related to
transparency as well as the direct and indirect effects on the image of the TH and,
consequently, its reputation. Ultimately, this perspective reflects the ability of THs to
DOI: 10.1002/hpm
invest in their future and to provide professionals and researchers with the most
advanced technologies (KPAs: innovation and technological excellence) to enhance
skills (KPAs: expertise and skills) and create a work environment that encourages the
involvement of human resources and the sharing of the strategic goals of THs. By
examining and comparing these BSC applications with the classical model by Kaplan
and Norton (1992), we propose changes and adjustments that consider the main
insights that emerged from the literature review. Figure 2 shows the framework
proposal, and Table 5 presents the measures that we recommend for the assessment
of the performance of a TH.
Figure 2. Applying Balanced Scorecard in teaching hospitals: the proposed framework
With regard to the indicators that were selected (KPIs) for each performance area,
some considerations appear to be appropriate. The ability of the BSC to assess the
performance of a TH can be compromised by the use of an excessive number of
indicators (Kaplan and Norton, 1996; Kocakulah and Austill, 2007). The measures
have been selected according to the following criteria: (i) the ability to fully represent
the results that are achieved with respect to the KPAs, (ii) the validity and scientific
reliability of metrics, (iii) the widespread use in the health sector (e.g. operating
margins, case-mix index, mortality index) and (iv) the simplicity of construction
and ease of availability that limit the cost of collecting indicators. The proposed
number of KPAs (18) and KPIs (35) in the model may appear to be high compared
with the number that is suggested in the literature (Kaplan and Norton, 1996; Gurd
and Gao, 2008). However, this choice is justified by our intention to develop a
general and comprehensive model.
DOI: 10.1002/hpm
To fully represent the peculiarities and different time perspectives of the three TH
functions, the framework uses both daily operational indicators (e.g. turnover index,
average waiting time for treatment) and high-level management measures (e.g.
impact factor, the number of specialising schools per 100 beds). Since the top-down
architecture, all of the indices selected are meaningful and mission critical. Given the
simplicity of construction and their widespread use in the health sector, the measures
are also easy to communicate to hospital stakeholders and enable management to
assess real performance improvements.
Table 5. Key performance indicators for the Balanced Scorecard of a TH

Perspective Key performance indicator Formula
Stakeholder % Patients satisfied N of patients satisfied/N of inpatients

perspective (prerequisite: a satisfaction questionnaire)
% Complaints N of complaints/N of inpatients
% Students satisfied N of students satisfied/N of total
students (prerequisite: a satisfaction
questionnaire)
% Researchers satisfied N of researchers satisfied/N of total
researchers (prerequisite: a satisfaction
questionnaire)
Market share (%) N of patients discharged by TH/N of
patients discharged by regional hospitals
Performance growth rate (%) N of patients discharged (t n)
year N of patients discharged (t 1)
year/N of patients discharged (t 1)year
Financial and Operating margin —
economic Profitability Total revenue from providing hospital
perspective services/Total revenues
Personnel costs in healthcare —
operating revenue (academic and
otherwise)
Average cost per patient Operating cost/N of hospitalisations
% Fund-raising resources per activity (%) Fund-raising resources per activity
(research/teaching/care) (research/teaching/care)/Total of
available resources
Care Average waiting time for treatment Average waiting time (from hospital
perspective system)
Average length of stay Total number of days of stay/N of
patients discharged
Case-mix index Σ PM i * PRss/Σ PM i * PPsd
Medical staff productivity N of patients discharged/Unit of medical
staff
Turnover index N of patients discharged/N of available
beds
Average cost per DRG point Healthcare cost/Total DRG points
Mortality index (%) N of deaths/N of patients discharged
Complication index (%) N of complications recorded in
patients discharged/N of patients
discharged
(Continues)
DOI: 10.1002/hpm
Table 5. (Continued)
Perspective Key performance indicator Formula

N of active trials —
% Patients in trial —
Teaching N of teaching or tutoring assignments —
perspective to medical staff per department or OU
N of specialising schools per 100 beds —
N of students/resident students per —
doctor
N of doctoral schools and health- —
related master’s programmes
Research N of active research projects —
perspective N of patents —
Impact factor —
Average IF per medical staff —
Innovation Absenteeism rate N of total days of absence (all operators)/
and growth (total employees * N of days estimated)
perspective Incentive plan —
N of communication projects for —
access to hospital services (e.g. service
card, website, toll-free phone number)
Employee satisfaction scores —
N of meetings for planning activities —
Training hours per employee —
% Employees involved in —
development plans
(%) Investment in technology (%) Investment in technology/Total
investment
CONCLUSIONS
Our framework, which was developed at the corporate level, can serve as a
foundation for those who want to apply the BSC to THs. The proposed framework
is the result of the first phase of our study and will be subject to further adjustments
and integrations. Accordingly, some limitations should be addressed.
First, the model must be shared and discussed in terms of the possible applications
within each specific organisation. These discussions should involve both managers
and key stakeholders. This step of creating consensus is important to the continuous
improvement of the BSC.
The cascading process is also important: the BSC could be developed at
different levels of an organisation and applied to one or more operating units. The
organisational areas in which the model will be applied should be defined properly
by adapting the number and types of perspectives, KPAs and KPIs to the specific
strategic objectives.
Moreover, the ability to implement a BSC must be supported by the creation or
development of a data warehouse or hospital information system that combines
clinical, operational and financial data in decision-making processes. The BSC can
become a point of reference for key managerial processes, such as the formulation
DOI: 10.1002/hpm
and communication of strategies, the establishment of goals, the allocation of
available resources, the reporting and use of results, and the creation of incentives
and reward plans. However, it is also important to consider that THs, especially
those at the international level, can differ greatly in terms of staff, organisation and
size, and these factors are crucial in decision-making processes.
Future research should focus on pilot case study surveys to verify and test the
reliability of the framework and highlight its possible strength and weakness.
ACKNOWLEDGEMENT
The authors would like to thank the referees and editor for their useful comments and
suggestions. The authors declare no competing interests.
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THE INTERNATIONAL JOURNAL OF HEALTH PLANNING AND MANAGEMENT

Int J Health Plann Mgmt 2013; 28: 181–201.

Applying the Balanced Scorecard approach

KEY WORDS: Balanced Scorecard; performance measurement; teaching hospitals

Copyright © 2012 John Wiley & Sons, Ltd.

THE USE OF BSC IN HEALTHCARE: A FOCUS ON THs

Applying the BSC to THs: results of prior studies

Table 1. The application of the BSC to the Monteﬁore Medical Center

Copyright © 2012 John Wiley & Sons, Ltd.

Economic and Revenues for services

Copyright © 2012 John Wiley & Sons, Ltd.

between employees and clients)

Why did the

Copyright © 2012 John Wiley & Sons, Ltd.

Clinical Clinical innovation

Why did the

Copyright © 2012 John Wiley & Sons, Ltd.

development Healthcare processes’ organisation

Figure 1. The BSC logical structure for application to THs

Figure 2. Applying Balanced Scorecard in teaching hospitals: the proposed framework

Table 5. Key performance indicators for the Balanced Scorecard of a TH

Stakeholder % Patients satisﬁed N of patients satisﬁed/N of inpatients

Perspective Key performance indicator Formula

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