Journal of Advances in Management Research

Development of Balanced Scorecard for healthcare using Interpretive Structural

Modeling and Analytic Network Process
Kailash Meena Jitesh Thakkar

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Kailash Meena Jitesh Thakkar , (2014),"Development of Balanced Scorecard for healthcare using
Interpretive Structural Modeling and Analytic Network Process", Journal of Advances in Management
Research, Vol. 11 Iss 3 pp. 232 - 256
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JAMR
11,3

232

Development of Balanced
Scorecard for healthcare using
Interpretive Structural Modeling
and Analytic Network Process
Kailash Meena and Jitesh Thakkar

Downloaded by Indian Institute of Technology Delhi At 10:09 20 October 2014 (PT)

Department of Industrial Engineering and Management,

Indian Institute of Technology Kharagpur, Kharagpur, India
Abstract
Purpose The purpose of this paper is to develop a Balanced Scorecard-based performance
measurement framework for health care system.
Design/methodology/approach An integrated ISM-ANP-based quantitative approach is used for
the development of balance scorecard for health care system. The necessary insights are drawn from
the secondary literature.
Findings This research identifies Key Performance Indicators and their interrelationships for
health care system. An integrated approach of ISM and ANP is employed for the development of
balance scorecard.
Research limitations/implications The findings of the research are based on insights gained
from secondary literature and an analysis of five cases in health care segment and hence generalization
of proposed framework is limited to the system representing some commonalities with chosen cases.
Practical implications Health care is the diagnosis, treatment and prevention of disease, illness,
injury and other physical and mental impairments in humans. Access to health care varies across
countries, groups and individuals, largely influenced by social and economic conditions as well as the
health policies in place. The changing nature of todays health care organizations, including pressure
to reduce costs, improve the quality of care and meet stringent guidelines, has forced health care
professionals to re-examine how they evaluate their performance.
Originality/value The Balanced Scorecard health care expanded organization measures beyond
financial analysis. It was first proposed by Robert S. Kaplan and David P. Norton in their book
The Balanced Scorecard (1996, Harvard Business School Press). This research reports a
development of Balanced Scorecard for health care using an integrated approach of Interpretive
Structural Modeling and Analytic Network Process is used.
Keywords Performance measurement, Balanced scorecard, Interpretive structural modeling,
Analytic network process, Healthcare management, Key performance indicators
Paper type Research paper

Journal of Advances in Management

Research
Vol. 11 No. 3, 2014
pp. 232-256
r Emerald Group Publishing Limited
0972-7981
DOI 10.1108/JAMR-12-2012-0051

1. Introduction
Health care is an important and necessary part of any society. Health care can form
a significant part of a countrys economy. In 2008, the health care consumed an average
of 9.0 percent of the gross domestic product across the most developed Organization
for Economic Cooperation and Development (OECD) countries. The USA (16.0 percent),
France (11.2 percent) and Switzerland (10.7 percent) were the top three spenders. The
Figure 1 shows per capita expenditure on health care in different countries. It shows
that in Asian countries per capita expenditure is very less compared to other countries.
It is very important to increase this expenditure for better health care.
The Figure 2 shows percentage of WHO regions lacking access to essential
medicines. Only 35 percent of the Indian population can access the medicines.

Development of
Balanced
Scorecard for
healthcare

Per capita expenditure worldwide

India
Pakistan
China

233
UK

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Canada
USA
Germany
Japan
0

200

100

300

400

500

Source: Dass (2011)

Figure 1.
Per capita expenditure
on health care worldwide

Percentage of WHO regions

lacking access to medicines
African
American
East Mediterranean
Europen
South East Asian
India
West Pacific
China
All countries
0

10

20

30

40

50

60

70

Source: Dass (2011)

Similarly, in Africa only 53 percent of the population is getting medicines. So, it

becomes very important to look for a good health care system in Asian, African and
other countries to provide good health care facilities.
The health care sector is one of the fastest growing areas of the economy of most
developed countries. Health care services are complex and challenging to measure.
Governments invest larger amounts of money in it, either directly or indirectly
and except a high-quality services from this sector. In reality the performance of this
sector is quite different and is characterized by long waiting times, inefficiency,
low productivity, stressed medical staff and dissatisfied patients. Performance

Figure 2.
Percentage of
WHO regions lacking
access to medicines

JAMR
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234

measurement provides hospital administrations with hard evidence about existing

practices, values, beliefs, assumptions and enables the administration to develop
a systematic means of identifying shortfalls and improve its future performance.
Various authors have suggested performance measurement and management
frameworks for measuring performance of an organization. Kaplan and Norton
(1996) presented Balanced Scorecard framework for measuring performance
of an organization. The Balanced Scorecard approach allows the managers to look
at a business from important perspectives financial perspective, internal perspective,
customer perspective and learning and growth perspective. Baker and Pink (1995)
were among the first to argue that the theory and concepts of Balanced Scorecard were
relevant in hospitals. Weber (1999) discusses that how the Balanced Scorecard can be
used for managing complex and rapid change. Beauchamp (1999) recommends that the
Balanced Scorecard be used to diagnose and manage the health of physicians practices
and related enterprises.
The health care system is composed of a complex set of entities, activities and
processes. Like other business organizations increasing levels of competition, patient
service alternatives, joint ventures, quality initiatives and emphasis on continuous
improvement evidences dramatic changes in the operation of health care organizations.
One of the important changes in todays health care industry is an increasingly
knowledgeable customer with intensifying demands to have information available for
helping them to make appropriate health care decisions. Good management requires
reliable and timely information on facts for making decisions. In spite of the
unquestionable truth of this statement there is a prevalent tendency to rely on
institutions and opinions and to assure that the organization is doing the right things
right without any support from facts.
Since the health care industry is a dynamic system, the evaluation of the
performance of the individual areas can be difficult. The increase in health care costs
and inefficiencies are due to inadequate and tedious purchasing procedures. There are
many factors related to health care industry, which make this industry full of
complexes and it is very difficult to measure the performance of such kind of industry.
It is very difficult to identify those factors and take decisions to solve them. In this
research, an integrated approach of Interpretive Structural Modeling and Analytic
Network Process (ANP) is used for the development of the Balanced Scorecard.
ISM determines the interrelationship between the different factors related to health
care industry and ANP gives the weightage to the factors to know which factors
are important and to be solved first. The objectives of this research are:
(1)

Identification of key performance indicators for health care system.

(2)

Determine interrelationship between different factors related to health care

using Interpretive Structural Modeling.

(3)

Formulation of ANP model using ISM for the development of a complete

framework of Balanced Scorecard.

The paper is structured as follows: Section 2 reports a comprehensive literature

review on health care and Balanced Scorecard. Section 3 highlights the key features of
methodology adopted for the development of BSC for health care system in this paper.
Section 4 includes an analysis of some of the representative cases. Section 5 reports the
development of BSC for health care. Finally, Section 6 concludes by deliberating upon
the key features of present research.

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2. Literature review
The changing nature of todays health care organizations, including pressure to reduce
costs, improve the quality of care and meet stringent guidelines, has forced health care
professionals to re-examine how they evaluate their performance. While many health
care organizations have long recognized the need to look beyond financial measures
when evaluating their performance, many still struggle with what measures to select
and how to use the results of those measures. Because a growing number of health care
professionals have readily adopted quality concepts, health care organizations should
be able to quickly improve their performance measurement systems by following
a few simple rules.
The popularity of Robert S. Kaplan and David P. Nortons Balanced Scorecard
method popularized in their book The Balanced Scorecard (1996, Harvard Business
School Press), expanded health care organization measures beyond financial analysis.
They led to the development of measures in four or more areas, including customer,
financial, internal process and learning and growth. Baker and Pink (1995) were
among the first to argue that the theory and concepts of BSC were relevant in hospitals.
Similarly there are many researchers worked on productivity and performance
measurement in health care services and use of Balanced Scorecard in hospitals, which
can be shown in Tables I and II.
3. Research methodology
The research has used an integrated approach of two techniques: Interpretive
Structural Modeling and ANP to develop a Balanced Scorecard for health care.
Interpretive Structural Modeling is an effective methodology for dealing with complex
issues. It has been used for over 25 years by specially trained consultants to help
their clients understand complex situations and find solutions to complex problems.
First proposed by J. Warfield in 1973, Interpretive Structural Modeling is a computer
assisted learning process that enables individuals or groups to develop a map
of complex relationships between the many elements involved in complex situation.
ISM is often used to provide fundamental understanding of complex situations, as well
as to put together a course of action for solving problems. It has been used worldwide
by many prestigious organizations including NASA. Table III shows the recent
contributions on ISM reported in literature.
The ANP is the most comprehensive framework for the analysis of societal,
governmental and corporate decisions that is available to the decision maker. It is a
process that allows one to include all the factors and criteria, tangible and intangible
that has bearing on making a best decision. The ANP allows both interaction and
feedback within clusters of elements and between clusters. The ANP models have two
parts: the first is the control hierarchy or network of objectives and criteria that control
the interactions in the system under study: the second are the many sub-networks
of influences among the elements and clusters of the problem, one for each control
criterion. Table IV shows the recent contributions on ANP reported in literature.
The Balanced Scorecard is an integrated management system consisting of three
components:
(1)

strategic management system;

(2)

communication tool; and

(3)

measurement system.

Development of
Balanced
Scorecard for
healthcare
235

JAMR
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Sl. no.
1.

236

2.

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3.

4.
5.
6.
7.

8.
9.

10.

11.

12.

13.
14.
Table I.
Comprehensive review
on health care

Reference

Focus/contribution

Lied (2001)

Takes into account resource limitations faced by small hospitals, both

human and technological, and suggests a number of measures that are
potentially for demonstrating accountability, benchmarking and quality
improvement
Moullin
It discusses the eight essential factors of performance measurement.
(2004)
A well-designed performance measurement system is vital for ensuring
that organizations deliver cost effective, high-quality services that meet
the needs of service users
Kumar et al.
The focus was on development of a procurement performance
(2005)
measurement system. The results say that through the implementation of
Balanced Scorecard measuring the procurement process can be done very
easily
Booth (2006)
It suggests that performance measurement may variously be viewed as
one small, but essential stage of EBLIP (Evidence based library and
information practice)
Walley et al.
Shows the ways in which measurement systems disguise failed decisions
(2006)
and encourage managers to take a low risk approach Symptomatic Relief
when trying to improve performance metrics
Kollberg et al.
Finds lean thinking is applicable in health care settings and flow model is
(2006)
suitable tool for following up initiatives in health care services
Peng et al. (2007) Identifies the critical intellectual capital elements and performance
indicators for performance management practices in the Taiwanese
hospital industry. Reveals relative importance and ranking of human,
organizational and rational capital
Purbey et al.
Suggests that a performance measurement system should be sensitive to
(2007)
changes in the internal and external environment of an organization
Chang (2007)
Explores the limitations and implications of Performance Assessment
Framework (PAF) as a balanced scorecard approach in NHS. Kaplan and
Norton suggested that the Balanced Scorecard approach can be adapted
for strategic performance management purposes in the public sector, this
study aims to argue that such claims fail to give sufficient weight to the
political context I which a public sector organization operates
Lee et al.
Reveals the problems associated with unsatisfactory delivery of services
(2007)
in the current health care system of China as experienced by patients of
diverse social economic backgrounds, including service quality,
accessibility and affordability
Focus is to trace the history and development of performance
Lega and
measurement and management systems in the Italian National Health
Vendramini
System. Reports that performance management has grown considerably
(2008)
in the INHS over the last 15 years. The reason for this growth are
normative, coercive and mimetic isomorphism, the introduction of quasi
markets, the adoption of DRGs
Dey et al.
Reveals that a combination of outcome, structure and process-based
(2008)
critical success factors and a combined AHP and logical framework-based
performance management framework helps in managing the performance
of health care services
Bakar et al.
Conducts a preliminary assessment of patient attitudes regarding aspects
(2008)
of service dimensions using SERVQUAL. The patients perceived scores
were calculated
Berbee et al.
Evaluates the development and use of service level agreements in a
(2009)
Belgain hospital from a client point of view

(continued)

Sl. no.

Reference

Focus/contribution

15.

Naidu (2009)

16.

Bamford and
Chaziaislan
(2009)
Zineldin et al.
(2011)

Reports that the patient satisfaction is a multidimensional health care

construct affected by many variables. Health care quality affects patient
satisfaction, which in turn influences positive patient behaviors such as
loyalty
Identifies gaps in the capacity and activity measures used and in the
dissemination of performance information

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17.

Recommends application of total relationship management and the 5Qs

model together with a customer orientation strategy for the improvement
of health care quality

It results in a carefully selected set of measures derived from and linked to an

organizations core strategies. There are a number of balances in the Balanced
Scorecard, among which are the balance or equilibrium between four historical
domains or perspectives considered to be mutually linked in terms of strategy and
performance: learning and growth perspective, internal process perspective, customer
perspective, financial perspective.
The Figure 3 depicts the flow diagram of the steps involved in the present research,
development of Balanced Scorecard using Interpretive Structural Modeling and ANP
for health care system.
4. Case study
This research has utilized insights of five case studies to deduct a list of critical factors
for health care industry. A comprehensive assessment of case studies is reported in
Table V.
Based on the case studies discussed above, many factors related to health care
industry are identified. The factors, their theoretical justification and relevance are
tabulated in Table VI.
A detailed analysis of case studies has helped to identify 21 factors important in
health care system. In order to focus on select key factors and minimize quantification
complexity, the number is reduced to 14. The simple way of group them is that the
factors which are related to performance, e.g. performance management, performance
measurement and performance appraisal are bound in one group. Customer-related
factors are bound in one group. Profitability and productivity are related to each other,
so bound in one group. Quality-related factors are bound in one group. Similarly, the
other groups are bound. After reducing them, the factors are:
(1)

performance;

(2)

customer satisfaction and perception;

(3)

leadership commitment;

(4)

strategic planning;

(5)

culture, courtesy and respect;

(6)

communication;

(7)

productivity and profitability;

Development of
Balanced
Scorecard for
healthcare
237

Table I.

JAMR
11,3

Sl. no.

Baker and Pink

(1995)

2.
3.

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4.

5.

6.
7.
8.
9.

10.
11.
13.
14.

Table II.
Comprehensive review
on Balanced Scorecard

Focus/contribution

A Balanced Scorecard approach can provide management with a

comprehensive framework that turns an organizations strategic
objectives into a coherent set of performance measures
Weber (1999)
Provides information about how the Balanced Scorecard can be used for
managing complex and rapid change
Santiago (1999) Adapts the Balanced Scorecard for behavioral health care and argues that
it can help organizations guide implementation of strategic planning
Urrutia and
The BSC is applicable to any type of organization. Hospitals should
Eriksen (2005)
include an additional perspective which provides specific information on
social demographic factors regarding the hospitals operating
environment
Thakkar et al.
Illustrates use of mix approach of cause and effect diagram, Interpretive
(2006)
Structural Modeling and Analytic Network Process and their use in
addressing some of shortcomings related to the development of BSC for a
real life case company KVIC
Chen et al. (2006) Shows that BSC is effective for underlining and existing problems and
identifying opportunities for improvements
Manville (2007) Shows that Balanced Scorecards can be implemented within a SME
context. The motivations for the adoption of the scorecard were both
internal and external due to heavily regulated organization
Gurd and Gao
Analyses the published cases of BSC in health care. It suggests that a more
(2007)
comprehensive view would come from a cross-national survey of best
practice use of BSC in health care
Funck (2007)
Indicates that different interests are made visible within the perspectives
of BSC without giving priority to one interest over another. The BSC plays
an important role in the formation of an equal relationship between
organizational interests
Chan (2009)
Finds an increasing use of strategy map and Balanced Scorecard in the
health care organizations and health systems
Cifalino and
Reports that the operational and strategic approaches are actionable and
Baraldi (2009)
feasible to measure the performance of selected training programs
Aidemark (2010) Suggests that measurement within the frames of Balanced Scorecard
made it possible to control both volumes and health care quality delivered
by the private competing contractor
Atkinson (2012) Describes the performance management framework developed by the
Regulation and Quality Improvement Authority in Northern Ireland and
identifies how such a framework may be proactively used to enhance
organizational effectiveness
Yuen and Ng
The authors unveil evolving HA performance indicators (PI). Despite the
(2012)
HA staffs explicit quality emphasis, cost control remains the primary
focus in their performance measurements

1.

238

Reference

15.

(8)

length of stay;

(9) occupancy;
(10) outpatient waiting time;
(11)
(12)

employee training;
quality assurance;

(13)

employee satisfaction; and

(14)

adaption of new technologies and new ideas.

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Sl. no.

Reference

Focus/contribution

1.

Kumar et al.
(2009)

2.

Sahney et al.
(2010)

The outcome of the research is a framework for technology transfer in rural

India. The research shows that there exists a group of variables having a high
driving power and low dependence requiring maximum attention
The ISM technique helps prioritize the strategic issues in quality assessment
qualitatively, so as to propose a hierarchical structure through prioritizing,
sequencing and categorizing ideas of ideas. The elements are classified as
drivers, enablers and dependents, and the hierarchically structured
The ISM based model indicates that effective top management leadership
role, availability of funds and availability of expert training;
organizational culture, organizational infrastructure, quality maturity
level of organization are tactical requirements
ISM is a useful methodology to structure supply chain risks in an easy and
distributed approach that can also be carried out in a step-by-step process on
several manufacturing stages. The input to the algorithm has to be well
defined to give the user an extract understanding of all risks that have to be
assessed
The research shows that there exist two groups of barriers, one having high
driving power and low dependency requiring maximum attention and of
strategic importance and the other having high dependency and low driving
power and are resultant effects such as high turnover at management level,
lack of continuous improvement culture

3.

Soti et al.
(2010)

4.

Pfohl et al.
(2011)

5.

Talib et al.
(2011)

Sl. no.

Reference

Focus/contribution

1.

Liebowitz
(2005)

2.
3.

Bayazit
(2006)
Bottero and
Mondini
(2008)

4.

Percin (2010)

5.

Ordoobadi
(2012)

The analytic network process when coupled with social network analysis,
can be a useful technique for developing interval measures for knowledge
mapping activities
Results that ANP can be used as a decision analysis tool to solve
multi-criteria supplier selection that contains interdependencies
Results that the priority list of the alternatives gives a great deal of
importance to the final project, with respect to the other possibilities. With
reference to the most relevant criteria for the sustainability of the project,
the problems related to energy efficiency, the aspects concerning the
landmark and the new services for the inhabitants were given the most
importance
The comprehensive ANP framework presents a roadmap for successfully
selecting an appropriate KM strategy for Turkish manufacturing
organizations. As compared to human oriented KM strategy and system
oriented KM strategy, dynamic KM strategy can lead to a more targeted
improvement in terms of knowledge transparency, knowledge sharing and
communication. Demonstrates that the ANP model with minor
modifications can be useful to all firms in their KM strategy selection
decisions
Allowing for interdependencies among selection criteria, as well as
between alternatives and selection criteria provides a more realistic
evaluation process than other selection processes that ignore such
interdependencies

Development of
Balanced
Scorecard for
healthcare
239

Table III.
Summary of recent
contributions on ISM

Table IV.
Summary of recent
contributions on ANP

JAMR
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240

Identification of factors related

to health care

Literature review

Grouping of factors

Health care
Balanced Scorecard

Six case studies reported

in literature

Use of integrated approach of ISM and ANP

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Interpretive Structural
Modeling

Classification of the factors in

four categories:

Structural self-interaction
matrix
Reachability matrix
Level partition
Classification of factors
Building the ISM model

Use of
interrelationship
between factors
based on ISM

Analytic Network Process

1. Financial perspective
2. Internal business
process perspective
3. Customer perspective
4. Learning and growth
perspective

Alternatives

Super Decision software

Pairwise comparisons
Super matrix formation
Synthesis of results
Priorities of alternatives

1.
2.
3.
4.

Financial measures
Customer measures
Internal measures
Innovation and
learning measures

Balanced Scorecard
Weightage of perspectives

Figure 3.
Flow diagram of project
work design

Owners

Objectives
Targets
Measures
Initiatives

5. ISM- and ANP-based modeling for health care

Figure 4 depicts the complete analytical approach (Integrated use of ISM and ANP)
adapted for the modeling for health care. Here ISM results an input to ANP. ANP uses
a beta version of Super Decision software to rank the alternatives (perspectives of the
Balanced Scorecard).
Interpretive structural modeling
It enables individuals or groups to develop a map of the complex relationships between
many elements involved in complex decision situation. ISM is often used to provide
fundamental understanding of complex situations, as well as to put together a course
of action for solving a problem. The ISM process transforms unclear, poorly articulated
mental models of systems into visible, well-defined models useful for many purposes.
First of all a structural self-interaction matrix is developed on the basis of case studies

Variables V1, V2, V3....Vn

V2

Vn

V1

V3

Grouping (GR) Variables and

Alternatives (ALT)

GR2
GR
1

GR3

A
L
T

Development of
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Scorecard for
healthcare
241

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Driving-Dependence matrix

Priorities A1, A2, A3....An

Synthesis of results

Super matrix formation

Pairwise comparisons

Source: Thakkar et al. (2006)

discussed in chapter 4. Then a reachability matrix is formed with the help of structural
self-interaction matrix. Then partition of level is done and finally a ISM model is
developed.
Structural self-interaction matrix
The first is step to analyze the contextual relationships of type leads to. Based on the
contextual relationship, a structural self-interaction matrix is developed. The cases
analyzed from the literature are used to identify the contextual relationship among
the factors. This is represented in structural self-interaction matrix in Table VII.
Following four symbols are used to denote the direction of relationship between the
factors (Fi and F j ):
V: Factor i will assist to reach factor j
A: Factor j will assist to reach factor i
X: Factor i and j will assist each other
O: Factors i and j are unrelated
Reachability matrix
The SSIM is transformed into a binary matrix, called a initial reachability matrix
(Table VIII) by substituting V, A, X and O by 1 and 0 as per the case. The rules for the
substitution of 1s and 0s are as follows:
.

If Fi to F j V, then Fij 1 and Fji 0

If Fi to F j A, then Fij 0 and Fji 1

If Fi to F j X, then Fij 1 and Fji 1

If Fi to F j O, then Fij 0 and Fji 0

Level partition
From the reachability matrix, the reachability set and antecedent set for each objective
is found in Table IX. The reachability set includes factors itself and others which it
may help to achieve, similarly the antecedent set consists of factors itself and the other
factors which help in achieving it. Then the interaction is derived for all factors. The

Figure 4.
Integrated approach
of ISM and ANP

Financial
perspective: total
profit margin, asset
turnover
Internal business
process perspective:
staff satisfaction,
staff turnover, length
of stay, occupancy,
outpatients per year
per doctor.
Customer
perspective: patient
satisfaction,
outpatient waiting
time.
Learning and
growth: expenditure
on medical research,
outpatient activity

Key performance
indicators/factors

Table V.
Key performance
indicators/factors
in health care sector

Chen et al. (2006)

Peng et al. (2007)

Enhanced
collaboration
Improved
communication
Improved learning/
adaption capability
Sharing best practices
Better decision
making
Enhanced product or
service quality
Enhanced intellectual
capital
Increased
empowerment of
employees

Manville (2007)
Learning and growth perspective:
Nursing staff turnover
Staff training
Access to training
Mission index
Internal business process perspective:
ER wait time
Responsiveness
Medical error rate
Contractual allowances
Customer perspective:
Time to treating provider
Courtesy and respect
Inpatient satisfaction
Emergency department satisfaction
Patient engagement
Financial perspective
Operating profit margin
Days cash on hand
Net revenue increase
Cost per patient day
Nursing staff productivity

Leadership
commitment
Strategic planning
Patient/market focus
Performance
measurement
Performance
management
Staff learning and
motivation
Staff well-being and
satisfaction
Process management
Patient and other
customer relationships
and satisfaction
Governance and social
responsibilities
Quality management

Service quality and

its impact on
customer
satisfaction
Importance of
perspectives from
patients and their
attendance
Interrelation
between different
factors in health care
organizations

Manjunath et al. (2007) Padma et al. (2010)

242

Reference

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Sl. no. Factors

Reference

F1

Accountability

Emanuel
(1999)

F2

Performance
measurement

F3

Performance
management

F4

Customer
satisfaction

F5

Customer
perception

F6

Leadership
commitment

F7

Strategic
planning

F8

Employee
training

F9

Culture

F10

Communication

F11

Length of stay

Significance

Accountability has become a major issue in health care.

Accountability entails the procedures and processes by
which one party justifies and takes responsibilities for its
activities
Peng et al.
Performance measurement helps in reducing costs,
(2007)
improving the quality of care and performance and
meeting stringent guidelines
Manville
Performance management in health care helps in ensuring
(2007)
that the services are improving and more efficient,
motivating and managing staff, learning from past
performance and improving future performance,
increasing public and user satisfaction
Bakar et al.
Customer satisfaction is a critical component of
(2008)
profitability for any business product or service oriented
industry. It helps the organization to stay in the business
and more importantly attain a competitive edge over the
competitors
Bakar et al.
Customer perception drives most of the success or failure
(2008)
of health care industry. When customers perceive a need
for a product or service, an industry has limitless ability to
expand, innovate and thrive. In the health care industry
product customers crave is health and wellness. Health and
wellness is an essential quality of life factor that many
customers are willing to pay a high price to achieve
Zelman et al. Implementation of any type of performance improvement
(2003)
and performance management system means change.
Without the absolute commitment of senior leadership,
pushing these changes down throughout the organization
will be difficult at best
Purbey et al. To maintain high level of commitment and involvement of
(2007)
hospital staff, volunteers and board members through
education, recognition and support, a strategic planning is
very important
Cifalino and Employee training including the administrator/CEO,
Baraldi (2009) administrative team, department managers, medical staff
is very much required to maintain the quality of service
Zelman et al. Health care is not a one size fits all profession. It is
(2003)
important to be sensitive to ways in which culture and faith
impact patients health care experiences
Zelman et al. The aim of communication involves the study and use of
(2003)
communication strategies to inform and influence
individual and community decisions that enhance health.
The importance of communication in health care is
increasingly recognized as a necessary element of efforts to
improve personal and public health. Health communication
can contribute to all aspects of disease prevention and
health promotion and is relevant in a number of contexts
Chen et al.
The time which elapses between the request by a patient
(2006)
for a consultant and attendance on the patient in a
consultation room. Reducing the outpatient is very
important to satisfy the customer/patient

(continued)

Development of
Balanced
Scorecard for
healthcare
243

Table VI.
Extensive summary
of factors relevant
to healthcare sector

JAMR
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Sl. no. Factors

Reference

Significance

F12

Outpatient
waiting time

F13

Occupancy

Bamford and
Chaziaislan
(2009)
Chen et al.
(2006)

F14

Courtesy and
respect

Chen et al.
(2006)

F15
F16

Employee
satisfaction
Profit margin

F17

Profitability

F18

Employee
productivity

F19

Service quality

F20

Adaption of
new technology

F21

Quality
assurance

Zelman et al.
(2003)
Chen et al.
(2006)
Zelman et al.
(2003)
Kershaw and
Kershaw
(2001)
Kenagy et al.
(1999)
Kershaw and
Kershaw
(2001)
Urrutia and
Eriksen
(2005)

It is total operating revenue minus total operating expenses

divided by total operating revenue. Profit margin can be
improved by customer satisfaction, good service quality
It is simply output divided by input. If the productivity
of a hospital is higher that means that the hospital
is in profit
If high quality service has a greater presence in our
practices and institutions, it would improve clinical
outcomes, patient and physician satisfaction while
reducing cost and it would create competitive advantage
for those who are expert in its application
This leads to enhanced service to patients. It also improves
attitudes of employee for better services to patient
This is critical for long-term survival and expansion of
health care system
This indicates how efficiently health care system is
managed
This shows serviceability of employee in the system

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244

Table VI.

Table VII.
Structural
self-interaction matrix

This represents quality of experience and affordability

of services to the patients
This ensures continual improvement of services and
customer serviceability
It shows the control over various processes of health care
system

Factors

14 13 12 11 10 9

8 7 6

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.

A
A
V
V
O
O
V
O
O
O
O
O
O

A
A
O
V
O
V
A

A A A A
A A A
V V
O

Performance
Customer satisfaction and perception
Leadership commitment
Strategic planning
Culture, courtesy and respect
Communication
Productivity and profitability
Length of stay
Occupancy
Outpatient waiting time
Employee training
Quality assurance
Employee satisfaction
Adaption of new technology and new ideas

A
O
V
V
O
O
A
O
O
O
V
O

X
O
V
V
O
V
V
V
V
V
V

A
O
X
A
A
A
A
A
A
A

A
A
O
V
O
V
A
O
O

A
O
O
V
O
V
A
O

X
V
V
V
V
V

A
A
O
X
O

2 1

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Factors

10

11

12

13

14

Driving power

1
2
3
4
5
6
7
8
9
10
11
12
13
14
Dependence power

1
1
1
1
1
1
1
1
0
1
1
1
1
1
13

0
1
1
1
1
1
0
1
0
1
0
0
0
1
8

0
0
1
0
0
0
0
0
0
0
1
0
0
0
2

0
0
1
1
0
1
0
0
0
0
1
0
0
0
4

0
0
1
0
1
0
0
0
0
0
1
0
0
0
3

0
0
0
1
0
1
0
0
0
0
1
0
0
0
3

1
1
1
1
1
1
1
0
1
1
1
0
1
0
10

0
0
0
1
0
1
0
0
0
1
1
0
0
0
4

0
0
0
1
0
1
0
0
1
0
1
0
0
0
4

0
0
0
1
0
1
0
0
0
1
1
0
0
0
4

0
0
1
0
0
0
0
0
0
0
1
0
0
0
2

1
0
1
1
0
1
1
1
1
1
1
1
0
0
10

0
0
1
1
0
0
0
0
0
0
1
0
1
0
4

0
0
1
1
0
0
1
0
0
0
0
0
0
1
4

3
3
10
11
4
9
4
4
3
5
12
2
3
3

Factors
1
2
3
4
5
6
7
8
9
10
11
12
13
14

Development of
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Scorecard for
healthcare
245

Table VIII.
Reachability matrix

Reachability set

Antecedent set

Interaction set

Level

1,7,12
1,2,7
1,2,3,4,5,7,11,12,13,14
1,2,4,6,7,8,9,10,12,13,14
1,2,5,7
1,2,4,6,7,8,9,10,12
1,7,12,14
1,2,8,12
7,9,12
1,2,7,10,12
1,3,4,5,6,7,8,9,10,11,12,13
1,12
1,7,13
1,2,14

1,2,3,4,5,6,7,8,10,11,12,13,14
2,3,4,5,6,8,10,14
3,11
3,4,6,11
3,5,11
4,6,11
1,2,3,4,5,6,7,9,10,11,13
4,6,8,11
4,6,9,11
4,6,10,11
3,11
1,3,4,6,7,8,9,10,11,12
3,4,11,13
3,4,7,14

1,7,12
2
3,11
4,6
5
4,6
1,7
8
9
10
3,11
1,12
13
14

1
4
6
5
4
5
2
7
7
7
8
3
6
8

factors for which the reachability and interaction sets are same is the top-level factor in
the ISM hierarchy.
Classification of factors
Different factors can be classified into four clusters, namely autonomous, dependent,
linkage and independent. The driving power- dependence diagram shown in Figure 5
helps to classify the factors.
The first cluster includes autonomous factors that have weak driving power and
weak dependence. These factors are relatively disconnected from the system. From
Figure 5, culture, courtesy and respect, length of stay, occupancy, employee satisfaction
and adaption of new technologies and new ideas fall into this cluster. The second
cluster consists of the dependent factors that have weak driving power but strong
dependence. Performance, customer satisfaction and perception, productivity and
profitability and quality assurance fall in this cluster. The third cluster consists of

Table IX.
Level partition

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246

Figure 5.
Driving power
dependence diagram

Driving
power

14
13
12
11
10
9
8
7
6
5
4
3
2
1

11
4

Independent

Linkage

3
6

Dependent

Autonomous
10
8
9,13,14

7
2

1
12

10

11

12

13

14

Dependence

linkage factors that have strong driving power and dependence. Any action on these
factors will have an effect on the factors in the higher level. The fourth cluster consists
of independent factors that have strong driving power and weak dependence. In this
cause, leadership commitment, strategic planning, communication and employee
training fall in the category of independent (driving) factors.
Building the ISM model
From the final reachability matrix, the interpretive structural modeling is generated.
If there is a relationship the factors i and j, this is shown by an arrow which points
from i to j. This graph is called a directed graph or diagraph. The developed ISM
model is shown in Figure 6.
Performance

Productivity and profitability

Quality assurance

Length of stay

Figure 6.
Interpretive
structural model

Customer satisfaction and perception

Culture, courtesy and respect

Strategic planning

Communication

Leadership commitment

Employee satisfaction

Outpatient waiting time

Occupancy

Adaption of new technologies and new ideas

Employee training

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From Figure 6, it can be said that:

(1)

Adaption of new technologies and new ideas will lead to reduce the length
of stay and outpatient waiting time and will also raise the occupancy of the
hospital. It will also improve the employee training.

(2)

Reduced length of stay and outpatient waiting time will automatically lead
to improve customer satisfaction and perception.

(3)

If the employee training is good, then it will lead to improve the employee
satisfaction.

(4)

If the higher management and managers of different departments and other

personnel are committed to their goals and objectives, it will lead to a better
strategic planning.

(5)

A better strategic planning will lead to improve communication between

the employees and it will also improve the behavior of the medical or nursing
staff and other personnel toward the patients.

(6)

A proper communication between the employees will improve the quality of

service and will help to assure the quality.

(7)

If the customers/patients are satisfied, profitability of the organization will

increase, that is the ultimate aim of any organization. It will also lead to
improve productivity of the organization.

(8)

If the service of quality is up to the mark, it will help to improve profitability

as well as productivity of the organization. An improved productivity and
profitability indicates that the performance of the organization is improving.

Weightage of performance measures using ANP

Saaty introduced the analytic hierarchy process for choosing the most suitable
alternative. The AHP is the mathematical theory of value, reason and judgment based
on ratio scale for the analysis of multiple-criteria decision-making problems. AHP,
premising independent elements, face certain limitations when the complexity of
decision problems increase and interaction among criteria and sub-criteria are not
implicitly covered. The ANP is a generalization of the analytic hierarchy process. ANP
is a comprehensive decision-making technique that has the capability of including
all the relevant criteria: tangible and intangible in arriving at a decision. ANP model
building requires the definition of elements and their assignment to clusters, and
a definition of their relationships. Like AHP, ANP is founded on ration scale
measurement and pairwise comparison of elements to derive priorities of selected
alternatives. In this paper, relationships obtained through the development of ISM, are
utilized as inputs for construction of the ANP model. Total weightage for four different
categories financial measures, internal measures, innovation and learning measures
and customer measures is measured. A beta version of the ANP software Super
Decision is used. The identified factors related to health care are clustered under four
categories: financial objectives, customer objectives, internal objectives and innovation
and learning objectives. The results obtained from the super decision software
(Figures 7 and 8) are as follows.
The results suggest that a hospital should give more weightage (33 percent or 0.33)
to internal processes-related measures, as the employee satisfaction, occupancy,

Development of
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Scorecard for
healthcare
247

JAMR
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Report for toplevel

This is a report for how alternatives fed up through the system to give us our synthesized values. Return to main menu.

Alternative Rankings
Graphic

248

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Figure 7.
Alternative rankings

Alternatives

Total

Normal

Ideal

Ranking

Customer measures

0.0000

0.1667

0.5000

Financial measures

0.0000

0.2500

0.7500

Innovation and learning measures

0.0000

0.2500

0.7500

Internal measures

0.0000

0.3333

1.0000

Note: Results obtained from Super Decision Software

communication, strategic planning and leadership commitment should be improved

and length of stay should be reduced. Financial and innovation and learning-related
measures have the same weightage (25 percent or 0.25). Customer-related measures
have the least weightage (17 percent or 0.17) and ranked last in the priority.
Complete framework of Balanced Scorecard for health care
From the Balanced Scorecard the overall performance score can be calculated:
Performance score for measure i Rating of measure i  Weightage of measure i
Rating of measure: excellentP
5, very good 4, good 3, average 2 and poor 1
Total Performance Score Score of measure i, i 1 to n performance measures
(Table X).
7. Conclusions
From the reachability matrix (Table VIII), the employee training has the maximum
driving power, that means to improve the employee training is the key factor. Employee
training is very important to maintain the quality of service. Next is good strategic
planning and better leadership commitment. To maintain high level of commitment and
involvement of hospital staff, volunteers and board members through education,
recognition and support, a good strategic planning is very important. Without the
absolute commitment of senior leadership, it will be very difficult to implement the
changes throughout the organization. Adaption of new technologies and new ideas will
lead to reduce the length of stay and outpatient waiting time and will also raise the
occupancy of the hospital. It will also improve the employee training. Due the changing
nature of todays health care organizations, including pressure to reduce costs, improve
the quality of care and meet stringent guidelines and competition adaption of new
technology and new ideas is very important for health care industry. Reduced length of
stay and outpatient waiting time will automatically lead to improve customer
satisfaction and perception. If the employee training is good, then it will lead to improve
the employee satisfaction. Health care workers play a vital role in patients well-being.
Their satisfaction is an important issue for all health care managers. Many measures
purport that employee satisfaction is a factor in employee motivation, employee goal
achievement, and positive employee morale in the workplace. If the higher management
and managers of different departments and other personnel are committed to their goals
and objectives, it will lead to a better strategic planning. A better strategic planning
will lead to improve communication between the employees and it will also improve
the behavior of the medical or nursing staff and other personnel toward the patients.

File

Assess/Compare

Quality assurance 12

Productivity and profitability 7

Performance 1

Financial perspective

Design

Computations
Networks

Customer perspective

Outpatient waiting time 10

Alternatives

Employee training 11

Adaption of new technologies and new idas 14

Learning and growth perspective

Innovation and learning measures

Internal measures

Customer measures

Financial measures

Culture, courtesy and respect 5

Customer satisfaction and perception 2

Help

Leadership commitment 3

Stategic planning 4

Communication 6

Occupancy 9

Length of stay 8

Employee satisfaction 13

Internal process perspective

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Development of
Balanced
Scorecard for
healthcare
249

Figure 8.
ANP model formulation

Table X.
Balanced Scorecard
for health care

1. Customer satisfaction and

perception
2. Culture, Courtesy and respect
3. Outpatient waiting time

4. Communication
5. Strategic planning
6. Leadership commitment
Financial perspectives
1. Performance
2. Productivity and profitability
3. Quality assurance
Learning and growth perspectives
1. Adaption of new technologies
and new ideas
2. Employee training
Customer perspectives

3. Occupancy

2. Length of stay

Internal business perspectives

1. Employee satisfaction

Survey/question schedule
Survey
The time elapses between the request by a
patient for a consultant and attendance on the
patient in the consultation room

Comparative survey of any two hospitals

Number of patients expressed satisfaction in
surveys/total surveyed patients
Survey of patients

Comparative study/survey of any two hospitals

Survey/question schedule (Table)

Output/input
Comparative study/audit

Survey
Number of employees expressed satisfaction in
surveys/total surveyed employees
Survey/Hospital records
Total number of days in inpatients/number of
discharges
Survey/hospital records
Average daily census/beds in service
Survey
Question schedule (Table)
Study of past performance of hospital

Measures: question schedule and other methods

17

25

25

33

Weightage
Factor rating (out of 5)
(out of 100) Target Excellent Very good Good Average

250

Strategic objectives

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Poor

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The importance of communication in health care is increasingly recognized as a

necessary element of efforts to improve personal and public health. Health communication
can contribute to all aspects of disease prevention and health promotion and is relevant in
a number of contexts. A good behavior of the staff toward the patients will improve the
customer satisfaction. Culture, courtesy and respect are very important factors for health
care industry. It is very important to maintain a good and positive behavior toward the
patient for improving the service quality. A proper communication between the
employees will improve the quality of service and will help to assure the quality.
If high-quality service has a greater presence in our practices and institutions, it would
improve clinical outcomes, patient and physician satisfaction while reducing cost and it
would create competitive advantage for those who are expert in its application. If the
customers/patients are satisfied, profitability of the organization will increase, that is
the ultimate aim of any organization. It will also lead to improve productivity of the
organization. Profitability plays an important role for any type of health care industry.
Every health care industry tries to gain profit and that is what they are working for.
Similarly, if the productivity of a hospital is higher that means that the hospital is in profit.
So, it is very important factor for health care industry. If the service of quality is up to the
mark, it will help to improve profitability as well as productivity of the organization.
An improved productivity and profitability indicates that the performance of the
organization is improving. Performance can be divided into three categories.
Performance measurement helps in reducing costs, improving the quality of care and
performance and meeting stringent guidelines. Performance management in health care
helps in ensuring that the services are improving and more efficient, motivating and
managing staff, learning from past performance and improving future performance,
increasing public and user satisfaction. Effective performance appraisal makes possible
the establishment of an employee development plan to improve performance in the
current job and prepare employees for future assignment and responsibilities. It provides
the vehicle for setting individual objectives and goals for the coming appraisal period.
The Balanced Scorecard developed for a health care system will be very helpful to
identify the objectives, measures and targets and based on that any health care
organization will be able to take initiative for those targets. The main purpose of the
Balanced Scorecard is log-term adaption and survival. Thus the focus is on
organizational mission, strategic management, program and service improvement, and
quality management.
The aim behind using the integrated approach is to correlate the strategic
objectives with performance measures, identify relevant measures and determine
weightage for various perspectives toward effective system development. Before
implementing this framework organizations should analyze the market trends,
customer preferences and competitors practices. The behavioral accuracy of the
model depends upon care taken in their collection. The presented framework
is based on case studies, so it may have influence of perceptions developed in the
case studies. The Balanced Scorecard can be used for other organizations also, but
care should be taken in considering the factors, objectives, measures, targets and
environment of the organization.
This present research is based on secondary information gained through analysis of
select case studies. It is a combination of two case studies of foreign health care, one
Malaysian organization of knowledge management and two case studies of Indian
health care. These inputs gave a hybridized output, the Balanced Scorecard, some
perspectives will definitely change but it can be used for Indian context as well as for

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252

other countries also. However, we propose a questionnaire schedule in Appendix to

improve upon the validity of the proposed framework through extensive studies in
health care system. This research has reported as integrated approach of Interpretive
Structural Modeling and ANP is used to develop a complete framework of Balanced
Scorecard. A combination of ISM and ANP is attractive in a way that ISM can satisfy
the input demand of ANP output of ANP results in a more usable outcome, which is
sometimes not possible with the use of any one technique. Further development of
more sophisticated interface integration using computer programming could increase
the efficiency of the proposed approach.
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Appendix

Sl. no.

Factor

How to evaluate: question schedule

F1.

Performance

To evaluate performance at any hospital some question have to

be asked to the managers:
1. Have the costs of medicines and other medical facilities been
reduced?
2. Is the quality of service improving?
3. Is your organization is able to achieve its goals and
objectives?
4. Are the different kind of services in hospital and their
efficiency improving?
5. Are the employees satisfied?
6. Are the customers satisfied?
7. What is your vision, mission and objectives for future?
It can be done by doing a survey at any hospital
Customer satisfaction Number of patients expressed
satisfaction in surveys/Total surveyed patients
For the survey many question can be asked to the patients:
1. Are you satisfied by the medicines prescribed by the doctor?
2. Are you satisfied by the behavior and treatment of the
medical or nursing staff?
3. Are you satisfied by the services or facilities provided by the
hospital during your treatment?
Is the Hospital administration or leaders of different departments
committed to their work or not?
It can be done by doing a study of past performance of the
mentioned personnel
It can be done by asking management, what is your mission,
vision, values, objectives and planning?
The simple way of know whether the medical or nursing staff
and other personnel showing respect, courtesy and respecting
culture of the patient is the survey of different patients. It is the
part of customer satisfaction
Is there a proper communication between hospital
administration, managers of different departments, medical staff
and other personnel?
The simple way to know communication is good or not is the
survey of hospitals performance
It is simply the ratio of amount of output produced and input
resources
It is equal to Total number of days in inpatients/Number of
discharges
For this have to look for hospital records
Occupancy Average daily census/Beds in service
For this also have to look for hospital records
The time elapses between the request by a patient for
a consultant and attendance on the patient in the
consultation room
Survey is the method to calculate outpatient waiting time

F2.

Customer satisfaction
and perception

F3.

Leadership
commitment

F4.

Strategic planning

F5.

Culture, courtesy and

respect

F6.

Communication

F7.

Productivity and
profitability
Length of stay
Occupancy

F8.
F9.
F10.

Outpatient waiting
time

(continued)

255

Table AI.
Question schedule

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Table AI.

Sl. no.

Factor

How to evaluate: question schedule

F11.

Employee training

F12.

Employee satisfaction

F13.

Quality assurance

F14.

Adaption of new
technology and
new ideas

A comparative survey of any two hospital can be conducted,

based on the performance we can rank them, say out of 10 to
know whether the hospital have trained employees or not
Number of employees expressed satisfaction in surveys/Total
employees surveyed
A survey has to be conducted for different employees of the
hospital
It is an audit to make sure that the quality of work or service is
good for company or not?
To measure this a comparative study can be conducted to know
whether mandatory standards are being met or not?
A comparative survey of any two health care centers can be made
to compare the adaption of new ideas, technologies, facilities,
services, instruments adapted by the health care centers

About the authors

Kailash Meena is a Student of the Department of Industrial Engineering and Management,
Indian Institute of Technology Kharagpur, West Bengal, India.
Dr Jitesh Thakkar is an Assistant Professor in the Department of Industrial Engineering
and Management at IIT Kharagpur. He has published extensively in the various peer-reviewed
international journals like Production Planning and Control, International Journal of Productivity
and Performance Management, International Journal of Six Sigma and Competitive Advantage,
Journal of Manufacturing Technology Management, Journal of Small Business and Enterprise
Development, International Journal of Innovation and Learning, etc. He is presently a reviewer
for select international journals in the area of quality and supply chain management. Dr Jitesh
Thakkar is the corresponding author and can be contacted at: jtiitkgp@gmail.com

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