Duke University Children’s Hospital

(Part 2)


The prime objective was to set goals for the patients and describe the impeding financial challenges. Administrators showed the clinicians raw data which indicated that the average stay of a patient at DCH was 20% longer when compared to the national average. At $15,000 average per-patient cost, DCH was spending more money than what it was actually bringing in (Meliones, 2000). Clinicians then began to understand that all groups at DCH would have to readjust their individual missions and begin paying attention to the cost factor.

DCH clearly saw the need to keep both the administrators and the clinicians highly involved and bring their missions into perfect alignment. To realize this goal, DCH looked to a practical management method that worked wonders for several Fortune 500 companies: The Balanced Scorecard (BSC). To create a well-designed BSC, it is important that the four perspectives of BSC form a chain of cause-and-effect relationships (“The Balanced,” n.d.). A BSC framework provides a foundation to execute a good strategy efficiently and manage change successfully (Rohm, 2006). DCH used BSC, aiming to align its four equally critical quadrants: finance, customer (patient) satisfaction, internal business process, and staff satisfaction.

Clinicians and administrators at DCH were made to understand that if too much is sacrificed in one quadrant to cater to another, then the hospital as a whole will lose its balance. DCH for example, could fire 50% of its staff to cut costs and give a boost to their financial quadrant, but that would bring down the overall quality of service and throw the customer quadrant out of balance. Similarly, if DCH could assign more number of patients to each nurse to improve the productivity of internal business quadrant, but that would give more scope to errors –a tradeoff that is totally unacceptable. Development and implementation of a BSC is a labor intensive task, since it is a methodology that is consensus driven. To make the BSC work, DCH started a pilot project, initiated a top-down reorganization and procedural work redesign, and developed a customized information system. The most challenging task for DCH however was to convince its employees to work in new ways. Doctors and managers initially viewed the move to organize them into teams as one that would cause their powerbase to shift. Almost all employees complained that a systematic approach to cost control was just like “cookbook medicine” (Meliones, 2000). It needed a lot of persuasion, reassurance, and persistence to get all employees at DCH to buy into the new process.

For employees to change their minds, and for DCH to sell BSC throughout the organization, people had to see that the BSC could be successful in a pilot project in one of the hospital’s areas. The pilot project started in the pediatric ICU by reorganizing the roles that were played by people working in the ICU. Pediatric ICU transitioned from a mission-bound department to multidisciplinary, goal-oriented teams that each focused on a specific illness or disease. Such teams at DCH were called the clinical business units. Lead physicians and lead administrators of these teams shared responsibility, and together they analyzed information on finance, patient and employee satisfaction, and healthcare initiatives and trends (Meliones, 2000). These clinical business units organized care coordination rounds and brainstorming sessions to come up with solutions to complicated patient cases. A patient’s care document (shared with patients) was created to record everything, right from treatment suggestions to care after discharge from the hospital. Apart from the strategic management processes, mission oriented processes and support processes are important from a business process perspective (“History Of,” 2008). The teams developed best practices, called clinical pathways so that everyone could learn from the successful experiences shared across the organization. The outstanding results achieved by DCH stand as a testimony to the fact that DCH did a good job in designing and implementing its BSC. Within a span of six months, the BSC approach brought down the ICU cost-per-case by 12% and increased patient satisfaction by 8% (Meliones, 2000). The success of the pilot project was so great that DCH implemented customized BSC templates in all areas across the hospital.




Meliones, J. (2000). Retrieved June 14, 2008.

The Balanced Scorecard. (n.d.). Retrieved June 14, 2008.

Rohm, H. (2006). Phase One: Building A Balanced Scorecard. Retrieved June 14, 2008.

Performance Management. (2005). Retrieved June 14, 2008.

What is the Balanced Scorecard? (n.d.). Retrieved June 14, 2008.

HISTORY OF THE BALANCED SCORECARD. 2008. Retrieved June 14, 2008.



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