Balancing multiple objectives of stakeholders of an
academic hospital with the Balanced Scorecard
Master Thesis: Management Control in Healthcare
MSc BA – Organizational & Management Control
University of Groningen
Faculty of Economics and Business
Supervisor: dr. B. Crom (DUI 815)
Co-assessor: dr. M.P van der Steen (DUI 812)
Martijn de Waal
s2170795
m.de.waal.1@student.rug.nl
Abstract:
The purpose of this study was to identify whether the Balanced Scorecard (BSC) could function as a tool that integrates the objectives of different stakeholders in a non-profit organization, and how this
is done. Existing literature analysed this in commercial companies, but to the best of our knowledge, it does not provide a decisive answer for non-profit organizations. This research has been conducted
at two support departments of the University Medical Centre Groningen (UMCG), namely the Radiology and the Operation Centre (OC) department. This case study contributes in two ways to existing literature. First, we conclude that the function in which the BSC is used might be influenced by the role of the management accountants. The role of the management accountants of the UMCG should be converted to business partners to fit the requirements of the support departments, in order to better integrate the objectives of different stakeholders. Second, we propose a hierarchy of
functions in which the BSC should be used in hospitals. Existing literature regarding the function of the BSC in hospitals considered the functions equally. We claim that by using the BSC in this hierarchy of functions, the objectives of different stakeholders might be better integrated in the BSC.
This is the fact because the BSC might then be better aligned with both the strategy of the support departments, and with the requirements of related departments. The results are based on document
analysis and seven interviews, conducted with different managers and controllers of both support departments and UMCG general. Additionally, this research has important implications for managers,
since it provides aspects to consider when implementing the BSC in non-profit organizations.
Keywords:
Balanced Scorecard, Non-profit organization, Hospital, Support department, Stakeholders, Hierarchy of objectives, Integration of objectives, Hierarchy of functions
Word count: 20.769
Table of Content
1. Introduction ... 4
2. Literature Review... 7
2.1 Recent developments in the Dutch healthcare sector ... 7
2.2 The Balanced Scorecard ... 8
2.2.1 First generation BSC ... 8
2.2.2 Second generation BSC ... 8
2.2.3 Third generation BSC ... 9
2.3 Stakeholder theory ... 9
2.4 Hierarchy of objectives ... 10
2.5 Functions of the BSC at hospitals ... 12
2.6 BSC design at hospitals ... 14
2.7 Conceptual model ... 15
3. Methodology ... 16
3.1 Research method... 16
3.2 Research quality criteria ... 17
3.2.1 Controllability ... 17
3.2.2 Reliability ... 17
3.2.3 Validity ... 17
3.3 Data collection ... 18
3.3.1 Case study method ... 18
3.3.2 Case hospital ... 18
3.3.3 Semi-structured interviews (Primary data collection) ... 19
3.3.4 Document analysis (Secondary data collection) ... 19
3.4 Interview Questions ... 19
3.5 Data analysis ... 20
4. Results ... 20
4.1 Objectives of the support departments ... 21
4.2 Internal and external stakeholders of the support departments ... 21
4.2.1 Stakeholders of the Radiology department ... 21
4.2.2 Stakeholders of the OC department ... 22
4.2.3 Relation to conceptual model ... 23
4.3 Hierarchy of objectives ... 23
4.4 Current functions of the BSC ... 24
4.4.1 Functions of the BSC at the Radiology department... 24
4.4.2 Functions of the BSC at the OC department ... 26
4.5 The design of the BSCs of the support departments ... 27
4.5.1 BSC of the Radiology department ... 28
4.5.2 Integration of objectives in the BSC of the Radiology department ... 28
4.5.3 BSC of the OC department ... 28
4.5.4 Integration of objectives in the BSC of the OC department ... 29
4.5.5 Relation to conceptual model ... 29
5. Discussion ... 30
5.1 Recent developments in the Dutch healthcare sector ... 30
5.2 Hierarchy of objectives ... 30
5.3 Functions of the BSC ... 31
5.4 BSC design and integration of objectives ... 33
6. Conclusion ... 35
6.1 Summary of findings ... 35
6.2 Theoretical contributions ... 36
6.3 Managerial implications ... 37
6.4 Limitations and directions for further research ... 37
References... 38
Abbreviations ... 44
Appendices ... 45
Appendix I: BSC Perspectives. ... 45
Appendix II: Organization Chart UMCG ... 46
Appendix III: Interview questions with literature references ... 47
Appendix IV: Codebook ... 51
Appendix V: Example of a transcribed interview ... 52
1. Introduction
An increasing amount of academic strategy literature claims that many organizations have found traditional performance measures (e.g. ex post costs, profits, and return on investment) to be insufficient guides for decision making in today’s rapidly changing, hyper-competitive environment (Lin, Q et al., 2013; Lupi et al., 2011; Malina and Selto, 2001). Therefore, many organizations adopted the Balanced Scorecard (BSC) as a strategic performance measurement system (PMS), which implies that the BSC of an organization is linked to their strategy (Yang and Tung, 2006). The BSC has been widely adopted by many organizations since 1990. After Kaplan and Norton (1992, 1996a) introduced the BSC, it has evolved from a strategic performance evaluation system to an effective tool of
strategy transformation and implementation. Additionally, according to Lin, Z et al. (2014), more than 80% of the top 1.000 corporations in the world adopted the BSC. Beyond the business world, the BSC has also been successfully implemented at non-profit organizations in for example
government, healthcare and education, although some parts of the BSC design are altered (Lin, Z et al., 2014; Grigoroudis et al., 2012).
As the BSC was originally conceived, the aim was to address problems relating to the measurement of organizational performance. The founders of the BSC (Kaplan and Norton) argued that traditional systems that were used to measure results in the majority of organizations, focused almost
exclusively on financial indicators (Bisbe and Barrubés, 2012). Nevertheless, in some sectors such as healthcare, in which non-financial indicators were widely used for operational management, there is an undesirable dichotomy between the economic vision of management teams and the clinical view of healthcare professionals. Unfortunately, at that time there were no measurement systems that were able to effectively integrate these two visions (Grigoroudis et al., 2012; Bisbe and Barrubés, 2012). Before the BSC was introduced in hospitals, there were already some management tools (i.e. dashboards) that tried to bridge the gap between different stakeholders’ interests, by combining financial and non-financial indicators. However, these management tools did not provide a structured combination of indicators with strategic implications (Bisbe and Barrubés, 2012). In contradiction, the BSC does provide a structured combination of financial and non-financial indicators. Therefore, the BSC is an often-used PMS in healthcare organizations such as hospitals (Bisbe and Barrubés, 2012).
Regarding the management of stakeholders, Sundin et al. (2010) noticed that commercial companies often have difficulties with balancing multiple objectives of different stakeholders. A stakeholder can be defined as any group or individual who can affect, or is affected by the achievement of the objectives of an organization (Freeman, 1984). A distinction can be made between internal and external stakeholders (Darnall et al., 2009). Internal stakeholders include management and non-management employees who have a direct economic stake in the organization (Waddock and Graves, 1997; Freeman, 1984). External stakeholders have a more limited control on important organizational resources (Sharma and Henriques, 2005).
Sundin et al. (2010) argued that the BSC might provide a solution for balancing objectives of different stakeholders. The BSC has the potential to enable the management of multiple objectives through the systematic recognition of stakeholders and their objectives, balancing these with other
At these companies, the hierarchy of objectives was traditional by placing financial perspectives at the top, which means that these are regarded as the most important objectives for the company. Nevertheless, there is hardly any research in this topic regarding organizations with a different hierarchy of objectives, compared to the state owned corporation they investigated. Does the BSC also provide a solution for balancing the conflicting objectives of both internal and external stakeholders at organizations with a different hierarchy of objectives?
Organizations that often have a different hierarchy of objectives, and in which the BSC is often applied, are hospitals. Some researchers (Aidemark, 2001; Fitzpatrick, 2002; Aidemark and Funck, 2009) argued that the BSC of hospitals need not to be in a certain hierarchy, but in a network of perspectives in balance. Aidemark (2001) for example argued that the cause-and-effect relationships on which the BSC is based could not be perfectly applied in healthcare organizations, because the supposed link between the customer and finance perspective is missing. Therefore, the hierarchy of the four perspectives was replaced by the concept of balance when implementing the BSC. Instead of being in a certain hierarchy, the four perspectives of the BSC were seen as a network of perspectives in balance. Hence, in the opinion of Aidemark (2001), the different perspectives of the BSC in hospitals should all four be considered as important.
Additionally, Voelker et al. (2001) argued that the hierarchy of objectives at non-profit organizations such as hospitals is divergent, compared to commercial organizations. Commercial companies often place financial perspectives at the top of the hierarchy of objectives. Nevertheless, in the non-profit sector, attaining a certain mission is often more important, and financial objectives are in most cases enabling for attaining the mission of non-profit organizations. Thus, the studies of Aidemark (2001) and Voelker et al. (2001) provide evidence that hospitals often have a different hierarchy of objectives. That is why this research is conducted at hospitals, more specifically at academic hospitals.
Due to recent developments, such as the introduction of Diagnosis Treatment Combinations (DTC), the demands on academic hospitalists have grown. DTC can be defined as the whole of hospital and medical specialist activities and services, arising from the demand for care by a patient consulting a specialist in a hospital (Custers et al., 2007). By introducing DTC, the role of the market has been introduced in the Dutch hospital sector. The introduction of DTC resulted in increased competition in the Dutch healthcare sector (Custers et al., 2007). The introduction of competition in the hospital sector leads to increased demands for high quality information and strategic performance
measurement. Despite the increased demands, academic hospitals are often also expected to make significant contributions in quality improvement, patient safety, research and education. Therefore, the complexity of academic hospitals has increased with the introduction of DTC.
This study will thus focus on how different objectives of stakeholders are integrated in the BSC design, and how the BSC is actually used. Does a specific way of using the BSC leads to better integration of the different objectives of stakeholders?
There are several reasons why it is important to conduct this research in the healthcare sector, in order to analyse how the BSC is used and how conflicting objectives are integrated in the BSC. First, Aidemark and Funck (2009) indicated that in theory the BSC calls for unambiguous goals, which can be decomposed and clearly operationalized. Nevertheless, healthcare organisations such as hospitals often have multi-dimensional goals. This is caused by the fact that the political, administrative and medical-professional spheres in healthcare organizations often have different non-congruent goals. Furthermore, some studies provided evidence that healthcare organizations such as hospitals are usually characterized as organizations with many actors that have contradictory interests (Ansell, 1990; Östergren and Sahlin-Andersson, 1998). Hence, on beforehand the BSC does not seem to be perfectly suitable to reconcile conflicting objectives of stakeholders in hospitals. Despite concerns about the suitability of the BSC in hospitals, it is an often-used tool in hospitals. Therefore, it is interesting to analyse how the BSC is actually used and how the objectives of different stakeholders are integrated in the BSC design.
In addition, Arnaboldi and Lapsley (2004) also provided evidence that supports the decision to conduct research in a public academic hospital. Arnaboldi and Lapsley (2004) hesitate whether management tools as the BSC can be easily transported from the private sector to the more complex public sector, while still attaining the intended aims. The fact that the BSC is successful in assimilating conflicting objectives in the private sector does not imply that this will also be the case in the public sector. That is why this study will provide evidence how the BSC might be used at public academic hospitals to integrate different objectives of stakeholders.
Hence, these two studies show that initially the BSC does not seem to be perfectly suitable to integrate conflicting objectives of stakeholders at organizations in the healthcare sector. However, the BSC is still an often-used PMS in the healthcare sector. Therefore, this research will contribute to existing academic literature by further deepening our understanding whether and how managers are able to integrate conflicting objectives with the BSC, by analysing how this happens in the healthcare sector. To the best of our knowledge, this will be the first study that investigates at a non-profit organization, how the BSC can be used to effectively manage the objectives of different stakeholders. It is of importance to deepen this understanding, because Malvey et al. (2002) described the
healthcare environment of hospitals as highly competitive. The survival of a hospital may accordingly depend on how well stakeholders are managed (Malvey et al., 2002).
The main objective of this research is thus to investigate how the objectives of stakeholders are integrated in the BSC of the support department of an academic hospital. This will be conducted by identifying the objectives of the support departments and of their stakeholders. It will also be analysed how the BSC is used to manage the support departments. In the literature section, it will be explained that the BSC can be used in different functions in hospitals. Moreover, the BSC designs of the support departments will be identified, in order to analyse how and whether the objectives of the stakeholders are effectively integrated in the BSC. The following research question will be used:
“How is the BSC used in non-profit organizations (academic hospitals), which have a different hierarchy of objectives, in order to integrate the different objectives of both internal and external stakeholders?”
Due to recent developments such as the introduction of DTC, managers of the support departments of academic hospitals often have difficulties how to implement conflicting objectives in their PMS. This research will investigate whether and how managers of academic hospitals implement conflicting objectives in their BSC design, and how they actually use the BSC. Managers of hospital departments could use the results of this study to attain a better fit of the BSC to their department. They might for example use the results of this research to design a BSC that is better aligned with the objectives of different stakeholders. By integrating the objectives of different stakeholders in the BSC of a hospital department, the amount of conflicts between different stakeholders’ objectives might be decreased. Current studies in how to reconcile conflicting objectives within organizations’ BSCs only considered commercial organizations. However, an important difference between commercial and non-profit organizations is that non-profit organizations have a different hierarchy of objectives. Furthermore, Arnaboldi and Lapsley (2004) indicated that management tools such as the BSC could not be easily transported from the private sector to the more complex public sector, while still attaining the intended aims. That is why this study will contribute to existing literature by
investigating a non-profit organization in the healthcare sector. Currently, there is only a scarce field of literature regarding the management of multiple objectives in the non-profit sector. Therefore, this research will be an important first step to analyse how to integrate multiple objectives by using the BSC in non-profit organizations, with a different hierarchy of objectives.
2. Literature Review
To provide an answer to the research question: “How is the BSC used in non-profit organizations
(academic hospitals), which have a different hierarchy of objectives, in order to integrate the different objectives of both internal and external stakeholders”, a theoretical framework will be constructed to
explain the most important concepts and their relations. The first paragraph provides an overview of recent developments in the Dutch healthcare sector. These developments increased the demands for academic hospitals, because they lead to financial pressures. The increased financial pressures might lead to more conflicts between different stakeholders’ objectives and are accordingly important to consider in this study. In the second paragraph, a description of the characteristics of the BSC will be provided to give an overview how the BSC has been developed from a performance evaluation system to an effective tool of strategy transformation and implementation. This is important because it can be used to systematically analyse how the case-organization implemented the BSC. In
paragraph three, stakeholder theory is introduced to provide a comprehensive view on stakeholders. The stakeholders of an academic hospitals’ support department have different objectives. Therefore, the fourth paragraph provides a comprehensive explanation of the hierarchy of objectives of an organization. This is important because the hierarchy of objectives determines which objectives of a department and its stakeholders are considered as important. The fifth paragraph systematically identifies different functions of the BSC, to determine how the BSC can be used in hospitals. This is of importance because it might be the case that different use of the BSC leads to better integration of the objectives of different stakeholders in the BSC. That is why in the sixth paragraph the different BSC designs of hospitals, derived from existing literature, will be described. Some hospitals changed the BSC in its structure and/or perspectives to be suitable for the hospital. This has important implications since it might be the case that different use of the BSC, leads to a different BSC design with better integration of the objectives of different stakeholders. Finally, in the seventh paragraph, a summary of the sub-questions and the consequent conceptual model will be provided.
2.1 Recent developments in the Dutch healthcare sector
Until the mid-2000s, the Dutch healthcare system was a system in which there was regulated
Despite major changes, the reforms run the risk of getting stuck in the middle between a centralised system based on state-controlled supply and prices, and a decentralised system of regulated
competition, providing insufficient incentives for the provision of quality services and expenditure control (Schut et al., 2013).
In recent years, reforms expanded the role of the market in the Dutch hospital sector and reinforced budget controls. This was caused by the introduction of Diagnosis Treatment Combinations (DTC). The major reason of introducing DTC was to create more transparency. Moreover, the introduction of DTC created the possibility for healthcare providers and insurers to negotiate about prices. Hence, this should lead to a better match between costs and provided services (Custers et al., 2007).
However, more competitive markets require, at least, provision of high quality information, appropriate financing and better efficiency incentives. Therefore, the demands for high quality strategic performance measurement in hospitals increased in the past years. Moreover, due to the ageing population, cost efficiency and performance measurement will become increasingly
important for healthcare organizations in the coming years (Schut et al., 2013). In conclusion, the recent developments in the Dutch healthcare system lead to increased demands on hospitals in the Netherlands. It is important to recognize the increased demands, since these might lead to more conflicting objectives of the different stakeholders of hospitals.
2.2 The Balanced Scorecard
2.2.1 First generation BSC
Based on existing literature, we could indicate three different stages of the evolution of the BSC (Lawrie and Cobbold, 2004; Perkins et al., 2014). The first stage BSC measures organizational performance across four balanced perspectives: (1) Financial, (2) Customer, (3) Internal business processes, (4) and Learning and growth (Kaplan and Norton, 1996b). At this stage, measurement systems without cause-and-effect logic can also be qualified as BSCs (Malmi, 2001). The four perspectives are:
(1) How do we look at shareholders? (Financial perspective) (2) How do customers see us? (Customer perspective)
(3) What must we excel at? (Internal business process perspective)
(4) Can we continue to improve and create value (Learning and growth perspective)?
A more comprehensive description of the perspectives can be found in Appendix I.
2.2.2 Second generation BSC
There were some practical difficulties with the first generation BSCs. One of these issues was that the definition of the BSC was initially vague, allowing for considerable interpretation (Lawrie and
Cobbold, 2004). A solution for this problem was found by introducing the concept of strategic
objectives. These were presented as short sentences, linked to the four perspectives of the BSC. They were used to capture the essence of the strategy of the organization to each of the areas. This was an improvement, compared to the first generation, because strategic objectives were developed directly from strategy statements, based on a corporate vision or strategic plan (Lawrie and Cobbold, 2004).
2.2.3 Third generation BSC
The third generation BSC was a refinement of the second generation design characteristics and mechanisms to give better functionality and more strategic relevance (Lawrie and Cobbold, 2004). These developments are a result of issues related to target setting and the validation of strategic objective selection. These issues enabled the development of an extra element: the “destination statement”. A destination statement describes in detail what the organization is likely to look like at an agreed future date. In many cases this builds on existing plans and documents (Lawrie and Cobbold, 2004). Central aim of the destination statement was to identify inconsistencies in the measures chosen for the BSC. Thereafter, by requiring managers to consider causality between the measures chosen and the overall objectives, they might choose more suitable measures and objectives (Lawrie and Cobbold, 2004; Perkins et al., 2014).
Hence, in general the BSC translates an organization’s mission and strategy into a comprehensive set of performance measures, which provides the framework for a strategic measurement and
management system (Kaplan and Norton, 1996b). The crux of the BSC is the link of performance measures in a causal chain, which passes through the four different perspectives.
Furthermore, the BSC helps to balance the financial and non-financial performance measures, and to build up causal links between leading and lagging indicators, the short term and long-term
performance measures, and the internal and external performance measures. As a result, desirable performance outcomes might be attained through the application of the BSC (Lin, Z et al., 2014). Thus, this paragraph illustrates how the BSC has evolved from a PMS to an effective tool of strategy transformation and implementation. It is important to consider the evolution of the BSC since this transformation proves that the BSC can be used in different ways. In paragraph 2.5, different functions of the BSC will be explained more specifically for hospitals.
2.3 Stakeholder theory
In this paragraph, stakeholder theory is introduced to give a more comprehensive view on stakeholders. The core of stakeholder theory has at least three aspects (Werhane, 2000): - the purpose of a firm;
- the relations between the firm and its stakeholders; - the interrelationships among stakeholders.
Whereas the primary responsibility of managers is to maximize profits (Werhane, 2000), or the primary purpose of a firm is to maximize stockholders’ welfare, stakeholder theory argues that the goal of any firm is the flourishing of the firm and all its primary stakeholders. The purpose of the firm is identified with stakeholder interests. Werhane (2000) then argued that in their example, all stakeholders are individuals or groups, made up of individuals. According to Edward Freeman, (founder of stakeholder theory) in every stakeholder relation, the stakes of each are normative reciprocal, for which each party is accountable. This means that each stakeholder can affect the other in terms of harms and benefits of the relation. According to Werhane (2000), obligations between stakeholders are derived on two grounds:
(1) Stakeholder relations are relationships between persons or groups, so the firm and each of its stakeholders are reciprocally morally accountable to each other.
(2) Stakeholder relationships have additional obligations, because of unique organizationally defined and role-defined relationships between firms and its stakeholders.
For instance, a hospital has liabilities to its employee-professionals because: (1) they are moral agents, (2) they are employees, and (3) they are professionals and are hired as professionals. On their turn, healthcare professionals have role obligations to: (1) the hospitals that employ them, (2) to patients, (3) to their profession, and (4) to their professional association. Moreover, they may also have role liabilities to the communities they serve and to healthcare payers. On top of that, they have common moral obligations to all of these populations, because of their existence in the community (Werhane, 2000). This example elucidates that hospitals have many different stakeholders, that all have different objectives. Therefore, it is important to analyse how the objectives of different stakeholders can be best managed.
Multiple objectives exist for an organization in a field of stakeholders and their individual goals, along with the goals associated with the short-term and long-term time horizons of the organization (Cyert and March, 1963; Simon, 1964). Moreover, due to limited resources and the reality that reaching one objective can be detrimental to the achievement of another objective, these objectives can be conflicting (Cyert and March, 1963; Jensen, 2001). Some studies (Perrow, 1961; Georgiou, 1973) indicated that one objective is not more important than another as such. Given the potential conflicting nature of objectives, managers must decide between prioritizing and maximizing particular objectives, or the adoption of a satisficing approach (Simon, 1964). The maximizing approach means that managers attempt to choose the best available alternative, according to some criteria with the aim of attaining the optimal outcome. The satisficing approach means that
managers try to balance the objectives of different stakeholders. The latter approach is used in this study, since the BSC is a tool that might balance the objectives of different stakeholders. By
identifying the stakeholders and what strategies are needed to attain their objectives, a foundation is provided to enable the balancing, thus satisficing of these objectives. Therefore, this approach is used to analyze how the BSC can be used in hospitals in order to balance the multiple (conflicting) objectives of different stakeholders. To analyze whether objectives are conflicting, the objectives of the support departments have to be identified. The following sub-question will be used to map these objectives (SQ1): What are the main objectives of the support departments of an academic hospital,
as established by the management of the support department?
Moreover, it is of importance to identify the most important stakeholders and their objectives to analyse if objectives are conflicting. This will be conducted by using the following sub-questions: (SQ2): Who are the most important internal and external stakeholders of the support departments of
the academic hospital? (SQ3): What are the objectives of different stakeholders of the academic hospitals’ support departments, regarding the support departments?
In the next paragraph, the hierarchy of objectives will be first explained to analyze the different priorities that organizations have with regard to different objectives.
2.4 Hierarchy of objectives
Figure I: BSC perspectives profit-organizations (Voelker et al., 2001)
More specifically, it will be analysed how the hierarchy of objectives of non-profit organizations differs from the hierarchy of objectives of commercial companies. Figure I illustrates the hierarchy of objectives of a typical for-profit organization, according to Kaplan and Norton (1992). In this
commercial organization, the financial perspective is placed at the top of the hierarchy, which means that this is the most important perspective for commercial organizations.
However, as previously mentioned, the hierarchy of objectives of commercial organizations is not identical as for non-profit organizations such as hospitals. Aidemark (2001) claimed that in the hospitals he analysed, the four perspectives were not regarded as a hierarchy, but as a network of perspectives. This means that one perspective is not more important than another perspective, but the perspectives are all regarded as important. In this sense the BSC is useful, because it helps hospitals to focus on the interaction between perspectives. Therefore, the different perspectives are all regarded as important (Aidemark, 2001; Fitzpatrick, 2002; Aidemark and Funck, 2009).
Figure II: BSC perspectives non-profit-organizations (Voelker et al., 2001)
This means that a hospital has to attain a certain financial performance in order to be able to fulfil their mission (Voelker et al., 2001).
Hence, the studies of Aidemark (2001) and Voelker et al. (2001) elucidate that the hierarchy of objectives in hospitals is likely to differ from the hierarchy of objectives of commercial organizations. It is important to recognize the difference in the hierarchy of objectives at different organizations, since this might influence the BSC design. The hierarchy of objectives of the support departments will be analysed, using the following sub-question: (SQ4): What is the hierarchy of objectives of an
academic hospitals’ support department?
In the next paragraph, it will be described in which different functions the BSC can be used in
hospitals. This is of importance since it might influence the extent to which the objectives of different stakeholders are integrated in the BSC.
2.5 Functions of the BSC at hospitals
As explained in paragraph 2.3, the support departments of an academic hospital are part of a field with a lot of different stakeholders and objectives. It might be the case that by using the BSC in a different function, the objectives of the stakeholders are better integrated in the BSC design. Therefore, this paragraph describes the different functions of the BSC that can be identified from existing literature. Some studies analysed the implementation of the BSC at hospitals, with specific attention to the function of the BSC. The aim of these studies was to analyse how the BSC should be used at hospitals, in order to be effectively implemented. As mentioned by Aidemark and Funck (2009), this is an important concern, because initially the BSC does not seem to be perfectly suitable for strategic performance evaluation in hospitals. On the contrary, Voelker et al. (2001) argued that the BSC is perfectly suitable for organizations in turbulent industries, such as healthcare. They argued that due to increasing competition in this sector, management systems that integrate diverse groups and focus them on organizational strategies become more important. The BSC is a PMS that captures this dynamic complexity and is accordingly perfectly suitable for healthcare organizations such as hospitals (Voelker et al., 2001). Based on existing literature, we propose the following comprehensive overview of functions of the BSC in hospitals: (Table I)
Six functions of the BSC in hospitals
Function
Description
Performance Measurement Tool *
The BSC was originally conceived as a PMS. This PMS had no, or hardly any link with the strategy of an organization (Kaplan and Norton, 2001).
Strategic Management Control
Initially, the BSC was conceived as a PMS. However, it appeared quickly that performance measurement creates focus for the future. Therefore, the BSC developed from a PMS to a strategic management control tool (Kaplan and Norton, 2001). The BSC as a strategic management control system uses a framework and core principles to translate an organizations’ mission and strategy into a comprehensive set of performance measures, and strategically aligned initiatives (Inamdar and Kaplan, 2001). The framework provides a balance between short- and long-term objectives, financial and non-financial measures, and external and internal performance indicators. Detailed cause-and effect reasoning displayed in a strategy map, links the drivers of the strategy to desired financial and customer outcomes (Kaplan and Norton, 2000).
Communication Tool ** Aidemark (2001) found that the BSC helps to reduce tensions between
Quality Management and Improvement Tool ***
Kollberg and Elg (2011) found that the BSC could be used as a tool for improving internal capabilities and supporting organisational development. More
specifically, the BSC is used as a tool by management and employees in discussions, knowledge creation, follow-up and reporting processes. It provides the organisation a structure that increases the understanding and meaning of improvements in the organisation, and emphasises the need of different improvement initiatives. Due to the fact that the BSC helps to focus the organisation on performance improvements, Kollberg and Elg (2011) suggest that the BSC can be viewed as a quality management and improvement tool when used in public health care.
Benchmarking Tool The study of Harber (1998) describes how the BSC can be used as a
benchmarking tool. In his research, different departments of a Canadian hospital quarterly illustrate their results with the BSC to senior management. These reports are available for any department in the organization. Departments are encouraged to share information, specifically in the successful achievement of performance results. This is a way of internal benchmarking with the aim of achieving corporate performance results.
Complementary Budgeting Tool
According to Gumbus et al. (2003), the BSC in more mature organizations can also serve as a complementary budgeting tool. This can be done by setting the capital budget, by using priorities as determined in the BSC metrics. The process of using the BSC as complementary budgeting tool is highly participatory, by allowing both senior management and clinical chairman to assign weights to major capital expenditures.
Table I: Functions of the BSC in hospitals
(Funck, 2009; Inamdar and Kaplan, 2001; Kaplan and Norton, 2001; Kaplan and Norton, 2000; Aidemark, 2001; Johanson et al., 2006; Kollberg and Elg, 2011; Harber, 1998; Gumbus et al., 2003)
* Funck (2009) identified the BSC function “Management Control”. Anthony (1965), one of the founders of the term management control, defined management control as: “the process by which managers assure that resources are obtained and used effectively and efficiently in the
accomplishment of the organization’s objectives”. In our view, this definition of management control illustrates that the term “Management Control” is too broad for describing the BSC as a tool to measure performance. That is why we decided to change the definition of the BSC as a tool to measure performance to “Performance Measurement Tool”.
** In their study, Kollberg and Elg (2011) identified the function “Information and Communication Tool”. Nevertheless, in our opinion the BSC in this specific function is only used as a communication tool instead of also being used as an information tool. Accordingly, we changed the function to “Communication Tool”.
*** Funck (2009) identified “Quality Management Tool” as a function of the BSC in hospitals.
However, when considering the description of this function by Kollberg and Elg (2011), we propose to change the function to “Quality Management and Improvement Tool”. Kollberg and Elg (2011) mentioned that if organizations use the BSC as a quality management tool, it provides the organisation a structure that increases the understanding and meaning of improvements in the organisation, and emphasises the need of different improvement initiatives. Therefore, we argue that it is important to add improvement to the function label. Thus, we decided to use the function “Quality Management and Improvement Tool” in our study.
As mentioned by Gumbus et al. (2003) the BSC functions as a PMS, but can simultaneously function as a communication tool, since the results of the performance measurement can be used in order to inform important stakeholders about the performance of the hospital. Hence, we argue that
different functions of the BSC in hospitals that are identified may be used simultaneously.
It is important to recognize that the BSC can be applied for different purposes. Zelman et al. (2003) argued that the BSC could be a relevant framework for hospitals, provided that it should be modified to fit the organizations’ conditions. Hence, Table I provides a comprehensive overview of the
different functions in which the BSC can be applied in hospitals. The way in which the BSC is presently used in the case-hospital is analysed using the following sub-question:
(SQ5): In which function(s) is the BSC currently used in the academic hospitals’ support departments? In this paragraph it is described in which different functions the BSC might be used. The next paragraph identifies the different designs of the BSC at hospitals. It might be the case that different use of the BSC leads to a different BSC design, with better integration of the objectives of different stakeholders.
2.6 BSC design at hospitals
Exiting literature regarding the BSC design in hospitals focused the discussion mainly on how many and which perspectives should be included. Additionally, an important point of discussion in these studies is the order of priority of the perspectives (Pineno, 2002; Kumar et al., 2005; Schmidt et al., 2006). In general, it can be argued that three different applications of the BSC in hospitals exist (Trotta et al., 2013):
(1) Some hospitals applied the traditional framework by using the financial, customer, internal process and learning and growth perspective in their BSC. Huang et al. (2004) studied the
implementation of the BSC in a hospital in Taiwan. They indicated that due to the fact that it was implemented as a pilot program, only the traditional indicators were used, to keep it straightforward. According to Sundin et al. (2010), the introduction of the traditional BSC might lead to integration of objectives of stakeholders, because the BSC combines, in a single management report many
divergent elements of an organisation’s competitive agendas. Nevertheless, this has not been specifically proved for non-profit organizations such as hospitals.
(2) Some hospitals partially revised the framework of the BSC in its logic architecture. Aidemark (2001) for example indicated that in hospitals, there is not a certain hierarchy of objectives.
Therefore, the BSC in the case they studied was modified in its logic architecture by regarding all four perspectives as important. However, according to Jensen (2001), the result of considering the different perspectives as important might be that the conflicts between different stakeholders increase. The result of regarding all perspectives as important is that managers have to maximize each of the performance perspectives. Consequently, this leads to the situation in which managers have to make inevitable trade-offs in order to try to maximize each of the perspectives. In this way, the objectives of different stakeholders might be harmed (Sundin et al., 2010).
(3) Some hospitals completely changed the original BSC framework in both the number and types of perspectives used (Gumbus et al., 2003; Josey and Kim, 2008). Gumbus et al. (2003) studied the implementation of the BSC in a hospital in the US. The case hospital of their study did not implement the traditional perspectives, but modified the perspectives, since these modified perspectives were the drivers of the critical success factors of their organization. Moreover, also Josey and Kim (2008) indicated that the hospital they studied changed both the perspectives and the number of
Hence, it can be concluded that there are different ways to design a BSC in hospitals (Trotta et al., 2013). In our view, depending on the hospitals’ characteristics, it might be useful to manage the objectives of different stakeholders by modifying both the perspectives and/or KPIs of the BSC. An example of hospitals’ characteristics that might influence the use of the BSC is the hierarchy of objectives. In our opinion, the objectives of stakeholders might influence, via the hierarchy of objectives and the use of the BSC, the BSC design of hospitals. By using it in a different function, the BSC design of the hospital might be modified, compared to the traditional BSC design described previously. In this way, there might be better integration of the objectives of different stakeholders. That is why the BSC design will be analysed using the following sub-question (SQ6): Which
perspectives and KPIs (Key Performance Indicators) are used in the Balanced Scorecard of the academic hospitals’ support departments and how are they related to the objectives of different stakeholders?
2.7 Conceptual model
From the introduction, it became evident that the central question of this research is: “How is the
BSC used in non-profit organizations (academic hospitals), which have a different hierarchy of objectives, in order to integrate the different objectives of both internal and external stakeholders?”
First, it is of importance to identify the objectives of the support departments, because in this way it can be determined later to what extent the BSC integrates the objectives of both the department and its stakeholders. Additionally, it is of importance to identify the objectives of the support departments to analyse to what extent the support departments cope with conflicting objectives. That is why the following sub-question will be used (SQ1): What are the main objectives of the
support departments of an academic hospital, as established by the management of the support department?
Second, to conduct this research, the most important stakeholders of the support departments have to be identified. Furthermore, the most important objectives of these stakeholders, regarding the support departments have to be identified. The following sub-questions will be used to map the different stakeholders and their objectives (SQ2): Who are the most important internal and external
stakeholders of the support departments of the academic hospital?
(SQ3): What are the objectives of different stakeholders of the academic hospitals’ support
departments, regarding the support departments?
Third, the hierarchy of objectives of the case-hospital will be analysed. This is important because the hierarchy of objectives determines which objectives of stakeholders are considered as important. Moreover, the hierarchy of objectives might influence, via the use of the BSC the BSC design. As mentioned previously, existing literature that analysed the BSC as a tool to integrate different objectives, only considered commercial organizations with financial objectives as primary objectives. This study will investigate, at an organization with a different hierarchy of objectives, how the BSC can be used as a tool to integrate the objectives of different stakeholders. The hierarchy of objectives will be analysed with the following sub-question (SQ4): What is the hierarchy of objectives of an
academic hospitals’ support department?
Therefore, the following sub-question will be used (SQ5): In which function(s) is the BSC currently
used in the academic hospitals’ support departments?
Fourth, after the function of the BSC is determined, the BSC design can be analysed. As already mentioned in the literature section, in general the BSC in hospitals can be designed in three different ways. For example, new perspectives might be added, or the KPIs might be modified. This is
important to recognize, since the BSC design indicates whether and how the objectives of different stakeholders are integrated in the BSC. Therefore, the following sub-question (SQ6) is used to study the BSC design:
Which perspectives and KPIs (Key Performance Indicators) are used in the Balanced Scorecard of the academic hospitals’ support departments and how are they related to the objectives of different stakeholders?
All-in all, the concepts addressed in this study are represented in Figure III:
Figure III: Conceptual model
3. Methodology
3.1 Research method
As mentioned in previous sections, this study contributes to existing literature by investigating the following question: “How is the BSC used in non-profit organizations (academic hospitals), which have
a different hierarchy of objectives, in order to integrate the different objectives of both internal and external stakeholders?” To answer the research question, qualitative research is used in the form of a
That is why this research provides a contribution to existing literature by investigating an
organization at the non-profit sector. The observation-phase consists of the collection of primary data, by conducting semi-structured interviews. Furthermore, secondary data was collected by asking for documents and schemes that were used at the implementation of the BSC. The emerging insights that arise are compared to existing studies in academic literature about the application of BSC in commercial companies. The final stage of the theory development process is the development of propositions.
3.2 Research quality criteria
The most important quality criteria for research are controllability, reliability and validity. These criteria are important as they provide the basis for reaching inter-subjective agreement on research results. Many authors acknowledge that the central aim of research is to strive after inter-subjective agreement. Inter-subjective agreement refers to consensus between the actors who deal with a research problem (Van Aken et al., 2012).
3.2.1 Controllability
The first requirement for reaching inter-subjective agreement in this study is controllability.
Controllability is a prerequisite for reliability and validity (Van Aken et al., 2012). The controllability of this study is guaranteed by writing memo’s during the research process. By writing memos in the form of a codebook, others are able to replicate this study. This increases the controllability of research (Van Aken et al., 2012). Moreover, to increase the controllability all interviews are recorded and transcribed. In this way, other researchers are able to replicate the study. This further increases the controllability of the current research
3.2.2 Reliability
Another important requirement for reaching inter-subjective agreement is reliability. The results of a study are reliable when they are independent of particular characteristics of a study and can
accordingly be replicated in other studies (Yin, 2003). There are four potential sources of bias: (1) Researcher bias, (2) Instrument bias, (3) Respondent bias and (4) Situation bias (Van Aken et al., 2012).
First of all, the results of a study are more reliable when they are independent of the person who conducted the research. To control for researcher bias, knowledge from other researchers (fellow thesis students) was used when coding the interviews, to make sure no codes are overlooked. In order to control for instrument bias, triangulation by using primary data in the form of interviews, and secondary data in the form of documents/schemes is applied. Triangulation can remedy the specific shortcomings and biases of instruments by complementing and correcting each other (Van Aken et al., 2012). To control for respondent bias, all involved hospital department representatives are interviewed. This decreases the possibility that the study’s sample yields a distorted view. Additionally, to control for respondent bias, different managers and controllers of the involved departments are interviewed. In this way, a distortion of the results, because of one individuals’ opinion, can be prevented. Finally, to control for situation bias, the respondents were interviewed at the UMCG. By interviewing the respondents in a similar setting, and at different times of the day, the situation bias can be controlled for.
3.2.3 Validity
The first type of validity is construct validity. There are two sides of construct validity: (1) the concept should be covered completely, and (2) the measurement should not have components that do not fit the meaning of the concept (Van Aken et al., 2012). In order to cover every component, triangulation is applied. If the semi-structured interviews do not cover all aspects of a concept, secondary data in the form of documents and schemes of the UMCG are used as an additional instrument to cover all concepts of a construct. In this way construct validity is increased.
The second type of validity is internal validity. The results of the study are internally valid when conclusions about relationships are justified and complete (Van Aken et al., 2012). The third type of validity is external validity. External validity refers to the generalizability of research results and conclusions to other people, organizations, countries, and situations. Both internal and external validity will be increased by tying the emergent theory to existing literature (Eisenhardt, 1989). Because the findings of case studies rest on a limited number of cases, it is of crucial importance in case study research to tie the emerging theory to literature. Therefore, the results of this research at non-profit companies are compared to the results of earlier studies in commercial companies. In this way, both internal and external validity are increased.
3.3 Data collection
3.3.1 Case study method
In current research setting, case study research is the appropriate method, because the aim of the study is “confronting” theory with the empirical world (Peccary et al., 2009). Moreover, this type of research is suitable as understanding is the primary objective, the phenomenon is not well
understood and is difficult to quantify (Bonoma, 1985; Yin, 1994).
Typical for case studies is that they combine a range of data sources that focus on a single entity, event or phenomenon and places these in context (Creswell, 1994; Stake, 1995; Yin, 2009). As indicated previously, both semi-structured interviews and the analysis of secondary data are the main data collection methods. Given the limited number of cases that can be studied, an extreme case situation has been chosen. This is also called theoretical sampling. The goal of theoretical sampling is to choose extreme cases that are likely to extend existing literature (Eisenhardt, 1989). The aim of this research is to analyse how the BSC is used at non-profit organizations, with a different hierarchy of objectives, to integrate conflicting objectives of stakeholders. The UMCG is a non-profit organization that has a lot of stakeholders and thus different objectives. This is further strengthened by the fact that the UMCG is an academic hospital, because as already mentioned in the literature section, academic hospitals have more stakeholders with different objectives as well. Hence, that is why theoretical sampling was used to pick the specific case. Moreover, we decided to analyse two support departments, in order to prevent biased results. The risk of analysing one support
department is that it might be an outlier that differs significantly from other support departments. Therefore, we decided to analyse the Radiology and OC department. We decided to analyse these departments since these are two divergent support departments within Sector E. The Radiology department can be considered as a diagnostics department, whereas the OC department can be considered as a medical facility department. To prevent a biased view, these two divergent support departments within Sector E were analysed.
3.3.2 Case hospital
An overview of the organization structure of the UMCG is presented in Appendix II. In 2013, the UMCG implemented a new hospital-wide BSC. In this BSC, uniform performance measures are used, in order to increase the comparability of the performance of different sectors of the UMCG.
3.3.3 Semi-structured interviews (Primary data collection)
Before the semi-structured interviews were conducted, a few unstructured interviews with the concern controller of the UMCG were conducted to determine the research direction. During these meetings, it was decided to analyse the BSCs of the Radiology and OC departments. Furthermore, in order to conduct proper qualitative research, in depth interviews were conducted to collect data. The interview questions were designed in the form of semi-structured interviews. In semi-structured interviews, questions are open-ended thus not limiting the choice of answers of respondents. The aim of this type of interview is to provide a setting in which the interviewer and interviewee can discuss the topic in detail (Gubrium and Holstein, 2002). These interviews were conducted with different managers and controllers within the UMCG. In total seven interviews have been conducted, in which the following persons have been interviewed:
- Controller UMCG (CU) - Controller Sector A (CA) - Controller Sector E (CE)
- Controller of Radiology and OC (CRO) - Manager OC (MO)
- Manager Radiology (MR)
- Operations Manager Radiology (OMR)
Because the controller of the OC department was also controller of the Radiology department, these interviews were combined in one interview. Additionally, the controller of Sector A, an important stakeholder of both support departments was interviewed. We also attempted to have an interview with the operations manager of the OC department, but he was not able to make an appointment. These respondents were chosen because they are a mix of stakeholders and representatives of the different departments. All interviews were performed in Dutch and are audio-recorded to create a written manuscript. This is important because the researcher can fully focus on the interview in order to ask appropriate questions (Maruster and Gijsenberg, 2013). The duration of the interviews
differed from 50 to 80 minutes to discuss the important issues.
3.3.4 Document analysis (Secondary data collection)
Complementary to the semi-structured interviews, documents about the implementation of the BSC were gathered at the UMCG. In these documents, for example schemes can be found in which the BSC is explained visually. It is important to gather these schemes since they can give a comprehensive view of how the BSC is actually applied in the case-hospital.
3.4 Interview Questions
In order to ask appropriate questions to the different managers, different interview guides were used. Furthermore, to increase the construct validity of the study, the interview questions were designed with assistance of existing literature. An overview of the questions linked to literaturecan be found in Appendix III. In general, the interview questions can be divided into four different main categories. The first category contains questions about the objectives of the support departments. The second category contains questions about the different objectives of both internal and external stakeholders of the support department. The stakeholders are mapped using the framework of Darnall et al. (2009). Stakeholders are considered internal if they have a direct economic stake in the organization (Waddock and Graves, 1997; Freeman, 1984). External stakeholders have a more limited control of important organizational resources (Sharma and Henriques, 2005). To determine if
In the interviews, the managers and controllers were asked to determine to what extent they experience conflicting objectives. Using the studies of Cyert and March (1963) and Jensen (2001), if reaching the objective of a stakeholder, means that the objectives of another stakeholder cannot be met, the objectives are considered as conflicting.
The third category contains questions about the relationship between the stakeholders’ objectives and the BSC design. These questions were asked to analyse the hierarchy of objectives, using the frameworks of Aidemark (2001) and Voelker et al. (2001). If the financial perspective is at the top of the BSC, the BSC design can be considered traditional, while if another perspective is most important, the design can be considered as modified. The fourth category of questions is designed to analyse the relationship between the use of the BSC and the integration of objectives of different
stakeholders. This is done by asking questions concerning the specific functions of the BSC. The answers on the questions are compared to different studies of the functions of the BSC in hospitals in the literature section (Funck, 2009; Inamdar and Kaplan, 2001; Kaplan and Norton, 2001; Kaplan and Norton, 2000; Aidemark, 2001; Johanson et al., 2006; Kollberg and Elg, 2011; Harber, 1998; Gumbus et al., 2003). By comparing the answers to existing literature, it is determined how the BSC is used. In this way, a comprehensive view on the current use of the BSC can be given. Moreover, the
integration of objectives of different stakeholders is determined by asking specific questions regarding the use of the BSC as a tool to integrate the objectives of stakeholders. The opinions of different managers are compared to analyse if the objectives are effectively integrated.
3.5 Data analysis
The data analysis started with the transcription of the interviews. The transcription method that is used is the denaturalized method. In this method, grammar is corrected, interview noise is removed and also non-standard accents are standardized (Oliver et al., 2005). An example of a transcribed interview can be found in Appendix V. After the interviews were transcribed, deductive codes were developed, based on literature and own knowledge. Then within-case analysis was applied to get familiar with the data. Within-case analysis consists of detailed case study write-ups. These write ups (inductive codes) are often simply pure descriptions. However, they are important in the generation of insights because they help researchers to cope early in the analysis process with the volume of data (Eisenhardt, 1989). From the deductive and inductive codes, a codebook was created in which each type of code is described shortly. The codebook can be found in Appendix IV.
After the interviews were coded, a summarizing table was constructed in which the different answers to the different questions are compared, sorted by category and code (Appendix VI). This is done to process the amount of data in a systematic way. In the end, the findings from the case are compared to existing literature that investigated the integration of the stakeholders’ objectives at commercial companies. From this comparison, final propositions were built, which can then be tested in similar and different studies, in order to verify the findings of the current study.
4. Results
4.1 Objectives of the support departments
From the interviews, it became evident that there are multiple objectives regarding the support departments of the UMCG. In general, these objectives can be divided into objectives of the UMCG, which apply for all departments, and objectives of the specific support departments, namely the Radiology and OC department.
First of all, as can be derived from Table II, the objectives of the UMCG in general are divided into four different categories. All departments are expected to commit to these four objectives. As for example MO mentioned: “We have four academic tasks, that are introduced by UMCG central. These
are patient care, education, research and training. We are not allowed to focus on one of these tasks, but we have to excel in all tasks. That is our most important objective from UMCG central.”
Additionally, within these four tasks, different departments have their individual objectives. As OMR mentioned: “In particular for Radiology, we have to develop our department on the tasks of
education, research and training. That is an important theme for our department.”
The most important objectives of both the UMCG and the Radiology and OC department are mapped in Table II:
Objectives support departments
UMCG Central (1) Patient Care
(2) Education (3) Research
(4) Training
Radiology department OC department
- Strategic position in academic research - High quality patient care
- Stay within financial budget - Low cost patient care - Efficient use of capacity
- Safe patient care
- High quality patient care - Stay within financial budget
- Stay within operation room capacity - Efficient use of capacity
Referring to the conceptual model, in this paragraph the main objectives of the support departments are identified. This is of importance since we later have to determine to what extent the support departments are confronted with conflicting objectives. In order to analyze this, the different internal and external stakeholders of the support departments, and their objectives, have to be identified first. This is conducted in the next paragraph.
4.2 Internal and external stakeholders of the support departments
This paragraph empirically identifies the most important stakeholders of the support departments of an academic hospital. Moreover, the most important objectives of these stakeholders regarding the Radiology and OC department are mapped.
4.2.1 Stakeholders of the Radiology department
From the interviews, it became evident that different stakeholders are of importance for the
Radiology department. The most important stakeholders and their objectives are mapped in Table III: Table II: Most important objectives of the Radiology and OC department
Stakeholders of the Radiology department Objectives Internal:
- Primary specialism (Poortspecialisme) - Board of directors
- Operations manager of Radiology - Medical specialists
- Get the right capacity, in time
Table III: Objectives of the important stakeholders of the Radiology department
From the interviews it could be concluded that there are two types of conflicting objectives. First, there are conflicts between the objectives of the department, and the objectives of stakeholders. Second, there are conflicts between the objectives of different internal and external stakeholders, regarding the support departments. An example of the first type of conflict is provided by OMR:”
Currently, we have a lot of new equipment. Nevertheless, it is hard to stay within the financial budgets with the new equipment.” Thus, if the Radiology department uses full capacity of their new
equipment, then the objective of the Board of directors to stay within the financial budget will be harmed. Furthermore, also CA indicated that: “The departments in Sector A are striving for growth in
complex care. However, we experience that the capacity of the Radiology department is not sufficient to support this growth.” Additionally, CU indicated: “One of the objectives of the Board of directors is growth in complex care. Nevertheless, since the Radiology is a department that serves almost every patient, growth in complex care means that fewer patients will visit the Radiology department. This might be contradictory to the objective of the department to increase the amount of patients.”
Hence, the examples indicate that there are objectives of different stakeholders and the Radiology department that are conflicting.
Additionally, CE provides an example of conflicting objectives of different stakeholders: “The medical
specialists want to increase quality of care. However, the Board of Directors also wants the department to stay within financial budgets that are preset. Increasing quality of care is expensive which has consequences for staying within the budget. These objectives are thus often conflicting.”
Furthermore, OMR indicated: “Patients that live in the neighborhood of the UMCG want to be treated
at the UMCG. If a patient needs an MRI scan, it might be the case that they have to go to the other hospital, at the southern part of the city, because of the objective of the Board of directors regarding the Radiology department. The Board of directors wants the Radiology department to increase in complex care. This leads to the situation that patients that need a simple MRI are redirected to the other hospital in this city.” This example explains that the objective of the patient is harmed, by the
objective of the Board of directors regarding the Radiology department.
All in all, these examples illustrate that the Radiology department is also faced with conflicting objectives of different stakeholders, and is accordingly in a field with a lot of different objectives.
4.2.2 Stakeholders of the OC department
The respondents of the OC department mentioned different stakeholders and their objectives. This is summarized in Table IV:
Table IV: Objectives of the important stakeholders of the OC department
External:
- Patients - Health insurer
- Get high quality care and fast treatment - High quality care against lowest possible costs
Stakeholders of the OC department Objectives Internal:
- Primary specialism (Poortspecialisme) - Chirurgic department
- Board of directors
- Operations manager of the OC department - Medical specialists
- Get the right capacity, in time - Safe and fast patient care
- High quality care, within financial budget - High quality care, within financial budget - High quality care
External:
- Patients
- Healthcare inspection
An example of conflicting objectives between the department and a stakeholder is provided by CRO:
“The surgeons want to improve quality of care. Their only objective is to treat the patient at the best possible way. If you want to have the best care, it often costs a lot of money, which is obviously hard, because of the financial budgets that the department is faced with.” CU provides another example:
“The UMCG’s target is to increase in complex care. However, this growth means that less complex
surgeries will be done by other hospitals. Therefore, the increase in complex care leads to a
decreasing amount of patients for the OC department. This might be contradictory to the objective of their department.” These examples illustrate that the objectives of the OC department are conflicting
with the objectives of its stakeholders.
Furthermore, the OC department also has to deal with conflicting objectives of different stakeholders. CRO mentioned: “Due to budget cuts, the financial budgets become tighter.
Nevertheless, the surgeons are not fully aware that high quality treatment costs a lot of money. That is why their objective of improving quality cannot always be attained, due to budget cuts.” Another
example is also provided by CRO: “The objective of the surgeons is to treat the patient at the best
possible way. But, the objective of the manager of our department is to stay within the budget. Staying within the budgets means that the highest quality care cannot be provided. Therefore, this leads to conflicts of the objectives that the surgeons and operations managers have, concerning the Radiology department.” These are examples of conflicting objectives of different stakeholders
regarding the OC department. Hence, in comparison with the Radiology department, the OC department is also confronted with different conflicting objectives.
4.2.3 Relation to conceptual model
Tables III and IV provide comprehensive overviews of different stakeholders of the Radiology and OC department, and their objectives. From these tables, it can be argued that both support departments are confronted with conflicting objectives. We concluded that there are two different types of conflicting objectives. There are objectives of stakeholders that are conflicting with objectives of the department. Moreover, there are conflicts between the objectives of different stakeholders. Hence, this paragraph empirically proved that the two support departments are part of a field in which a lot of different objectives are at stake. Another important remark from the interviews is that most conflicts of objectives of the support departments and its stakeholders are regarding the financial budget. Almost all respondents indicated an example in which the financial budgets are conflicting with the objectives of the departments or stakeholders of the departments. Now the different objectives of the stakeholders are identified, the order of these different objectives will be analyzed in the next paragraph.
4.3 Hierarchy of objectives
From the interviews, it can be concluded that there were different opinions regarding the hierarchy of objectives. For example, CE argued: “In the BSC, the sequence of perspectives is often that you
start with the financial perspective, and thereafter the client perspective. Although, looking at for example the OC department, the customer (patient) perspective is regarded as the most important. Furthermore, internal process is the second and the financial perspective is the third perspective in sequence.” This example elucidates that the hierarchy of objectives is modified, by regarding the
customer (patient) perspective as the most important.
MR also indicated that the hierarchy of objectives is modified. Nevertheless, she argued that the different perspectives are all four important and should be considered as a network of perspectives in balance: “You cannot easily argue that one perspective is more important than others. In my view,
we have to excel in all different perspectives, which means that one perspective is not more important than another.”
