Radiology’s Balanced Scorecard
In business, as in life itself, success is all about balance. And in the business of radiology, balance is among the most important factors that can determine the fate of the practice. Take any position or point of view to its extreme and the result is alienation, tension, and, inevitably, sub-optimal performance. Too much attention on technology at the expense of customer service can lead to a great-looking suite of scanners sitting idle for lack of patients. A myopic attention to financial success at all costs can lead to a drained organization incapable of sustaining itself for the long term. You get the picture. The same holds true for the metrics and instruments for measuring success in business. Although outcomes and their determinants have been an important part of the medical lexicon since Hippocrates exhorted his students in his first rule to do no harm, the business world has struggled with how best to evaluate outcomes in a way that will reveal the various layers on which its success can be fairly evaluated—in a balanced way that tells the full story, and for the benefit of all stakeholders. It is a story of the role of innovation and other important characteristics of an organization that may not be readily discernable to the evaluator of the firm’s balance sheet. One device that has successfully accomplished this complex task is the balanced scorecard. Introduced in 1992 by Robert Kaplan and David Norton, this method of scrutinizing an organization’s performance in ways that transcend the isolated review of financial results—this revolutionary way in which to look at the complete enterprise—is remarkably relevant to today’s diagnostic imaging practices. It is critical to evaluate the performance and future viability of the practice based on several objective measurements that combine to form a balanced scorecard, and a balanced view of the current and future reality. In a terrific reprise of their seminal work, the July/August issue of the Harvard Business Review (linked elsewhere in this issue) contains a “Best of HBR” edition of the authors’ updated 1996 sequel entitled “Using the Balanced Scorecard as a Strategic Management System. In a summary of this article, the editors of the HBR highlight the key elements of how the balanced scorecard can be used as a key management tool. They indicate that the scorecard’s “…value as the cornerstone of a new strategic management system….addresses a serious deficiency in traditional management systems: the inability to link a company’s long-term strategy with its short term financial goals. The scorecard lets managers introduce four new processes that help companies make that important link.” Kaplan and Norton outline the four new processes as: 1) translating the vision, which helps managers build a consensus concerning a company’s strategy, 2) communicating and linking, communicating a strategy at all levels of the organization and linking it with unit and individual goals, 3) business planning, enabling companies to integrate their business plans with their financial plans, and 4) feedback and learning, giving companies the capacity for strategic learning, which consists of gathering feedback, testing the hypotheses on which a strategy is based, and making necessary adjustments. So how should we take advantage of this sage advice as organizations interested in sustaining profitable growth for the long term? By looking beyond the obvious and most basic drivers that many radiology practices today use as the sole measure of their success: paid time off, annual increases in the radiologist W-2s, and an ever-expanding cadre of junior radiologists to do the heavy lifting for the practice—the so-called “quality of life” metrics. Success in today’s radiology practice is dependent upon linkage, alignment, communication, leadership, and balance. For example, linking the practice’s “brand equity” with its clinical quality, its impact on the community, its responsibility to professional development, its value to its stakeholders, is a primary requisite for sustainability of the enterprise and requires deft maneuvering of a host of complex issues. As leaders managing complex businesses, it is incumbent on you to get up to date on how instruments such as the balanced scorecard can help you focus your various constituents on those success dynamics that build a true picture of the practice and its level of success. Mine the data that you have available to you to build the proper dashboard and metrics that will include factors such as brand value, employee satisfaction, collegiality, pride, clinical excellence, market penetration, innovation, and other equally important indicators of success. And keep balance in your life for your own personal success.