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Abstract
Purpose – The purpose of this article is to provide an overview and evaluation of performance
measurement systems and also present a framework for the selection of an appropriate performance
measurement system for healthcare processes.
Design/methodology/approach – The paper provides a brief review of the existing performance
measurement frameworks. On the basis of review, performance measurement system criteria are
identified and accordingly a framework has been proposed for measuring performance in healthcare
processes.
Findings – The measurement of performance of a healthcare organization is still an unresolved issue.
A performance measurement system should be sensitive to changes in the external and internal
environment of an organization. The proposed framework measures performance from a multi and
interrelated perspective, namely efficiency, effectiveness and flexibility.
Practical implications – The study will help the healthcare organization to know how they are
performing; it will also help in benchmarking the organization so that customers know the value of the
money they pay for the service.
Originality/value – The framework presented provides a performance measurement system for
healthcare processes that is sensitive to change in the external and internal environment of an
organization.
Keywords Performance measures, National health services, Strategic planning
Paper type Research paper
Background
The design of an effective performance measurement system, that includes the
selection of appropriate measures and approaches for analyzing results, is central to
aligning an organization’s operations with its strategic direction. Despite its
importance, this is one area that many organizations fail to address effectively.
Performance measurement is an established concept that has taken a renewed
importance in varieties of organizations (Camarata and Camarata, 2000). Historically,
performance measurement systems were developed as a means of monitoring and
maintaining organizational control, which ensures that an organization pursues
strategies that lead to the achievement of overall goals and objectives of the
organization (Nani et al., 1990). The development of performance measurement system
in management has followed a path that has been influenced by general push to
International Journal of Productivity
improve quality of service while meeting cost parameters. Bititcti et al. (2000) identified and Performance Management
that performance measurement system needs to have the following characteristics: Vol. 56 No. 3, 2007
pp. 241-251
.
being sensitive to changes in the external and internal environment of an q Emerald Group Publishing Limited
1741-0401
organization; DOI 10.1108/17410400710731446
IJPPM .
reviewing and reprioritizing internal objectives when the changes in the external
56,3 and internal environment are significant enough;
.
deploying changes to internal objectives and priorities to critical parts of the
organization, thus ensuring alignment at all times; and
.
ensuring that gains achieved through improvement programs are maintained.
242 Performance measurement provides the basis for an organization to assess how well it
is progressing towards its predetermined objectives, helps to identify areas of
strengths and weaknesses, and decides on future initiatives, with the goal of improving
organizational performance. Performance measurement is not an end in itself, but a
tool for more effective management. Results of performance measurement indicate
what happened, not why it happened, or what to do about it. In order to make an
organization effective, the performance measurement outcomes must be able to make
the transition from measurement to management. It must also be able to anticipate the
changes needed in the strategic direction of the organization and have a methodology
in place for effecting strategic change. This concept is identified as performance
management in performance measurement literature.
Organizations which do not integrate ongoing performance measurement and
feedback into their management development programs tend to experience lower than
expected performance improvements and higher dissatisfaction and turnover of
employees (Longenecker and Fink, 2001).
Performance prism
Neely (2002), and Kennerley and Neely (2001) outlined that the performance prism is a
multi-faceted framework, which attempts to address the shortcomings of the
frameworks that are currently available. Neely (2002) argues that the performance
prism can be considered as a second-generation performance management framework.
The framework has been deliberately designed as a highly flexible so that it can
provide a broad as well as narrow focus. The performance prism consists of five
interrelated perspectives namely stakeholder satisfaction, strategies, processes,
capabilities and stakeholder contributions.
These five perspectives provide a comprehensive and an integrated framework for
thinking about organizational performance. Neely (2002) and Wivel, Senior Partner in
the Danish Arm of Ernst and Young, argued that “It will not be possible to create Performance
shareholder value without creating stakeholder value”. The performance prism
provides a broader view of stakeholders than the balanced scorecard, which makes
measurement for
reference only to customers and shareholders. In the tomorrow’s company report, the healthcare
Royal Society of Arts, Manufacturer and Commerce (RSA) suggested that competitive
success in future would depend on management taking an inclusive approach in
meeting the needs and indeed, requirements of all stakeholders. The performance 245
prism also considers both regulators and pressure groups that are stakeholders with
growing significance and power in the current dynamic business environment. The
performance prism enables to provide a balanced picture of the business, significantly
highlighting external and internal measures, as well as enabling financial and
non-financial measures and measures of efficiency and effectiveness (Neely et al., 2001).
These could be easily developed into lead measures of organizational performance.
Although such performance measurement frameworks are undoubtedly valuable,
their adoption is often constrained by the fact that they are simply frameworks. They
suggest some areas in which measures of performance might be useful, but provide
little guidance on how the appropriate measures can be identified, introduced and
ultimately used to manage the business (Medori and Steeple, 2000).
On the basis of the above characteristics a comparison may be made between the
existing performance measurement frameworks.
Further, these dimensions can be measured by expressing them into measurable units.
Service quality of any hospital can be measured by quality of care, quality of clinical
investigations, cleanliness of hospital environment etc. Waiting time may be one of the
criteria for customer satisfaction measure. In the case of private hospitals (profit
organizations) growth can be measured by financial indicator like income, profit of
hospital. Safety may be measured by reduction in number of cases of bacterial infection
in the hospital due to introduction of efficient infection control system.
Different reviewers have suggested that flexibility can also be considered as lead
performance measures (Anderson and McAdam, 2004). In manufacturing sector
already this dimension has been considered in supply chain by different authors
(Beamon, 1999; Chan, 2003). Kaplan and Norton (1992) took the innovation and
learning perspective as lead measure in balance scorecard approach. Flexibility is a
lead performance measure, which focuses on analyzing forward looking, predictive
and future performance comparisons. This can measure a system’s ability or the
adaptability to respond to diversity or change. There are very few literatures are
available to measure flexibility in service sector, though many researchers have
IJPPM identified this dimension as lead performance measure in manufacturing sector. Slack
56,3 (1991) identified two types of flexibility measures for manufacturing sector: range
flexibility and response flexibility. Range flexibility is defined as to what extent the
service can be changed. Response flexibility is defined as the ease (in terms of cost,
time, or both) with which the service can be changed. On the same line the flexibility
measures have been identified that should be included in the proposed framework for
248 its potential to adapt changes:
.
professional flexibility;
.
instrument flexibility;
.
process flexibility;
.
volume flexibility;
. mix flexibility;
.
expansion flexibility; and
.
new service flexibility.
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Further reading
Allen, D. (1995), “Observable stances”, Management Accounting, Vol. 73, pp. 20-2.
Ballantine, J. and Brignall, S.J. (1995), “A taxonomic framework for performance measurement”, 251
paper presented to the 18th Annual Congress of the European Accounting Association,
Birmingham, May.
Brown, M.G. (1994), “Is your measurement system well-balanced?”, Journal for Quality and
Participation, Vol. 17, pp. 6-11.
Hazell, M. and Morrow, M. (1992), “Performance measurement and benchmarking”, Management
Accounting, December 9, pp. 44-5.
Laitinen, E.K. (2002), “A dynamic performance measurement system: evidence from small
Finnish technology companies”, Scandinavian Journal of Management, Vol. 18, pp. 65-99.
Letza, S.R. (1996), “The design and implementation of the balanced business scorecard: an analysis
of three companies in practice”, Business Process Re-engineering & Management Journal,
Vol. 2 No. 3, pp. 54-76.