Hospital Management and The Balanced …€•55― 『情報科学研究』第17号 Hospital Management and The Balanced Scorecard for Healthcare in Japan Toshiro Takahashi 要約

―55― 『情報科学研究』第17号

Hospital Management and The Balanced Scorecard

for Healthcare in Japan

Toshiro Takahashi

要約

日本の医療制度，医療経営の現状を議論した後に，日本の病院での BSC の利用の状況を全国規

模で３年間に３回行った調査をもとにして，わが国の病院での BSC の利用を分析し，どのような

成果が表れ，どのような組織変化が起こっているかを分析した。さらに，日本の企業で経営の道

具としてのBSCの普及があまり進まない理由と病院でBSCの利用が企業に比較して急速に浸透し

ている理由を分析し整理した。それらを踏まえて，わが国で初めての医療版 BSC の全国での利用

状況を病院経営と関連させながら現状と将来を明らかにした。

Keywords Balanced Scorecard (BSC), Hospital Management, Effects of Implementing BSC, Nationwide Survey, Performance Measurement, Management Movement

Ⅰ．Introduction and overview of the current status of healthcare in Japan

The healthcare system takes a variety of forms depending on the history of and cultural background in each country. Based on this recognition, I now undertake an overview of the current status of healthcare in Japan. Looking at the relationship between residents and healthcare service providers in Japan, everyone can receive healthcare services provided through the health insurance system, anytime and anywhere, thanks to the established universal healthcare system, or universal health insurance coverage. Also, everyone can receive medical treatments as an outpatient at any hospital, medical clinic, and specialized hospital. That is, free access to these facilities is guaranteed. Nevertheless, such advantages can sometimes lead to the degradation of healthcare and be a hindrance to the provision of efficient medical care. This is in marked contrast to the fact that, in many countries overseas, except for some emergency cases, the very first point at which patients access the medical delivery system is limited to a primary physician. In Japan, there are 7.7 hospitals per 100,000 population, which is considerably larger than in other developed countries; for example, the number is 1.9 in the United States and 2.3 in Germany1). Why are there so many hospitals in Japan? In sparsely populated areas, for example, there has been an intentional increase, for political or electoral reasons, in the number of

『情報科学研究』第17号 ―56―

small-sized hospitals replacing medical clinics, which is partially responsible for the shortage of doctors and medical specialists in such districts. That is, there is a tendency in healthcare administration in Japan that, because there are so many hospitals, doctors are deployed in small numbers in much larger areas. Unlike medical clinics, under the Medical Law hospitals are subject to certain minimum standards with respect to the number of doctors available to treat inpatients and outpatients. Increasingly more hospitals are receiving governmental instruction because they do not have an adequate number of doctors to meet such medical standards. Additionally, combined with such factors as the education of doctors’ children, there has been a considerably serious uneven distribution of doctors between urbanized areas and other less-populated districts. In Japan, the matter of medical mishaps has been discussed enthusiastically for the last ten years or so. There is a dormant structural problem in the healthcare system in Japan that serves as the backdrop for repeated medical mishaps here. Japan has an established public healthcare system, or universal health insurance coverage, so there are fixed official prices for both pharmaceutical prices and medical service fees. A major reason for this could be a fact that, amid the administrative convoy-fleet approach2), there has been very little competition among hospitals. Non-profitability is the only cause that has kept orders in the healthcare system, but this cause is now only a “very thin” substance, except for some hospitals. As far as the healthcare system and medical mishaps in Japan are concerned, the problems that we can point out are sizable variations in the quality of doctors and other medical specialists and the absence of an adequate system to bolster quality. One reason for this shortcoming could be the fact that the Ministry of Health, Labor and Welfare has been punting the matter of post-graduate education following qualification to certain professional or specialist organizations, not siding with Japanese citizens. Most certainly, there would be far fewer problems if the autonomy of such professional or specialist organizations had been more functional, but I’m afraid that the reality is something different. Very belatedly post-graduation education for the doctors has begun being provided, but it still fails to go further into post-intern training. Specifics about receiving healthcare services in Japan have all been “up to the doctor” and patients have not so often interfered in what the doctors do for them. Yet, an increase in patients’ awareness of their rights and changes in their demands for the quality of healthcare have been causing gradual changes in the healthcare system in Japan.

Ⅱ．Need for balanced scorecards (BSC) in the business administration of healthcare institutions

Against a backdrop of implementing BSC in hospitals in Japan, one compelling issue was that management wanted to acquire a framework for carrying out their business strategies. The Medical Law stipulates that the managers of hospitals in Japan must be doctors. As such, it was only after such uneducated business managers came to hold business management positions that they realized the need for a business management framework. This means there is growing demand by doctors and scientists for the conduct of well-grounded


business administration. From the viewpoint of hospital management, there has been increasing demand to conduct performance evaluation of doctors working for the hospital. In practice, they were required to correct imbalances in terms of the quality of healthcare and efficiency between the clinical field and management. Other driving factors include the fact that every hospital is required to perform multidimensional and multifaceted performance evaluation such items as the pursuit of its mission, management of costs, improvements in quality, and securing profits for future growth, as well as the fact that both ideas and mechanisms have yet to be established for the conduct of performance evaluation of results distribution to hospital staff members. That is to say, as a non-profit organization, the hospital must be run on the principle of not distributing the profit it has attained, and also of returning such profits to staff members and the local community. Another problem with hospitals in Japan is that their financial data is not consolidated with other data such as patient and clinical data. Against this backdrop, there is an increasing need to consolidate the fragmented business administration system. Although there has been a reality that hospitals in Japan have failed to establish their own strategies and there has been the sense that business administration may be exactly the same as other hospitals done in accordance with direction provided by the Ministry of Health, Labor and Welfare, the situation has changed a great deal. That is to say, every hospital is required to plan and establish its own strategies and carry them out. This means that the conditions are in place to disseminate BSC as a management tool.

Ⅲ．Motivation of the studies

In medical circles here in Japan, in recent years there has been growing interest in BSC as a viable and effective tool for business administration. In addition, in the welfare and health segments executives and managers at various institutions and facilities are also expected to start working on BSC from this point on. Meanwhile, in reality, there are a number of barriers to implementing BSC, both for hospitals and other such segments. Who in the organization should play the role of promoting BSC? When should they start and what should they begin with? How should they take the lead in the discussions at each level of expertise? What specific metrics are necessary to measure performance and how should these metrics be set? What sort of linkage is required between BSC and existing business administration skills in order to maximize synergistic effects? How can they infiltrate BSC, which can crisscross vertically integrated hospital organizations that have a function-based structure? Is it really possible to conduct stable monitoring activities while clearing various issues and problems that may be confronted in operating BSC? In these difficult circumstances, we can anticipate a variety of moves and developments, both positive and negative. To be more specific, can they implement BSC after successfully resolving such problems one by one, or will they only realize they cannot resolve all these problems and end up hesitating to implement BSC? Will they just thrust themselves into the new world of BSC and then start thinking it over in a hit-or-miss


fashion? Or will they stop moving forward without doing anything on BSC and just wait and watch as their business begins to go downhill? Now, amid these circumstances, I would like to start analyzing our questionnaire results so that we can explore how, as a business tool, BSC has penetrated in hospitals here in Japan and also how BSC will evolve in future. In order for us to implement BSC with the confidence that it is a great tool that enables innovation in business administration in the 20th century and get it entrenched in the organization, it is essential to clarify implementation barriers and figure out viable countermeasures to deal with them. Meanwhile, based on the recognition that BSC is nothing more than a tool for business innovation, it is also important to consider the implementation and operation of a medical BSC to clarify certain key points, such as how BSC should be used in resolving business administration issues and basically what sort of skills are used as existing management tools in medical business administration. Against this backdrop, Takahashi Laboratory (Professor Toshihiro Takahashi) at Nihon University Graduate School of Business Administration and JMA Research Institute at Japan Management Association have conducted joint research by carrying out three rounds of questionnaires each year starting in 2004. These fact-finding questionnaires have been designed to identify various business administration issues and problems hospitals encounter and also to understand realities such as how they are making use of their existing management skills, then clarify critical points such as their awareness of BSC, what specific interests they have in BSC, how they are working on BSC, what sort of benefits they can expect by implementing BSC and what specific barriers they face.

Ⅳ．Overview of Research (Table 1)

1st Round of Questionnaires: We conducted our 1st round of questionnaires in August 2004. In setting up samples, we paid attention mainly to such attributes as the scale of the organization, entities of establishment, and regional characteristics, then extracted samples at random from medical institutions and forwarded our questionnaire cards to 2,169 hospitals nationwide. We were able to collect replies from 440 hospitals (a 20.3% collection rate). 2nd Round of Questionnaires: We conducted our 2nd round of questionnaires in August 2005. In setting up samples, as with the 1st round of questionnaires, we mainly paid attention to such attributes as the scale of the organization, entities of establishment, and regional characteristics, then extracted samples at random from medical institutions and forwarded our questionnaire cards to 2,267 hospitals nationwide. We were able to collect replies from 442 hospitals (a 18.6% collection rate). 3rd Round of Questionnaires: We conducted our 3rd round of questionnaires in August 2006. In setting up samples, as with the 1st and 2nd rounds of questionnaires, we mainly paid attention to such attributes as the scale of the organization, entities of establishment, and regional characteristics, then extracted samples at random from medical institutions and forwarded our questionnaire cards to 2,320 hospitals nationwide. We were able to collect replies from 309 hospitals


(a 13.3% collection rate).

Table 1 Basic Numeric Data From Three Rounds of Questionnaires 1st

2004

2nd

2005

3rd

2006

Total number of hospitals in Japan 9,077 9,026 8,997

Number of questionnaire cards we sent out 2,169 2,267 2,320

Number of replies we obtained 440 442 309

Percentage of replies 20.3％ 18.6％ 13.3％

Total number of hospitals in Japan: Data obtained from the medical institution census conducted by the Ministry of Health, Labor and Welfare

Each statistical value represents one survey in October 2004, one in October 2005, and one in June 2006 Source: Prepared by the author

Ⅴ．Findings from our Questionnaires – Limits and Possibilities

In conducting the three rounds of questionnaires, we extracted approximately 2,600 hospitals at random from approximately 9,000 hospitals nationwide and forwarded our questionnaire cards, requesting that they return their reply via postal mail or facsimile. Reply percentages were 20.3 percent (2004), 18.6 percent (2005) and 13.3 percent (2006). As such, the joint research we conducted this time cannot necessarily be said to exactly represent facts and realities surrounding BSC in all hospitals in Japan; however, we did try our best to ensure that the samples we extracted are free from any particular bias. As shown in Table 2, we compared the number of hospitals and their scale in Japan in 2004 with data from those hospitals that replied to our questionnaire. Looking at the scale of hospitals in terms of the total number of beds, 3,625 hospitals have 20 to 99 beds (39.9％), 2,700 have 100 to 199 beds (29.7％), 1,151 have 200 to 299 beds (12.7％), 775 have 300 to 399 beds (8.5％), 352 have 400 to 499 beds (3.9％), and 479 have 500 or more beds (5.3％). Table 2 In terms of the number of beds, percentage of hospitals that replied to our three rounds

of questionnaires 2004

Nationwide 2004

Responding hospitals

2005 Responding

hospitals

2006 Responding

hospitals

99 or fewer beds 39.9％ 20.2％ 20.4％ 20.5％

100 to 299 beds 42.4％ 29.3％ 30.4％ 28.9％

300 to 499 beds 12.4％ 28.2％ 28.4％ 27.9％

500 or more beds 5.3％ 20.1％ 20.1％ 22.4％

Source: Prepared by the author


(1) Main Attributes of Replied Hospitals (Table 2 and Table 3) The main attributes of hospitals that replied to our questionnaires are described below. In the 1st round of questionnaires, hospitals that have beds for acute-phase general patients and call themselves a core hospital in their respective region account for approximately 70 percent of the replies received. In terms of scale, hospitals with 500 or more beds account for approximately 20 percent, 300 to 499 beds make up 30 percent, 100 to 299 beds comprise approximately 30 percent, and 99 or less beds came in at approximately 20 percent, indicating that there were more replies from larger-scale medical institutions. As in the 1st round of questionnaires, in the 2nd round approximately 70 percent of hospitals have beds for acute-phase general patients and call themselves a core hospital in their respective region. Hospitals with 500 or more beds account for approximately 20 percent, 300 to 499 beds make up approximately 29 percent, 100 to 299 beds comprise approximately 30 percent, and 99 or less beds came in at approximately 20 percent, thus the results we obtained were almost the same as those in the previous round. In the 3rd round of our questionnaire there were no noticeable changes in each percentage of replying hospitals in terms of scale as defined by number of beds. As shown in Table 3, in our 2004 research there were more replies from public and publicly-owned medical institutions in terms of the entity of establishment, namely public hospitals account for 57.0 percent of replies received, publicly-owned hospitals make up 9.7 percent, healthcare corporation hospitals comprise 22.2 percent, and university and other hospitals came in at 10.6 percent. In our 2005 research, there were more replies from public and publicly-owned medical institutions in terms of the entity of establishment, namely public hospitals account for 55.3 percent of replies received, publicly-owned hospitals make up 9.5 percent, healthcare corporation hospitals comprise 23.5 percent, and university and other hospitals came in at 11.0 percent. In this way, we obtained almost the same compositions as those in our previous research.


Table 3 Entities of Establishment of Hospitals Replied in 2004, 2005 and 2006 Public Publicly-

owned Healthcare corporation

University and others

No reply

Percentage of total number of

hospitals throughout Japan in 2004 14.7％ 3.6％ 62.2％ 19.5％－

Percentage of number of hospitals

that replied in 2004 N=440

57.0％ 9.7％ 22.2％ 10.6％ 0.5％



55.3％ 9.5％ 23.5％ 11.0％ 0.7％



54.4％ 11.3％ 22.7％ 11.3％ 0.3％

In this table, each column (category) includes the following types of hospitals.

Public: This category includes those hospitals run and/or administered by the Ministry of Health, Labor and Welfare, prefecture governments, communities, the National Hospital Organization, and the Japan Labor Health and Welfare Organization, but do not include national university hospitals and public university hospitals, which are listed in a separate column.

Publicly-owned: This category includes those hospitals run and/or administered by the Japan Red Cross Society, Saiseikai (Social Welfare Gift Bestowed Foundation), and organizations associated with social insurance.

Healthcare corporation: Healthcare corporations mean those institutions that use “healthcare corporation” as their official hospital name.

University and others: This category includes national university hospitals, private university hospitals, public university hospitals, public benefit corporations, social welfare corporations, companies, consumer cooperatives, and personal practices. Source: Prepared by the author

In our 2006 research as well, there were more replies from public and publicly-owned medical institutions in terms of the entity of establishment, namely public hospitals accounted for 54.4 percent of replies, while publicly-owned hospitals made up 11.3 percent, healthcare corporation hospitals comprised 22.7 percent, and university and other hospitals came in at 11.3 percent. In this way, we obtained almost the same composition as that in our previous two questionnaires.

Ⅵ．Matters Related to the Questionnaire

In order to see whether the total values obtained from hospitals responding to this questionnaire are applicable as values representing the entire hospital segment in Japan, we have conducted


statistical examinations. To be more specific, of all the data we obtained in this survey, we have compared the data on patient accommodation capacity in terms of the number of beds and the entities of establishment with those of the 2004 Ministry of Health, Labor and Welfare final data, and used “goodness-of-fit test” techniques to see whether these two different data sets have the same distribution. The result is that “the survey results this time cannot be said to have the same distribution as the 2004 official final data.” In the context of a comparison with respondent hospitals, of the hospitals we sent our questionnaire to this time, the larger the scale of their organization, the keener they recognize the need for “administrative techniques,” with many of them proactively making an effort to reply. To the contrary, smaller-scale hospitals are less interested in BSC itself, and this is considered to be a reason for the smaller percentage of replies from them. Meanwhile, national and public hospitals have some issues that they currently need to address, such as the implementation of an independent corporation by the National Hospital Organization, support for DPC 3), and financial crisis. Local municipality hospitals are required to initiate actions to improve their business administration amid reductions in the provision of general accounting and cuts to grants ordered by mayors and prefecture governors in the last few years. As such, there have been positive and active debates on such measures as implementing BSC, and it is assumed that this is the reason why the percentage of replies from them is very high. Meanwhile, looking at healthcare corporations and personal practices, there are many cases in which a gap in the scale leads to a gap in the quality of doctors and clerical staff. As such, smaller hospitals or such other hospitals often running deficits have no time for BSC and many are too busy with their day-to-day operations, which resulted in a smaller percentage of replies. Besides, many personal practices run their hospitals as personal assets. From these facts, frankly speaking, they have little interest in BSC related to optimization of the whole organization and information disclosure

Ⅶ．Result and Analysis

A survey conducted in 2006 revealed that 58 hospitals, corresponding to 18.8 percent of respondent hospitals, already have BSC in place. The percentage is on the rise year by year, from 5.0 percent in 2004 and 11.4 percent in 2005 (Fig. 1).


5.0 14.8 45.2 34.8 0.2

11.4 15.4 58.3 14.9 0.0

18.8 10.4 56.9 12.3 1.6

0% 20% 40% 60% 80% 100%

3rd (2006 n=309)

2nd (2005 n=422)

1st (2004 n=440)

Already involved internally or at related facilities Reading related literature and attending seminars Know the name and its broad ideas This is the first time to hear the nameNo reply

Fig.1 Changes in BSC Involvement

On the other hand, focusing on a yardstick for future dissemination of BSC, there is actually a gradual decline, only 10.4%, in the number of hospitals that lag or are playing catch-up at the stage of collecting information on related literature and participation in seminars as well as educating their staff members. Meanwhile, those hospitals that already implemented BSC and those still playing catch-up, when totaled, represent 19.8 percent in 2004 and 26.8 percent in 2005, with a further rise to 29.2 percent in 2006, indicating the very fast dissemination of BSC into Japanese medical circles. Now, looking at the efforts under way at those hospitals where BSC is already in place, there is an increase in the percentage of implementation by the whole corporation or hospital. This fact tells us that the dissemination of BSC into hospitals here in Japan is in full swing (Fig. 2).

36.4

0.0

18.2 18.8

2.1

39.641.4

3.4

46.6

0

5

10

15

20

25

30

35

40

45

50

3rd (2006 n=58)2nd (2005 n=48)1st (2004 n=22)

Already implemented across thecorporation (multiple hospitals,etc.)Already implemented in anothercorporation within the group

Already implemented across thehospital

％

Fig. 2 Change in BSC Implementation


Regarding how they use BSC and what they aim at through use of BSC, the top ranked item is use as a strategic management system, followed by use for organizational reform. Use of BSC for performance evaluation is still limited, but it must be noted here that such a low percentage is just because this indicates a case in which BSC is used only for the purpose of performance evaluation. Since it is self explanatory that performance evaluation serves as the base for strategy management, thus serving as basic data for organizational reform, is it now clear that each hospital in Japan is placing increasing importance on multidimensional performance evaluation (Fig. 3).

5.2

20.7

48.3

77.6

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0

戦略的病院経営のため

組織改革のた

業績評価のた

そ

％

For strategic hospital management

For performance evaluation

For organizational reform

Others

Multiple answers OK: Select all appropriate items n=58

Fig.3 Points prioritized in implementing and making use of BSC Now focusing on the aims of implementing BSC at those hospitals that have already introduced BSC and are still studying introduction (n = 90), about 80 percent of them are aiming at the promotion of “changes in the mindset and structural vitalization,” and more than 50 percent of them are interested in using BSC to “secure execution of their annual business plan” as well as enhancing and securing “objective management.” These figures are also on the rise year over year, indicating that they are expecting BSC to help them beef up of management power rather than manage their business strategies (Fig. 4).

25.617.88.8

26.712.2

4.434.4

16.714.2

38.918.96.2

51.133.3

18.652.2

26.712.4

76.728.914.2

0 10 20 30 40 50 60 70 80

Changes in mindset and structural vitalization

Management of objectives

Formulate mid-term business plan

Department management

(n=90)

Initial objectives and aims

Attained objectives and aims

Previous status of attainment

Fig.4 Effects of Implementing BSC

(n=90)

Secure execution of annual business plan

Beef up supervision over corporation/hospital

Promote team-based healthcare


Now, looking at the effects obtained from implementing BSC evaluated qualitatively at 58 hospitals that already have BSC in place, the top ranked item is the “sharing of visions, strategies, and the sense of values,” followed by “participation in business management by staff members and coordination awareness,” “clarification and reestablishment of vision and strategies,” and a “raised sense of unity in the hospital as a whole.” Comparing the second and third surveys, there is a sharp increase in the “sharing of visions, strategies, and the sense of values” from 29.2 percent to 48.3 percent. There are also noticeable increases in “participation in business management by staff members and coordination awareness” from 20.8 percent to 39.7 percent, and “raised sense of unity in the hospital as a whole,” from 4.2 percent to 20.7 percent. These increasing trends clearly show that the effects of implementing BSC have been made much clearer in terms of the penetration of vision and changes in mindset among staff members. Meanwhile, we cannot say that adequate effects have been brought about by functions of management tools such as “linkage among the business plan, budget, and vision” and “securing the attainment of visions and strategies.” (Fig.5).

8.3

5.2

8.35.2

16.7

13.812.5

19.04.2

20.7

31.3

27.620.8

39.729.2

48.3

0 5 10 15 20 25 30 35 40 45 50

Sharing of vision, strategies, and sense of values

Participation in business management by staff members and coordinationawareness

Clarification and reestablishment of vision and strategies

Raised sense of unity in hospital as a whole

Improved effectiveness of goal management program

Linkage among business plan, budget, and vision

Secure attainment of vision and strategies

Eliminate ambiguities in strategies and goal setting

Previously (n=48)

This time (n=58)

％

Fig. 5 Effects obtained from Implementing BSC The top ranked item here is “disclosing management information such as performance evaluation indicators and the like to staff members” with the help of the implementation of BSC, at 37.9 percent, followed by “increasing the percentage of the management class conveying messages to the staff members,” at 34.5 percent. As seen from these figures, a mechanism has been established in Japan in which, in addition to the top-down conveyance of decisions, the middle class moves up and down to extract ideas from the bottom. (Fig. 6)

Multiple answers OK: Select up to 5 items


10.3

10.3

10.3

19.0

19.0

25.9

31.0

31.0

34.5

37.9

0 5 10 15 20 25 30 35 40

ce

to

on

ed

m

ts

th

m

C

en

(n=58)op 10 Itemss only (Multiple answers OK: Select all appropriate items)]

％

Top 10 Itemss only (Multiple answers OK: Select all appropriate items)

Fig. 6 Mechanism that have been changed through BSC implementation As many as 88 percent of hospitals who have already introduced BSC or are still studying introduction positively evaluate the effectiveness of BSC on the business administration front, and 50 percent of all responding hospitals give BSC high marks. Such a high evaluation could translate to the fact that they have been disclosing their instances and research results adequately to make such an evaluation. (Fig. 7)

(n=58)

Effective45%Somewhat effective

38%

Not very effective3%

Not effective0%

Not effective at all0%

No reply9%

Very effective5%

Fig. 7 Effectiveness of BSC as a Tool for Hospital Management As far as Japan is concerned, a high evaluation is given to the use of BSC in medical circles, and at hospitals in particular. BSC is also now enjoying wider use in social welfare facilities. From these

(n=58)

Disclosed management information (such as BSC performanceevaluation indicators and the like) to staff members

Increased the percentage of management classconveying messages to staff members

Increased opportunities for staff members to express theiropinions on management and operation

Studied issues across all departments involved

Reviewed and implemented objective managementprogram

Implemented ablity to exchange opinions betweendepartments

Implemented mechanism to enable committeeactivities to link up with BSC

Reviewed and implemented personnel evaluationprogram

Positioned clinical indicators in BSC

Reviewed communication and reporting capabilitiesbetween departments

％


facts, we can safely say that BSC in Japan is being spread more widely and faster in terms of its use in units of organizations such as hospitals than in similar cases observed with non-medical business companies. Yet, I must note here that the use of BSC lags a great deal in terms of its use in healthcare policy.

Ⅷ．Reasons for Quick Dissemination of BSC among Hospitals in Japan

To this point, I have attempted some analysis of the penetration of BSC, how it is used, and major achievements it has made in hospitals in Japan. There are a myriad of possible reasons why the implementation of BSC in hospitals in Japan has progressed more quickly than in the industrial world. Behind such developments, there is an environment in which many hospitals in Japan have needed virtually no business administration-oriented management techniques that may be dubbed business administration skills. That is to say, in such a management environment, hospitals have been open to much less competition than the industrial world, or they have been in some advantageous situations in which they do not need to pay as much attention to such business administration techniques and skills if they operate in line with the policies established by the Ministry of Health, Labor and Welfare. Based on these realities, the discussions to follow explore some reasons why BSC has made such quick penetration in hospitals here in Japan. (1) Management systems have not made deep inroads into hospitals to date. Setting aside some advanced hospitals, hospitals in general have been more or less unfamiliar with management systems. In recent years, however, the healthcare management environment has been getting more and more challenging, and this has made all levels of expertise start to think that they have to do something new to survive. Such a move has created a chance for BSC to come to the forefront, because the concept is easy to understand and logical. This could be one reason. Another reason could be how handy BSC is for conducting measurement, analysis, and improvement through quantification in numeric terms. (2) There have been some changes in the field enabled by the process of incorporating

BSC and the sense of “becoming aware of it.” There have been many cases in which staff members in the field are not involved in the process of determining the hospital’s goals. In a hospital that may be dubbed a vertically integrated and functionally separated organization, a process that allows everyone to take part in the decisions is very fresh, which has led to the very quick dissemination of BSC. In addition, many hospitals have a business practice in which the goal setting process is taken care of by managers whereas the execution process is assigned to frontline staff members, and in many cases this separation of responsibility has caused frontline staff to lack understanding of these goals, which has hindered the creation of hospital values that patients can perceive. Using BSC requires frontline staff to take part in both of these processes, and this has created the opportunity for such staff members to “become aware of it” and also enabled the sharing of a


wide variety of information. This could be another reason. (3) There has been a situation in which the middle class is required to take part in

business administration. Conventionally, mission statements and short-term goals are known to most staff members but for some are only known as messages of less importance to them that are originated by the director. That is to say, many staff members have never gone beyond simply performing their assigned work, and there has been some sense that clerical work staff members have been satisfied with performing their daily work, such as that required in the medical practice section, management of articles, and accounting, whereas doctors, nurses, and co-medicals have been only required to handle patient care. Following the collapse of the bubble economy, however, the easygoing way of thinking that hospitals would not suffer was overturned by such bitter facts as bankruptcy, consolidation of hospitals, and renewal as medical clinics. Previously hospitals were able to pull in patients spontaneously, but these gentle circumstances collapsed due to the development of new situations such as the increase of adult-onset diseases, the fact that patients have both the time and environment to search and select advanced hospitals and good doctors best suited for curing their conditions, and also by the fact that the development of transportation has allowed patients to select hospitals and act on their own. These changes in circumstances have also caused hospital management, which formerly was only in the hands of top management, to be shared by the middle class and clerical work staff members, thus creating more abundant information related to hospital management. This could be another reason. (4) Every hospital has originally had a number of and large volume of multidimensional

qualitative data, which has not been in frequent use for hospital management. There has been a variety of data at every hospital, including data just thrown away immediately after being created. These data have not been made good use of on the management and clinical fronts. In recent years, there has been a tendency to place much importance on clinical indicators, but they have not yet been disseminated at the nationwide level. Here is another chance for BSC to come to the forefront. In an approach that uses BSC, both clinical data and management data are quantified when they are generated, which makes these values easy to understand for everyone, making it easier for all staff members to gain understanding. (5) Many individuals have a science-oriented way of thinking. In this sense, with the

help of BSC, data can be a “common language.” Hospitals are characterized by great differences in language and education from one medical department or division to another. In particular, hospitals often have no common language in place. Making the situation worse, hospitals have a function-based organizational structure that has made it difficult to cultivate and grow an internal common language. Against such a backdrop, it is important to make sure that doctors understand that BSC can foster a common language used for communication. In this sense, strategy maps and scorecards can function as tools that can be used


by people with all types of expertise when they are used as a common language in hospital management and operation. (6) BSC has satisfied a desire of the healthcare management class to acquire a

standard (or typical) framework as a tool for conducting business administration. For doctors, nurses and clerical work staff members who have never experienced systematic learning about business administration, BSC satisfies the basic requirements for a tool to allow them to analyze things scientifically and theoretically. At the same time, under the Medical Law, a doctor who is the administrator of a hospital is termed a manager or administrator. Without being constrained by such narrow-mindedness, which is typical of Japan, however, in medical circles wherein the dominant major players are public hospitals that seek humanity-based non-profitability and private hospitals that formally also profess to seek the same thing, BSC is an effective tool for transcending a situation in which public health administration is granted asylum in a place where nobody seriously wants business administration tools.

Ⅸ．Reasons for Slow Dissemination of BSC among Businesses in Japan

My judgment is that business companies have been much slower in implementing BSC than hospitals in Japan. Companies here have taken it for granted that they need to operate by putting much emphasis on an array of both financial and non-financial indicators. Besides, many of them are in a very stringent competitive environment in the global market and even those only oriented toward domestic sales are also open to very fierce competitive. In addition, these companies inevitably need to deal with more complaints and claims from consumers and pressure groups than hospitals do. Furthermore, their business administration environment changes much faster, and this has made them prepare various types of business administration tools to cope with the speed of such change. As such, they feel and actually have no pressing need to implement BSC anew. Based on these facts, the following discussions attempt to explore some reasons why BSC has made such slow penetration among business companies in Japan. The first reason is that it takes a long time before BSC is accepted by company employees and some effects can be expected. In many cases, management expects some short-term results while still being conscious of long-term achievements. That is to say, management is obliged to track day-to-day sales and profits, give instructions in real time, and improve the situation so as to improve profitability. One Japanese business manager left me this very impressive phrase – “I think BSC is a very good tool. Nevertheless, although BSC is helpful in stopping to look at the path of our growth, it is not a tool to keep track of day-to-day changes in conducting the business. In this sense, I think I need a tool other than BSC to grasp everyday trends.” 4) There is an undeniable sense that the season for BSC is already over for business companies. Seemingly, there are not all that many companies who will want to implement BSC in future. Against this backdrop, BSC researchers have shifted their target to non-profit organizations, hospitals, and municipalities.


As such, the possibilities, if any, of businesses implementing BSC in the future could be limited to medium- and small-scale businesses, municipalities and public businesses where the management is less conscious, or other cases such as a company introducing BSC not for company-wide implementation but for some particular purpose in different ways of implementation. As a matter of fact, I have heard that in an increasing number of cases a business consulting company does not use the name BSC when making a proposal to its clients even if the proposal is based on a BSC approach. The second reason is that every company has already been tackling a number of different management skills and, as such, expects to produce respectable results if it tries anything new, and so, if it is working on ISO and TQM now, it cannot chase two rabbits at the same time, so it is inevitable that it choose the major tool. The third reason is that the idea of BSC is basically close to some ideas that many Japanese businesses have practiced until now. Profit-making naturally requires every business to identify customer needs, manufacture quality products and provide good services, and for that purpose, such activities as reviewing business practices and developing human resources are functioning as routine mechanisms. For many successful businesses in Japan, although the term BSC may sound like something new, some similar mechanisms may already be in place. The fourth reason is that, in general, businesses have a much more complex structure than hospitals, with an extremely large and complicated organization. As one such case, for example, a business may use BSC to develop the goals (visions) of particular divisions, whereas its business administration planning office creates a companywide map by integrating the maps generated in each division. (In this case, however, there is no companywide common recognition in place, and the company only manages the logic, not indicators.) Businesses primarily have many indicators to be managed (and so do each of their divisions). As such, if one of their divisions is to implement BSC, addition of new BSC indicators to existing indicators naturally causes double entry of managed indicators, thus causing frontline staff members to complain, asking why they have to work on two similar streams of tasks. In this case, what the company gains is nothing more than backward-looking BSC activities in which its staff members only temporarily do what top management has told them to do. The fifth reason is that implementing BSC requires businesses to give up styles that they are already familiar with, which requires top management to have a strong will to “change” them. In reality, however, very few businesses dare to take such additional steps. There are many cases where they alter BSC itself in their own way for convenience, which is something like mistaking the means for the end. Let's look at an example of this. Ricoh is highly regarded for its success in implementing BSC as a business operating in Japan. I’ve heard that Ricoh currently has no map in place (although maps may have been absent in the first place) and they are operating only on BSC5). In addition, they have established a style in which each division sets and manages their performance evaluation indicators from four different perspectives toward their mid-term management plan. Of course they have done so only after thoroughly understanding BSC, and implemented BSC as a result of


feeling a deep sympathy with the idea of BSC. Nonetheless, agreeing to the idea in general does not necessarily facilitate implementation in practice. That’s the reality with BSC, and I feel this may stem from some differences in organizational structures between the United States and Japan. Private businesses are already using a variety of business administration techniques and have appropriate business administration frames in place as their basic business environment. As such, there is a strong tendency among them to introduce BSC ideas as supplements to brush up such frames. Besides, for many big businesses, it is quite challenging to deploy BSC across the company gracefully unless they have overwhelming cohesive power. On the contrary, there has been an atmosphere for the last couple of years that BSC is the only choice as a business administration tool in medical circles, including promotions conducted by the Japan Association for Healthcare Balanced Scorecard Studies6) and the way of addressing BSC. That is a big difference from the case with private businesses. And, in a sense, there has been an atmosphere in which “BSC appears to be something good, so they gave it a try.” (Such a style of decision-making is hard to realize for large business organizations, including the flow of approval by top management, except for a top-to-bottom approach).

Ⅹ．Conclusion

The dissemination of BSC in medical circles in Japan has served as a trigger that has made all concerned people reconsider not only financial data but also non-financial indicators. That is to say, BSC has given them an opportunity to think over the values of the hospital that do not appear on the profit and loss statement. In addition, it has been proven that BSC has marvelous characteristics as a tool to cultivate a common language in the hospital in pursuit of optimization as a whole as well as in bettering communication among all concerned individuals. Meanwhile in Japan, there has not yet been much progress in the use of BSC at a system level, namely its comprehensive use in local communities for medical policy-oriented purposes, and research has just begun. The adoption of BSC in medical circles in Japan is driving a ‘management movement’ to allow all concerned to make a concerted effort to think over hospital management theoretically using adequate evidence. This may be said to closely resemble activities in which, after the statistical way of quality management was introduced from the United States, such a way of doing things has been driven in the direction of making everyone unite their effort to think over everything and then spread to QC circles and TQC circles. In any event, in order to further develop BSC in future, it is essential to carefully create a balanced selection of financial, non-financial and clinical indicators, and relate them to strategies to incorporate visible result measurement and evaluation into BSC. So far I have discussed some reasons for the quick implementation of BSC by hospitals as well as the slow pace at which it is implementing among business companies in Japan. Now I would like to add one more reason for such quick BSC implementation by hospitals here. That is, their hospital organizations are not as mature as those of business companies from a business administration


viewpoint. Nevertheless, in my belief, it depends on how field staff members recognize how satisfactory BSC will be as a framework for their day-to-day business practices, regardless of whether hospital chairmen and directors can become aware that BSC is very useful as a practical guideline in hospital management. As things stand now, it would be safe to say that, in the case of hospitals that have above-average organizational strength, the biggest factor for implementing BSC is the sense of crisis that their directors, who are also doctors, have in hospital management. Note 1) These figures are calculated from the OECD 2006 data. 2) Once hospitals were able to keep themselves up and running without competition with others as long as

they did things in a way similar to what others did under the instructions of the Ministry of Health and Welfare. In Japan, financial institutions including banks, healthcare institutions including hospitals, and educational institutions including schools all belong to this category.

3) DPC is short for Diagnosis Procedure Combination. Unlike the conventional "fee-for-service payment" system in which fees are calculated for each medical intervention performed, this new system calculates fees by combining: the comprehensive evaluation portion (which includes medication, injection, treatment, and hospitalization fees) comprising an amount per day specified by the Ministry of Health, Labor and Welfare based on each inpatient’s name of the disease, its symptom and therapeutic intervention; with the fee-for-service evaluation portion (including surgical operation, anesthesia, rehabilitation, and instruction/guidance fees).

4) This remark is from a November 2006 interview with the president of a mid-sized manufacturer. 5) Similar remarks are made in a number of publications. For the purposes of this article, reference should

be made to publication numbers (67) and (68). 6) Japan Association for Healthcare Balanced Scorecard Studies (HBSC) was established 2003. There are

two types of members who are individual members and supporting members. Supporting member is mainly hospitals and companies.

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Hospital Management and The Balanced …€•55― 『情報科学研究』第17号 Hospital Management and The Balanced Scorecard for Healthcare in Japan Toshiro Takahashi 要約