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The Cleveland Clinic’s Balanced Scorecards Report


Introduction

Performance evaluation is a critical aspect of the management of every organization. Companies that can streamline their performance management systems develop strong internal competitive advantages over their competitors. This is the reason why many organizations commit many resources to performance management systems. The competitive global climate is causing companies to lose margins to efficient providers. Differentiation is no longer a guarantee of creating and maintaining market share. As such, companies are competing in an increasingly complex environment. While some companies establish themselves as highly efficient providers, some seek to use quality as a differentiator. Regardless of the business model, all companies face competition from firms across the world.

In addition to the pressure associated with the competitive business climate, companies are also facing stricter demands from customers, regulators, shareholders, and stakeholders. The customers keep demanding for better products designed to meet their unique needs. They keep on comparing what they get from suppliers with other local products, and increasingly, with foreign products. Customer demand and lifestyle changes are behind many product innovation initiatives in different companies. Regulators, on the other hand, are exerting pressure on businesses from various fronts. Some enforce environmental standards, while others deal with public health concerns. Regulators also deal with issues such as product quality and trading rules. In other words, the pressure exerted on any business is becoming more and more unmanageable. Shareholders are also a source of pressure for company CEOs. Shareholders demand quarterly profit growth. The global financial crisis has left many shareholders wary of big companies, and they do not hesitate to take away their investments at the first sign of trouble. In the same way, other stakeholders look at businesses located in their communities as a source of funding or support. Each organization is forced to run charity programs under the umbrella of corporate social responsibility programs.

Apart from the external pressures that businesses deal with today, they also deal with internal pressure arising from talent development, performance measurement, and transition planning. Organizations find themselves in very difficult times today. The risk of bankruptcy is real for many organizations because of fluctuations in customer demand.

The issues above constitute the balanced scorecard. It is an attempt by strategic thinkers to model how organizations can find a profitable equilibrium. This paper explores the issues that surround the operations of the Cleveland Clinic. It also attempts to model balanced scorecards.

Methodology

To complete the research project, it was necessary to carry out several research activities to find relevant data. The main activities were as follows. First, it was necessary to carry out a literature review in regards to the accepted performance review practices about the development of balanced scorecards. This process involved the use of conceptual models to map performance and to understand the impact of performance management in the attainment of balanced scorecards.

Secondly, a review of secondary data relating to the operations of the Cleveland Clinic took place. The use of secondary data helped to save time and money that would have been used to extract the information from the primary sources. The secondary data came from credible sources such as Gallup International.

The third aspect of the review was the examination of the information posted on the website of the Cleveland Clinic. The website sufficed as a source of primary information. The website provided the insight needs concerning the management structure of the organization. The fourth aspect of research used in the project was an examination of news sources and industry magazines to uncover the significant changes taking place in the medical sector.

Literature Review on the Balanced Scorecard

A balanced scorecard is a tool used in strategic management as a means of evaluating an organization’s strategic advantages. It helps organizations to determine the amount of focus they need to give different priorities in their organizations. It is also useful in the determination of strategic alternatives for businesses seeking to change their operating strategy.

What is the Balanced Scorecard?

Robert Kaplan and David Norton created the balanced scorecard (Neely 1999). It was a remedy to the limitations posed by concentrating on the financial performance of the organization as the only measure of performance. Usually, when organizations commit too much time to one measure of performance, such as finances, the company loses its strategic edge. The balanced scorecard helps an organization to balance its current priorities with the long terms demands placed in it by its shareholders, stakeholders, and customers. In the same regard, the balanced scorecard can help organizations to predict future performance in avenues such as social media.

What Constitutes the Balanced Scorecard?

The scorecard has four main elements. These elements include financial measures, customers, business processes, and learning and growth (Neely, 1999). Financial measures in a balanced scorecard are the traditional results prepared through accounting principles to ensure that the organization meets the expectations of the shareholders. Typical financial measures that are of interest to the shareholders include the return on investment, the net profit made by the organization, and the organization’s balance sheet. Financial performance was the main method of analyzing the performance of companies. However, investors realized that financial measures on their own do not give a reliable indication of the future performance of the organization.

The second aspect of the balanced scorecard is the customers. One of the significant changes in the business in the twentieth century was the recognition that customers are the most important assets to a business. This is the thing behind slogans, such as the customer is king. Customers not only provide cash flow but also lead to the growth of the customer base for the organization through word of mouth advertising. The measure used to assess how well a company is going concerning the customers is customer satisfaction. The other significant measures in the balanced scorecard that relates to customers are customer retention and the market segment of the product in the given market.

The third component of the balanced scorecard is business processes. Every business has a unique signature based on the processes it uses to achieve business results. While the function may be generic across many organizations, the actual activities, speeds and efficiency of the processes depend on the specific organization. In this sense, business processes can be key sources of competitive advantage. Processes in business include quality of produces, the rate of production, and the number of products made available to the consumer. It is incumbent upon every business leader to ensure that the processes used in the business are the most effective ones.

The fourth component of the balanced scorecard is learning and growth. This refers to the ability of the organization to learn from its activities to improve them. Organizations learn when their employees learn. There are two sources of learning in organizations. First, an employee can learn from the shop floor how to solve common problems as they arise. This method is not structured. However, an organization may also encourage the staff members to take academic courses to improve their skills. The balanced scorecard also looks at employee satisfaction as one of the measures that influence whether the best employees remain in an organization, or whether they move other things. Talent management is becoming more and more difficult because of the high demand for talent, and the multiplicity of opportunities brought about by globalization

Significance of the Balanced Scorecard

Every organization needs to pay attention to the balanced scorecard because of its power to reveal flaws. First, the balanced scorecards make it possible for the organization to think about how to improve customer experience in its premises (Davies & Davies 2011). This is necessary for survival. The balanced scorecard makes it necessary for each organization to think about customer satisfaction proactively.

The second importance of the balanced scorecard for any organization is that it makes it easier to interact with clients and other important stakeholders—the process of developing balanced scorecard forces every organization to think about the shareholders in many ways.

The third advantage of the balanced scorecard is that it can help an organization to identify its sources of competitive advantage (Porter 1980). This is a very important part of the strategic planning process. The information relating the performance of the organization allows the organization to reexamine its assumptions.

How Do Organizations Use the Balanced Scorecard?

Organizations use the balanced scorecard in three main ways. First, the scorecard is used as a strategic planning tool. It helps the organization to focus on the issues that have the most impact on its future. Secondly, the balanced scorecard can function as a guide for developing performance measurement tools. Since organizations use the balanced scorecard to develop strategic options, it is also the best tool to use as the basis for developing performance management measures in line with the strategic options.

BSC Matrix for Cleveland Clinic

Background of Cleveland Clinic

The Cleveland Clinic is a private teaching hospital. The clinic carries out research and training as well as patient care. The clinic has a main campus in downtown Ohio with eight community hospitals and eighteen family health centres in Northeastern, Ohio (Cosgrove 2012). The clinic treats both local and international patients. The clinic has plans to open new health centres outside the United States. Plans are at an advanced stage towards the opening of a Cleveland Clinic in Abu Dhabi.

Leadership Structure

A CEO and a Board of Directors lead the Cleveland Clinic. The hospital was established in 1921 as a teaching and referral hospital. It is currently among the top four hospitals in the United States of America. It serves clients from all over the country. The clinic has four main leadership levels. The first one is the Board of Directors. The Board of Directors is responsible for the development of policies governing the operations of the hospital. The board meets eight times a year to review progress and to set new targets. In addition to these, the board is responsible for the smooth running of the clinic. Membership to the board is voluntary.

The hospital also has a Board of Trustees. The role of the Board of Trustees is to provide advisory services to the Board of Directors. The trustees are allowed to serve in the subcommittees instituted by the Board of Directors. Membership to the Board of Trustees is voluntary, and there is no remuneration for it.

Apart from the Board of Governors and the Board of Trustees, the hospital also has a Board of Governors. This body consists of the medical personnel who work in the hospital. The two main areas covered by the Board of Governors is the coordination of the medical and surgical services provided by the hospital. The CEO of the hospital is the chairperson of the Board of Governors. The fourth leadership level in the organization is the Executive Leadership. This level includes all executives in the hospital. The executive leadership works under the direction of the Board of Directors.

These structures are the ones that ensure the hospital has the best talent and counsel to remain one of the leading hospitals in the United States.

Performance of the Cleveland Clinic

The Cleveland Clinic has been performing very well for some time now. The market share of the clinic rose by 2% in 2011 (Cosgrove 2012). In that year, the clinic saw a record 4.6 million outpatients (Cosgrove 2012). The clinics market share in Cuyahoga County fell by 5% in 2012 (Cosgrove 2012).

The financial performance of the clinic has been very robust over the years. The operating revenue of the hospital increased by 7% to 6.215 $Billion in 2012 (Cosgrove 2012). This performance is in contrast to many healthcare providers who are struggling to make ends meet. In this regard, the clinic is in very good financial standing to carry on with its activities. The clinic understands that without a strong financial performance, it will not be able to meet its obligations, which include attracting and retaining the best talent.

Recent Events

The plans that the hospital has for the near future include opening several clinics in several parts of the world. The first clinic the hospital wants to open outside the United States is a clinic in Abu Dhabi. The work is in progress with graduated launch earmarked for 2014. The clinic has also opened up new wings and laboratories in Cleveland, and in Florida to meet the rising demand for its services.

The clinic is under pressure to maintain its sterling performance. However, several factors will play an important role in determining whether the clinic can meet the challenges coming its way. These challenges include decreasing reimbursement from the government for services rendered, a decline in the national inpatient stay in hospitals, a shrinking local population in Cleveland, and increasing pressure to reduce healthcare costs (Cleveland Clinic 2012).

The Cleveland Clinic is enjoying a lot of support from its stakeholders. The clinic has kept on attracting very positive reviews and awards based on its services. This shows that the clinic is performing well in an industry that is in a high state of transition.

Balanced Scorecard Matrix

The balanced scorecard matrix for the Cleveland Clinic is a follows

Themes Initiatives Measurement Targets
Customer Maintain and improve high-quality service provision
  • Continue implementing the highest standards of care based on WHO guidelines
  • Increase the number of facilities in current locations and in new locations
  • Implement high-quality care services
  • Long-term client relationships
  • Referrals
  • Positive Press
  • New Clinic in Abu Dhabi open by 2014
Financial Financial stability
  • Carry out analysis to determine the potential for rationalization
  • Encourage financial awareness among all staff
  • Calculating physician cost of care
Internal Efficient operations
  • Improve patient flow in all Cleveland Facilities
  • Reduction of patient waiting time
Employee learning and growth Talent retention
  • Give research grants
  • Seek research funding
  • New research areas
  • New training opportunities

Performance Management System at the Clinic

The discussion on the performance management systems at Cleveland Clinic explored the application of systems that contribute towards performance management. Performance management refers to all the activities undertaken by organizations to deliver certain result to its shareholders. These activities vary from organization to organization. The effectiveness of the performance management systems used by an organization usually depends on the capacity of the organization to manage the system. Some organizations prefer data-intensive performance management systems, while others prefer loosely-structured processes. Highly structured performance management systems are used in organizations that have high clarity in the job descriptions of the staff. Such organizations include banks. However, in industries where professionals tend to work on their own without direct oversight in regards to how they perform their work, performance reviews are less structured.

The number of performance management models varies depending on the needs. The model that was used in the analysis of the performance management system of the Cleveland Clinic and its impact on the balanced scorecard of the organization includes performance planning, performance measurement and performance reviews.

Performance Planning

Performance planning refers to the activities undertaken to identify performance targets an organization would like to achieve in a given period. Performance planning models depend on the organization developing a performance management system. In top-down models, the main performance goals trickle from the top management, down to managers, supervisors and eventually to the implementing staff. These systems are ideal for organizations that have achieved a high level of order in industries that are not changing. Some organizations use the bottom-up approach to performance planning. This involves the creation of performance targets at the bottom and using the aggregated results to define the overall organizational goals. This model requires the development of overall guidelines in regards to the performance measures needed to address the performance issues raised. In this regard, it is important to have a coordinated approach to performance measurement to ensure that all the performance goals developed in the organization fit within the mission and the vision of the organization.

Performance Measurement

The development of performance measures also requires the development of performance measurement tools to ensure everyone is on track to achieving the performance goals identified in the performance planning stage. It is imperative to pick on the specific measures to use to measure performance and to communicate these measures to all the officers. Some jobs require time-based measures if the task is repetitive. For instance, the levels of performance needed for a call centre operator can be eight hours of talk time per day. In some cases, results-driven performance measures are a better option. For instance, a marketing executive would work harder if the performance measure, in this case, were how many accounts have been opened in a given amount of time.

Performance Assessment

The third level of performance management is the performance assessment. It is important to fix a time when all an employee can look back at work done to determine whether he has achieved the short-term performance goals developed in the performance planning stage. The most popular performance assessment type is the use of quarterly performance appraisals. This type of performance appraisal is effective if the results are binding, and if the process leads to the growth of the person involved. It is important to use the performance assessment meetings to raise performance concerns and to address the issues raised. It is also desirable that performance appraisals emerge from an ongoing performance-monitoring program.

Performance and the Balanced Scorecard of the Cleveland Clinic

Performance Management in Cleveland Clinic influences the balanced scorecard for the organization in several ways. First, each time the performance management systems meet the needs of the clinic. The results show in the balanced scorecard. This is simple logic. The development of the balanced scorecard depends on the work the entire health system is willing to do to ensure that all the sectors of the scorecard receive adequate attention.

The balanced scorecard for any organization has four parts. This is the financial performance, the customers, business processes, and learning and growth. The financial performance of the Cleveland Clinic has been remarkable for a long time. The company has been posting better financial results every New Year, compared to the previous year. Considering the overall difficulties the industry has been going through, this is very commendable. Many hospitals and health institutions in America were hit hard by the global financial crisis and the changes in access to healthcare. Therefore, the Cleveland Clinic is achieving its financial targets, which is commendable for its long term operations.

On customers, the hospital has been receiving positive reviews from many of its clients. This is further proved by the rating the hospitals has been getting from various review agencies. It shows that the hospital is putting in the efforts needed to with the confidence of all its clients. However, a reduction in the number of patients from the local area that the hospital is threatening this successful streak. This can mean that a strong competitor has entered the market. Also, the hospital’s CEO reported that the number of people in the immediate community is on a decline. This will affect the number of patients the hospital treats per day. In effect, the market share lot, if it call came from local areas, will diminish in importance.

The business processes of the hospital also seem adequate for the task because of the long history of innovation at the hospital. The hospital has been posting very strong results in the last several years. This can only show that its systems are working. The hospital is under threat from various quarters to review its systems to address the changes that are coming to the sector. These changes include the emerging from demands for a reduction in healthcare costs. The government and consumer groups are actively seeking a reduction in the costs of healthcare to make it affordable for those who need access. Secondly, there is a reduction in the number of inpatients across the country. Fewer patients are willing to spend time in hospitals to recuperate, leading to a reduction in the income from hospital beds. The third threat that health facilities need to deal with is the reduction in reimbursements from Medicare and Medicaid. This will also affect the cash flow of the hospital. In essence, the hospital needs to adjust its systems to handle these changes. Otherwise, it will be unable to cope with change.

The third element of the hospital’s balanced scorecard is learning and growth. In this area, the hospital is performing very strongly. According to the hospitals CEO, the hospital increased the number of publications in its name by 5% in 2012 (Cosgrove 2012). The hospital published 1453 journal articles, books, and chapters. This shows that the clinic has a strong learning culture and continues to play an important part in both the theoretical and practical application of the practice of medicine. The hospital is also increasing its physical presence in the United States and across the world.

Based on the current level of performance, the hospital’s balanced scorecard is in good condition. However, the continuation of this position depends on environmental factors. If the hospital wants to remain as a strong player in the health sector, then it needs to work hard towards the development of a strategy that will help it to remain in front of the curve.

Strengths of the Performance Management System

The current performance management system in use at the clinic has delivered strong results for the organization. Therefore, it shows that the organization is using its systems to good effect. The advantages of the system are as follows.

First, the performance management system in the clinic is data-driven. This means that the hospital stresses on the use of evidence-based approached to performance management. The clinic sets performance targets and selects measures that support data analytics for use in the measurement of the data. The advantage of using data-driven performance management systems over subjective systems is that the data speaks for itself. It is impossible to argue with productivity numbers compared to a subjective interpretation of how hard someone works. Data-driven performance measurement systems also make it necessary to focus on the core issues. An organization can lose its strategic focus if it fails to concentrate on the core issues it needs to focus on. Data-driven performance measurement systems enforce focus because the number would show how focused each worker is on the specific issues that address the organizations long term needs. Data-driven systems in the hospital are also ideal for measuring progress achieved in maintaining a balanced scorecard. Many times, organizations fail to achieve their objectives because of failure to measure the correct quantities. In this sense, the Clinic is in good stead by using data-driven performance management systems because this gives it a quantified basis for evaluating its scorecard.

The second advantage of the current performance management systems is that it is customized for the organization. The clinic is a research and treatment facility. This means that its needs are not purely academic, and they are not purely about the direct provision of healthcare. Therefore, a performance management system designed exclusively for academic institutions or one designed for the hospital would not meet the unique needs of the clinic. The development of custom performance management systems is imperative for the successful implementation of performance management practices. As earlier stated, the failure of an organization to know what to measure in regards to performance will lead to the failure of its performance management system. This is very crucial in the context of the development of a balanced scorecard. One of the essential elements of the balanced scorecard is business processes. The development of a balanced scorecard requires an organization to develop the capacity to adjust its systems in response to strategic threats and opportunities. Business functions in different organizations may be similar. However, the business processes of these two organizations would bear unique traits based on the focus of the organization.

The third advantage of the performance management system in use is that it aggregates the performance of the entire organization based on the performance of individuals. This is a very important feature of performance management systems in any organizations. The ability to aggregate their performance of different department into one report makes it possible to measure how well the organization is proceeding towards the general performance goals for any specific quarter. In the context of the balances scorecard, the performance of each employee contributes towards shareholder value. This is why it is important to track the performance of each employee and based on performance objectives of each employee.

The hospital ran a program intended to reduce infections that patients picked while in the hospital. The solution proposed was that a physician would wash his or her hands after treating each patient. The hospital discovered that physicians at times thought that they had washed their hands, but in reality, they had not. Therefore, the hospital came up with a program of assigning discreet observers the duty of keeping track of whether a physician washed his or her hands after treating each patient. The result was that many physicians did not wash their hands as many times as they thought they did. When presented with the findings based on the discreet observation made about their handwashing habits, the physicians were invariantly shocked. This lead to an increase in compliance and a reduction in hospital derived infections by 90% (Gillespie, 2012).

Shortfalls of the Existing Performance Management System

Any performance review system has inherent weaknesses. Some of these weaknesses arise out of the design of the performance measures. There is no perfect performance management system anywhere. What can be thought of as a weakness in one place can be a strength in another place (Colquitt, LePine & Wesson 2009)? In this regard, the performance management system in use in the Cleveland Clinic has three main disadvantages. These disadvantages include retrospective performance reviews, the significance of subjective reviews at a supervisor level, and the collection of too much performance data that may not be adding value to the performance management process.

Retrospective performance reviews arise when a system is designed to collect data, and then review takes place at the end of a specified period. The problem with retrospective systems is that they fail to provide early warning to an organization to enable course correction. For instance, if a physician needs to see a certain number of patients per day to achieve a weekly target, it is important or the physician to have a means of knowing how many patients he has seen continuously. This will enable the physician to adjust the time he spends with each patient. The effect of retrospective performance management systems on the balanced scorecard is that they fail to take full advantage of the strategic opportunities that the balanced scorecard reveals. For instance, the balanced scorecard may indicate that the hospital needs to spend more time on the improvement of business systems. In many hospitals, such changes require full-time monitoring and experimentation with different models to find out what works—waiting for three months to tell whether a specific performance improvement measure is working leads to wastage of time. In this regard, the performance management system in the Cleveland Clinic requires an overhaul to include elements that will make it possible for the institution to monitor performance better.

The second weakness of the performance management system at the Cleveland Clinic is that it still gives a lot of prominence to subjective reviews. This happens during the quarterly appraisal meetings. The use of subjective appraisals is very good at the individual level and can help an employee increase their output. However, if there is any problem between an employee and the supervisor, the performance review can fail to achieve these high ideals. This is why many organizations are running to metric-based systems that measure quantities such as level of output, nature of customer feedback, and work standards. Another weakness associated with the use of subjective reviews is that the results they yield are very difficult to aggregate across the organization. They are often a reflection of the relationship between an employee and his immediate supervisor. These reviews are also subject to positive bias or negative bias. A supervisor may give an employee poor reviews because of problems with their working relationships. At the same time, the employee may get superior reviews because the supervisor does not want to jeopardize the employees work. In the context of the balanced scorecard, the difficulties associated with aggregating the overall performance reviews make it very difficult to measure how balanced a company’s scorecard is. This negates the benefits of the balanced scorecard as a performance indicator.

The third weakness of the performance review system in use in the hospital s the collection of too much data that does not seem to have relevance to the key performance indicators. This is a common problem affecting performance management systems in many organizations. Some organizations erroneously believe that an effective performance review necessitates the collection of a lot of data. Data collection is an important part of performance management, especially if the system is data-driven. This can lead to problems is the organization makes the performance management process cumbersome. The effect on the balanced scorecard, in this case, is that it becomes difficult to develop an accurate picture of the scorecard of an organization. The organization’s performance review personnel may not appreciate the relative importance of some data over others. they may decide to use data that gives the best picture while neglecting the important aspects of the performance of the organization.

Conclusions

The following conclusions arise from the literature reviewed in regards to the performance management systems of the Cleveland Clinic. First, the balanced scorecard requires data generated through performance reviews. The balanced scorecard required hard data to develop measure and implement. This data is best-generated using performance review systems. In this regard, there is an intricate relationship between performance reviews and the balanced scorecard. Any organization that intends to use the balanced scorecard also needs to understand how performance reviews can feed this process. Of course, it is imperative to understand that performance reviews do not give information regarding the future of the company. Rather it gives a picture of the current operations of the company. In this sense, a balanced scorecard is a tool used to determine the strategic choices an organization needs to make, and not how it has been performing.

Secondly, the balanced scorecard is ideal for setting strategic goals for an organization. This means that an organization can set near term and long terms goals based on the balanced scorecard. This requires an understanding of the operating environment as well as the internal strengths and weaknesses. In this sense, an organization may choose to use the balanced scorecard as a strategic planning tool after carrying out a PEST analysis as well as a SWOT analysis. In this situation, the performance management system can help to provide the data associated with the current state of the organization. If the organization aggregates its performance data, then it can use this data to identify and quantify its strengths, weaknesses, opportunities, and threats. This can help it to find the information it needs to make a strong strategic plan. Also, the performance review system can help the organization to track its progress towards attaining its strategic goals.

Thirdly, the balanced scorecard can be affected by the efficiency of the performance review systems in use. The review of the balanced scorecard depends on organizations depends on the data derived from performance reviews of the activities of the organization. In this regard, it is imperative to determine that the performance review systems deliver data that is credible and data that meets the review needs of the balances scorecard. If an organization wants to know how well it is treating its customers, it will look at the performance review data relating to customer service. If the data shows that the performance of all the customer service staff is good, the organization may erroneously conclude that its customer management systems are in order. This may not be an accurate reflection of the situation. It is important to understand fully the source and nature of the data used for review to avoid making wrong conclusions regarding the balanced scorecard of the organization.

Fourth, the balanced scorecard requires specific measures to deliver an accurate picture of the company’s position. The balanced scorecard is data sensitive. Using the wrong data can lead to making the wrong conclusions. In this sense, the balanced scorecard is sensitive to the information used to develop it. It also requires continuous data to keep showing an accurate picture of the organization. In this sense, every organization that wants to use the balanced scorecard as a tool for ensuring that it is operating in line with the expectations of all its key stakeholders needs to identify the proper measures to use in developing and maintaining the scorecard. There is always a risk associated with developing a wrong picture of the organization’s scorecard if the wrong measures are used to develop the scorecard.

Recommendations

The following recommendations relate to what the Cleveland Clinic can do to match its performance management systems to the balanced scorecard.

First, the Cleveland Clinic can improve its financial performance by linking financial productivity to the performance evaluation measures of each employee. In many hospitals, medical personnel lack a clear picture of the financial performance of the organization. This limits their ability to make financial considerations at the point of care. The hospital needs to aggregate the data that relates to the total cost of care handled by a specific physician and to use the information as part of their performance appraisal. For instance, the hospital can generate data showing the comparative cost of accessing the same treatment from different physicians in the same hospital

On the question of the customers, the hospital has a very strong reputation both locally and internationally. The hospital should keep on boosting its public relations efforts to sustain the current goodwill it enjoys (Holmes 2005). More importantly, the hospital should investigate and understand the sources of goodwill that it currently enjoys. For instance, the hospital needs to know the quality of care, range of services or presence of facilities that attracts patients to it. This will help the hospital to know its sources of competitive advantage and will help it to protect these sources.

Thirdly, the hospital needs to use the performance review framework to carry out a regular review of its business processes and practices. The need to do this comes from the risk of reduced cash flow based on the projected reduction in reimbursements. The hospital needs to rationalize its activities to remain profitable. The government of America is planning to reduce the reimbursements that healthcare providers receive from federal sources. This means that hospital such as the Cleveland Clinic will need to find alternative sources of income to supplement their revenues.

Finally, the hospital needs to strengthen its research division as one of the centres of learning and growth. Research is one of the areas through which the hospital can attract more funding for its activities. Therefore, the hospital needs to strengthen its research division to derive the full benefits that can accrue from it. In addition to this, the hospital needs to find opportunities for its staff members to increase their skills. This can be by taking residential courses in the institution since it is also a teaching centre. The staff can also learn by enrolling in other medical schools. Also, the hospital needs to transform itself into a learning organization to help it to improve its business processes. It should encourage its staff to undertake efficiency studies in the hospital to improve the operations of the facility.

Reference List

Cleveland Clinic 2012, CEO, President Delos M. “Toby” Cosgrove, MD, Delivers Annual “State of the Clinic” Address. Web.

Colquitt, J, LePine, J & Wesson, M 2009, Organizational Behavior: Essentials for Improving Performance and Commitment, McGraw-Hill, New York.

Cosgrove, DM 2012, State of the Clinic, Cleveland Clinic, Cleveland OH.

Davies, RH & Davies, AJ 2011, Value Management: Translating Aspirations Into Performance, Gower Publishing, Surrey.

Gillespie, G 2012, How Reporting, Analytics and Metrics Affect Outcomes and Save Lives. Web.

Holmes, D 2005, Communication Theory: Media, Technology, and Society, SAGE, London, UK.

Neely, A 1999, ‘The Performance Measurement Revolution: Why Now and What Next?’, International Journal of Operations & Production Management, pp. 205-228.

Porter, ME 1980, Competitive Advantage: Techniques for Analyzing Industries and Competitors, Simon and Schuster, New York, NY.

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