Balanced Scorecard Approach To Strategic Planning
The following graphics shown individually, and then summarized, depict how the CEO and
his/her management team sequentially:

Lay out a clear vision of how they can create additional value for their customers in
ways that streamline internal operations and improve financial performance too

Specify measurable performance improvement targets that strengthen market
positioning and the bottom line by enhancing clinical quality, efficiency and revenue
producing capabilities

Balance the timing of investments and operating cash flow to support the vision’s
realization by assuring timely access to capital.
One CEO noted recently that taking this balanced approach to financially oriented
strategic planning at the right time had helped avoid the need at a later date for the Hunter
Group style of slash and burn planning.
REYNOLDS & COMPANY
Customizing Strategic and Financial Solutions
The Hospital’s Vision And Strategic Direction Are Supported By Its
Targets For Rebalancing Financial Performance
PHYSICIANS
MARKETS
1. Grow subspecialty referral volume from the Core and
Secondary markets
1. Support private primary care physicians in their
efforts to serve targeted communities
2. Strengthen CGH’s primary care presence in Dublin to
better serve the elderly and recent arrivals
2. Strengthen relationships with aligned PCPs and
support affiliated subspecialists in serving the patients
of those network PCPs
3. Target selected physicians and hospitals in the
secondary market for subspecialty referrals/admissions
3. Compensate faculty only for their academic
activities and expect them to produce sufficient practice
income to round out equitable compensation packages
4. Develop an effective marketing communication
strategy for targeted consumers, buyers and physicians
VISION
SERVICES
1. Reconfigure service capacity to improve service mix
and profitability and serve more patients at the Main
Site
2. Differentiate CGH and its physicians from
competitors on high quality clinical outcomes and
emerging medical technology
3. Promote selected Product Lines and physicians as
high tech, high quality subspecialty healthcare
providers
CUSTOMERS
Become recognized
as a high quality tertiary
referral center which also
serves the continuum of
healthcare needs of the
community
FINANCE
1. Increase HMO/PPO rates to parity with other teaching
hospitals in the system and secure more case rates
1. Focus primarily on the needs and preferences of
consumers in the Core Market
2. Focus in Dublin on the subspecialty referral needs and
preferences of selected PCPs and community
hospital-affiliated specialists
3. Focus on the habilitation needs of providers in the
Core Market and their clients to replace volume
reductions in other areas
EMPLOYEES
2. Improve productivity and quality through the use of more
effective clinical, IT and management systems
1. Attract sufficient numbers of competent clinical
employees by improving working conditions, offering
competitive compensation and providing such benefits
as day care and evening care for their children
3. Increase billing and collection for all services, high
cost implantables and consumable supplies
2. Improve employee retention and productivity
4. Assure ongoing access to capital at favorable costs
REYNOLDS & COMPANY
Customizing Strategic and Financial Solutions
Twenty Eight Targets For Performance Improvements And Conceptual
Facilities Reconfiguration Plans Are Expected To Produce Financial Stability
15 Planned Improvements In
Market Positioning And Financial Performance
13 Planned Improvements In Quality, Efficiency
And Revenue Production
SERVICE VOLUME
UNIT NET REVENUE
UNIT COST
CLINICAL QUALITY AND
EFFICIENCY
1. Redesign Geriatrics
Program to gain Medicare
discharges from Core
Market
1. Renegotiate selected HMO
contracts at appropriate
times to:
1. Achieve performance
improvement targets and
initiatives as part of
business plans for:
1. Set standards for clinical
quality and efficiency,
develop infrastructure and
monitor for compliance
2. Add PCPs in Secondary
Market and woo splitadmitters to add
discharges
3. Brand CGH and selected
high margin product lines
to increase their volumes
4. Win cardiac surgery
discharges from a
mutually acceptable
contract with Aetna
5. Add cardiac surgeries and
proportionate PTCAs from
Secondary Market
6. Increase the admission
yield of the Secondary
Market clinics
7. Increase speech and
hearing volume through
diversification initiatives
8. Increase volume to meet
targets set for all other
services
• Increase rates for
selected services
such as obstetrics
• Establish break-even
case rates for
complex DRGs
• Provide high cost
thresh holds to start
per diems for
tracheostomy and
other cases
• Rehab medicine
• Women’s services
• Newborn services
• Children’s services
2. Establish plan for
productivity-based
Faculty compensation
• Bill separately for
implantables, etc.
3. Reduce Administrative
Expenses to benchmark
for peer hospitals
• Agree to limit denied
days to those
concurrently
identified
4. Reduce staffing and
other patient care and
ancillary costs to
benchmark values
2. Periodically consider
whether individual HMO
contracts represent CGH’s
best use of scarce beds
3. Establish Sub Acute
Transitional Care Unit
if/when state regulation is
adopted
2. Reduce Medicare LOS to
free up beds at Main Site,
including quicker imaging
turnaround times
ANTICIPATED NORTH
SITE FACILITIES
RECONFIGURATIONS
1. Move ICU & CCU to New
Tower at the Main Site
2. Create Short Stay Unit in
old CCU/ICU space in
existing Main Site hospital
3. Reduce number of blocked
beds at Main Site
3. Build 30 new rehab beds
and also move 30 rehab
beds from existing
location, to space
contiguous with new beds
4. Consider resizing bed
capacity of selected
services:
4. Renovate to gain 30
additional med/surg beds
and replace 17 Gyn beds
• Rehab Medicine
• Women & Children
• Drug Detox
• Alcohol Rehab
5. Perfect and utilize
methods for promotion
and marketing
communication with:
• Patients
• Seniors
5. Replace Emergency
Department for expansion
of services and shell
second & third floors of
new ED building
6. Move NICU and OB-LDR to
second and third floors of
new ED building
7. Build Education Center
8. Have physicians build new
Medical Office Building
• Physicians
• Employers
REYNOLDS & COMPANY
Customizing Strategic and Financial Solutions
Implementation Of The Performance Improvement Initiatives Will Assure
Access To Sufficient Capital To Realize The Hospital’s Vision
CGH's 28 Planned Performance Improvement Initiatives Increase Operating Income
By $19 Million/Year And Gain Access To $60 Million Of Debt Capital By 2004
(000's)
Liquidity
Current Ratio
Working Capital
Days Cash on Hand
Cushion Ratio
Days in AR
Profitability
Income from Operations
Total Profit Margin
Return on Assets
Return on Net Assets
Capitalization
L-T Debt to Capitalization
Debt Service Coverage Ratio
2000
2001
2002
2003
2004
2005
2006
1.44
$ 43,696
52
0.70
95
1.85
$ 58,974
62
1.89
59
1.99
$ 80,584
96
2.05
60
2.09
$ 90,802
103
2.26
60
2.19
$101,859
112
2.50
60
2.14
$ 100,241
107
2.27
60
2.12
$ 99,700
103
2.13
60
$
$
$
$
8,766
2.4%
1.9%
8.3%
$ 11,533
3.0%
2.5%
9.8%
$ 13,015
3.3%
2.9%
9.8%
$ 13,593
3.3%
3.0%
9.2%
0.71
1.46
0.68
1.53
0.64
1.55
0.60
1.57
3,399
1.1%
0.9%
4.1%
0.72
1.30
2,148
0.2%
0.1%
0.7%
0.75
2.17
4,922
1.4%
1.1%
5.1%
0.74
1.35
REYNOLDS & COMPANY
Customizing Strategic and Financial Solutions
15 Planned Improvements In
Market Positioning And Financial Performance
CGH’s Vision And Strategic Direction Are Supported By Its Targets For Rebalancing Financial Performance
MARKETS
PHYSICIANS
1. Grow subspecialty referral volume from the Core and
Secondary markets
2. Strengthen CGH’s primary care presence in Dublin to
better serve the elderly and recent arrivals
3. Target selected physicians and hospitals in the secondary
market for subspecialty referrals/admissions
4. Develop an effective marketing communication strategy
for targeted consumers, buyers and physicians
1. Support private primary care physicians in their efforts to
serve targeted communities
2. Strengthen relationships with aligned PCPs and support
affiliated subspecialists in serving the patients of those
network PCPs
3. Compensate faculty only for their academic activities
and expect them to produce sufficient practice income to
round out equitable compensation packages
SERVICES
1. Reconfigure service capacity to improve service mix and
profitability and serve more patients at the Main Site
2. Differentiate CGH and its physicians from competitors
on high quality clinical outcomes and emerging medical
technology
3. Promote selected Product Lines and physicians as high
tech, high quality subspecialty healthcare providers
VISION
Become recognized
as a high quality tertiary
referral center which also
serves the continuum of
healthcare needs of the
community
FINANCE
1. Increase HMO/PPO rates to parity with other teaching
hospitals in the system and secure more case rates
2. Improve productivity and quality through the use of more
effective clinical, IT and management systems
3. Increase billing and collection for all services, high cost
implantables and consumable supplies
4. Assure ongoing access to capital at favorable costs
SERVICE VOLUME
UNIT NET REVENUE
1. Redesign Geriatrics
Program to gain
Medicare discharges
from Core Market
1.Renegotiate selected
HMO contracts at
appropriate times to:
2.Add PCPs in Secondary
Market and woo splitadmitters to add
discharges
3.Brand CGH and selected
high margin product
lines to increase their
volumes
4.Win cardiac surgery
discharges from a
mutually acceptable
contract with Aetna
5.Add cardiac surgeries
and proportionate
PTCAs from Secondary
Market
CUSTOMERS
6.Increase the admission
yield of the Secondary
Market clinics
1. Focus primarily on the needs and preferences of
consumers in the Core Market
2. Focus in Dublin on the subspecialty referral needs and
preferences of selected PCPs and community hospitalaffiliated specialists
3. Focus on the habilitation needs of providers in the Core
Market and their clients to replace volume reductions in other
areas
7.Increase speech and
hearing volume through
diversification initiatives
8.Increase volume to meet
targets set for all other
services
• Increase rates for
selected services
such as obstetrics
• Establish breakeven case rates
for complex DRGs
• Provide high cost
thresh holds to
start per diems
for tracheostomy
and other cases
UNIT COST
CLINICAL QUALITY AND
EFFICIENCY
1.Achieve performance
improvement targets
and initiatives as part of
business plans for:
1.Set standards for clinical
quality and efficiency,
develop infrastructure
and monitor for
compliance
•Rehab medicine
•Women’s services
•Newborn services
•Children’s services
2. Establish plan for
productivity-based
Faculty compensation
• Bill separately for
implantables, etc.
3.Reduce Administrative
Expenses to benchmark
for peer hospitals
• Agree to limit
denied days to
those
concurrently
identified
4.Reduce staffing and
other patient care and
ancillary costs to
benchmark values
2.Periodically consider
whether individual
HMO contracts
represent CGH’s best
use of scarce beds
3.Establish Sub Acute
Transitional Care Unit
if/when state regulation
is adopted
13 Planned Improvements In Quality,
Efficiency And Revenue Production
2.Reduce Medicare LOS to
free up beds at Main
Site, including quicker
imaging turnaround
times
3. Reduce number of
blocked beds at Main
Site
4.Consider resizing bed
capacity of selected
services:
• Rehab Medicine
• Women &
Children
• Drug Detox
• Alcohol Rehab
5.Perfect and utilize
methods for promotion
and marketing
communication with:
ANTICIPATED NORTH
SITE FACILITIES
RECONFIGURATIONS
1.Move ICU & CCU to New
Tower at the Main Site
2.Create Short Stay Unit in
old CCU/ICU space in
existing Main Site
hospital
3.Build 30 new rehab beds
and also move 30 rehab
beds from existing
location, to space
contiguous with new
beds
4.Renovate to gain 30
additional med/surg
beds and replace 17 Gyn
beds
5.Replace Emergency
Department for
expansion of services
and shell second & third
floors of new ED
building
6.Move NICU and OB-LDR
to second and third
floors of new ED
building
• Patients
7.Build Education Center
• Seniors
8.Have physicians build
new Medical Office
Building
• Physicians
• Employers
EMPLOYEES
1. Attract sufficient numbers of competent clinical employees
by improving working conditions, offering competitive
compensation and providing such benefits as day care and
evening care for their children
2. Improve employee retention and productivity
CGH's 28 Planned Performance Improvement Initiatives Increase Operating Income
By $19 Million/Year And Gain Access To $60 Million Of Debt Capital By 2004
(000's)
Liquidity
Current Ratio
Working Capital
Days Cash on Hand
Cushion Ratio
Days in AR
Profitability
Income from Operations
Total Profit Margin
Return on Assets
Return on Net Assets
Capitalization
L-T Debt to Capitalization
Debt Service Coverage Ratio
2000
2001
2002
2003
2004
2005
2006
1.44
$ 43,696
52
0.70
95
1.85
$ 58,974
62
1.89
59
1.99
$ 80,584
96
2.05
60
2.09
$ 90,802
103
2.26
60
2.19
$101,859
112
2.50
60
2.14
$ 100,241
107
2.27
60
2.12
$ 99,700
103
2.13
60
$
$
$
$
8,766
2.4%
1.9%
8.3%
$ 11,533
3.0%
2.5%
9.8%
$ 13,015
3.3%
2.9%
9.8%
$ 13,593
3.3%
3.0%
9.2%
0.71
1.46
0.68
1.53
0.64
1.55
0.60
1.57
3,399
1.1%
0.9%
4.1%
0.72
1.30
2,148
0.2%
0.1%
0.7%
0.75
2.17
4,922
1.4%
1.1%
5.1%
0.74
1.35
REYNOLDS & COMPANY
Customizing Strategic and Financial Solutions