ACC 660 Module 6 Milestone Two Example

Hospital Performance Dashboard Design

[Student Name]

Southern New Hampshire University

ACC 660: Controllership

Milestone Two

[Instructor Name]

[Date]

The organization, setting and figures below are a composite written as a model document. No real employer, client, colleague or patient is described.

Hospital Performance Dashboard Design

Introduction

Each month, every hospital director and medical director receives a 40-page package of income statements, departmental expense detail and balance sheet schedules. In interviews, most said they look only at the bottom line and at labor costs, and several said the package arrives too late to change anything. The sponsor wants hospital leaders to manage the drivers of performance, not only react to results. This milestone designs a one-page monthly dashboard (Kaplan & Norton, 1996).

Users and Decisions

The users are hospital directors, who manage staffing, scheduling and costs, and medical directors, who manage clinical quality and doctor productivity. Their decisions include how many doctors and technicians to schedule by day, whether to extend emergency hours, which referral clinics to visit and when to raise a concern about drug use. Each measure was chosen because it informs at least one of these decisions. Measures that only the corporate team can act on, such as interest expense or management fees, stay out of the hospital dashboard and remain in the sponsor's package.

The Measures

Dashboard measures

Why These Measures

Revenue per doctor hour and labor cost share capture the main economic choice in a hospital: matching staff to demand. Drug cost share flags waste and diversion. Referral sources and emergency wait times are leading indicators: specialty revenue depends on general practice referrals, and long emergency waits drive clients to competitors. Technician turnover predicts both cost, through overtime and recruiting, and client experience, because experienced technicians run the treatment floor and keep doctors moving between cases. Ittner and Larcker (1998) found that customer satisfaction measures help predict future financial performance, supporting the inclusion of the client survey. Some familiar measures were deliberately left out. They include days sales outstanding, which is irrelevant when clients pay at the time of service, and detailed expense lines, which remain available in the full package for anyone who wants them.

Targets and Comparisons

Each measure shows the hospital's value, its target, its trend over twelve months and its rank among the 14 hospitals. Targets come from the median of the group's top-performing hospitals, adjusted for hospital type, since an emergency-only hospital will always have lower revenue per doctor hour than a specialty center. Measures outside a tolerance band appear in color so a director can see in seconds where to look.

Ownership and Data

Every measure has a data owner responsible for its accuracy: the revenue accountant for revenue measures, the payroll manager for labor, HR for turnover and retention, and the medical director for wait times. Definitions are fixed in a data dictionary, and the controller's team audits two measures each quarter by tracing them to source systems.

Incentives and Gaming

Directors' bonuses currently depend only on EBITDA versus budget. The new plan bases 60 percent on hospital EBITDA margin and 40 percent on three dashboard measures: net promoter score, technician turnover and emergency door-to-doctor time, each with a cap. Banker et al. (2000) found that adding nonfinancial measures to an incentive plan improved both those measures and later financial results in a hotel chain, which supports this design. Measures that could be gamed are paired: a director who cuts technician hours to improve labor cost share will see wait times rise and turnover increase on the same page.

A Sample Page

For the Boulder specialty hospital in October, the page would show revenue per doctor hour of $612 against a target of $640, ranked eighth of 14, with labor cost share of 41 percent against a 39 percent target, both in amber. Net promoter score is 71, above target and in green; new referral sources are 6, down from 11 three months earlier, in red. Emergency door-to-doctor time is 34 minutes against a 25-minute target, in red, and technician turnover is 38 percent annualized, also red. Read together, the page tells the director a coherent story: technician departures are lengthening waits and reducing doctor productivity, and referrals are starting to fall. The action is to address technician retention before the revenue decline shows up in the financial measures.

Review Meetings

Each regional director will hold a 45-minute monthly review with each hospital's director and medical director, using only the dashboard. The meeting covers the red measures, the actions taken and their owners. The controller's analysts attend the first three meetings at each hospital to explain definitions and answer data questions, and then attend quarterly. Questions that require deeper analysis are logged and answered within a week.

Rollout

The dashboard will be piloted at three hospitals for two months, with directors asked which measures they used and which they ignored, before rolling out to all 14. The 40-page package will be retired after six months if no one asks for it. Success will be judged by whether directors can name their red measures and the actions taken, and by whether the paired measures improve together rather than one at the expense of another.

Conclusion

A one-page dashboard of twelve measures, balanced across perspectives and paired to limit gaming, gives hospital leaders information they can act on within the month.

References

Banker, R. D., Potter, G., & Srinivasan, D. (2000). An empirical investigation of an incentive plan that includes nonfinancial performance measures. The Accounting Review, 75(1), 65-92. https://doi.org/10.2308/accr.2000.75.1.65

Ittner, C. D., & Larcker, D. F. (1998). Are nonfinancial measures leading indicators of financial performance? An analysis of customer satisfaction. Journal of Accounting Research, 36, 1-35. https://doi.org/10.2307/2491304

Kaplan, R. S., & Norton, D. P. (1996). The balanced scorecard: Translating strategy into action. Harvard Business School Press.