Free Paper: The Impact of Performance Measurement on Decision-Making to Achieve the Desired Outcomes in Healthcare

1.0 Introduction

1.1Background of the Study

Organizations today are increasingly inclined to ensure customer satisfaction, improve their employees' performance, and grow their profits to keep their investors and stakeholders satisfied. Performance measurement is used in organizations by the management to deliver reliable information to support decision-making. Performance measurement experts use data for strategic purposes. Inferences obtained from the analysis of performance data are used in the decision-making process to improve the overall performance of organizations. Martinez (2005) defines strategic performance measurement as the process where organizations continuously monitor their long-term plans, goals, and achievements.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

Grafton et al. (2010) suggested that performance measurement systems could positively influence decision-making in organizations. It also shows that performance measurement metrics can positively affect individuals' productivity at an organization's operational level. Previous studies have shown that performance measurement systems play a crucial role in improving the quality of care services provided by healthcare organizations. The same principles of performance measurement and its potential benefits can be applied in the strategy of healthcare organizations to keep up with the need and demand for quality healthcare services Grafton et al. (2010). It is crucial for healthcare organizations to ensure that they have the right performance measurement tools at their disposal that can be used for decision-making purposes by healthcare workers. Innovating better performance measurement metrics and models at an organization can be of great benefit since they help healthcare organizations deliver strategically aligned measurement metrics that facilitate effective decision-making within the healthcare organization’s ' ranks. Performance measurement can provide crucial decision-making support systems, tools, and frameworks (White, 2019). These frameworks should include multiple measures that will enhance the evaluation process.

Recent studies suggest that healthcare organizations have been aggressive in implementing innovative customer demand (Baird, 2017). The same process is vital in the attainment of total transparency within the organization. The impact of performance measurement systems cannot be understated. For instance, in an organization, a manager has to supervise, observe, and control junior employees' activities. It requires the same manager to monitor the performance constantly (White, 2019). It allows the manager to take any corrective measures in case of deviations in desired results and putting systems into place so that the variations do not occur in the future. Performance measurement is an ongoing improvement operation within an organization (Pirozzi and Ferulano, 2016). The advantages of a performance measurement system within a healthcare organization are that it allows for improved performance within the organization and continually provides for the growth of the organization's productivity by reducing costs and increasing efficiency within the organization.

1.2 Conceptual Framework

The conceptual framework of this study will involve three a model detailing three sections covering performance measurement systems. The three phases will include:

• Design of performance measurement systems
• Implementation of performance measurement systems
• Use of performance measurement systems

The research will focus on three models used in performance measurement systems in healthcare. These systems will include; balance scorecard, Kaplan and Nortans(1992), Lynch’s Performance Pyramid systems and Bitici’s integrated Performance measurement systems(Bitici, 1997). These performance measurement models are classified as either vertical, horizontal and balanced.

Studies have shown that a performance management system allows the organization to have a method of understanding, managing, and improving the overall functioning of their state of business organization (Saunila, 2017). If implemented correctly and efficiently it becomes a significant driver of success in an organization. In a recent study, PMA (Performance Measurement Association) found out that 40% of FTSE 100 companies have used a performance measurement scorecard (Storto and Goncharuk, 2017). Other studies have found out that between 30% to 50 % of Fortune 500 companies have attempted to use at least one performance measurement system (Saunila, 2017). These present significant changes from the past where healthcare organizations employed only financially based performance measurement metrics. When companies implement PMS in their organizations, it can help improve their communication within teams. For instance, the use of constructive feedback can motivate managers to translate various strategies into operational tasks and therefore enhance decision-making (Baird, 2017). Another impact of performance measurement is that it affects behavior. Working PMS can increase the levels of psychological empowerment and provision of feedback, which enhances intrinsic task motivations.

An effective performance measurement system can be used in decision-making in two ways. The first method is where higher-ranking managers use PMS tools to evaluate lower-level manager’s performance and construct decisions based on the outcome (Kearney, 2018). The second application is where managers use PMS in an organization to provide business-related information that supports effective decision making to resolve uncertainties. Through innovations in a better PMS model, organizations can benefit from aligned metrics that improve data accuracy and efficiency in the organization’s decision-making process (Saunila 2017). It is crucial to note that a well-created performance measurement system will be essential to an organization towards meeting its strategic goals. Some of the benefits of an operational performance measurement plan include increased employee retention, employee loyalty, effective communication across departments, better productivity, and improved efficiency (Jordão, 2017).

Previous studies have suggested that performance measurement tools are vital in the improvement of the processes of healthcare. PMS tools are used to improve quality in healthcare services. Healthcare organizations can implement macro and micro changes to their use of performance measurement tools to support their decision-making processes. Macro changes refer to the application of performance measurement systems to detect and control healthcare institutions (Asiaei et al., 2018). PMS can enable an organization in the healthcare sector and the public healthcare system to manage spending and monitoring performance within the organization. The tools allow organizations to make better decisions, leading to better healthcare services for every person.

On the other hand, micro-changes for performance measurement at the micro-level involve managers putting measures to collect, monitor, and analyze information through a specified PMS. The changes lead to enhanced healthcare services (MacLean et al., 2018). PMS tools can support better management decisions within healthcare systems if well implemented with the right strategies. Previous studies have supported the application of PMS in addressing the issue of processes of care.

Performance measurement has increasingly become necessary due to increasing healthcare expenditures in most parts of the globe. Performance measurement has become core to ensuring accountability in the spending of the health expenditures, especially in not for profit organizations. In the past, healthcare services’ responsibility was determined through traditional business processes such as annual reporting and contracting. A better sense of accountability has emerged in recent years that emphasizes achieving stipulated goals effectively and efficiently (Taheri et al., 2019). PMS implementation in healthcare services mostly involves four stages: conceptualization, strategy, and selection of measures, data collection, and analysis (Bourne et al., 2018). This can occur in different levels of organizations and systems.

PMS drives enhanced decision-making in healthcare systems (Maestrini et al. 2017). Despite healthcare workers perceiving performance measurement as a constraint, in their decision-making freedom, PMS use in most cases delivers overall improvement in quality healthcare systems (Smith and Bititci, 2017). Through the provision of evidence-based metrics, PMS helps in overcoming quality bottlenecks in healthcare service delivery. The management of Healthcare organizations can identify areas that should be corrected to ensure that the delivery of services is done in a manner that ensures quality.

One of the popular tools and strategies for implementing a healthcare organization’s performance measurement system is a non-financial measurement tool. An excellent example of such a device is the Balanced Score Card (Harbour, 2017). This tool can be used with good results in healthcare organizations. A balanced scorecard can be used by a healthcare organization to gauge whether it has achieved its goals, improves service delivery, and informs decision-making depending on the balanced scorecard (Micheli and Mura, 2017).

Another important strategy in implementing performance measurement systems in healthcare organizations is to manage them by prioritizing their objectives and focusing on those objectives. The reason is that in healthcare organizations, prioritization of critical decisions is vital. Decision-making involves two main dimensions: the financial dimension, where the use of public resources is essential, and the outcome-related dimension which concentrates on issues to do with public health and quality of care (McDavid et al., 2018. Increased PMS strategic use leads to more healthcare staff empowerment, hence improving the sector’s overall service delivery.

Another strategy in determining the best PMS approach to consider in healthcare organizations is where managers are given the most autonomy to make their decisions (Landy et al., 2017). The self-determination theory explains that when managers are given more independence, they are more motivated to perform in their respective roles.

Despite the immense importance of performance measurement systems in healthcare organizations, little or no studies have been conducted to ascertain how performance measurement could be applied successfully to improve healthcare quality. This study aims to design strategies that can be used to implement a performance measurement system in healthcare organizations. It has been established that irrespective of an organization’s field or sector, measurement and monitoring of strategic performance are critical. PMSs can be used successfully in measuring quality in healthcare organizations.

1.3 Problem Statement

This study aims to identify the current healthcare organization’s performance measurement systems and design strategies to enhance their effectiveness. Most healthcare organizations have not fully embraced the use of performance measurement indicators in their management decision-making protocols.