Question

Daniel Nguyen, a well-known dentist in Ballarat, has decided to join a small group of dentists so that he no longer has to be on call every night. Practice members share the responsibility of emergencies with other members of the group. In the past, Daniel differentiated his practice by specialising in the treatment of families with children. None of the other dentists specialise in families, but all of them treat some children. Daniel’s son just finished an accounting degree and recommended that the dentists’ group consider implementing a balanced scorecard as they develop the policies and practices for the new group.

Required

1. Explain what each of the four perspectives of the balanced scorecard mean in the context of the dentists’ group.

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2. Recommend two measures for each of the four perspectives for the dental group. Explain your recommendations.

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Answer 1

ANSWER:

A.    The financial perspective is similar across organizations. Because this is a service industry, any financial measures relating to cost will likely measure the cost of clinical staff members.

The customer perspective will relate to the dental patients and possibly also to insurance companies, who pay for dental services. The customer perspective is important to dentists because return business is probably most of their business.

Internal business processes would include the ease with which patient appointments are booked, effective scheduling of staff, and effecting accounting practices, especially for billing and managing accounts receivables.

Learning and growth would pertain to the dentists, who need to participate in continuing professional education to keep their licenses and dental procedures current, and staff members such as hygienists who are an important part of the patient care team.

B.     Patients could be surveyed either before they leave the office or by mail after the appointment date. The performance measure could be average patient satisfaction. In addition, the clinic may want to use waiting time as an important measure of customer satisfaction. If patients have to wait extended amounts of time, they will feel frustrated and may find a new clinic. Other measures could include tracking the proportion of patients who return for additional services, the number of patient complaints, and the number of return visits for problems with the original work.

Financial perspective:

·         Operating margin reflects the overall profitability of the dental clinic and reflects changes in both revenues and costs. Tracking operating margin will alert the dentists to potential problems with revenues or costs before the problems become too large.

·         Bad debts or insurance adjustments. Some patients may not have the ability to pay and if the percentage of patients with these types of problems increases, operating margin will fall. Bad debts and insurance adjustments can also indicate problems with services or with billing processes.

Internal business processes:

·         Days in accounts receivable. This measure is important because some customers may be very slow to pay, or unable to pay. The clinic needs to know immediately if there is a problem with receivables because it affects cash flows.

·         Patient throughput, that is, the rate at which patients are treated. Throughput could be measured as an average number of patients treated per day, per week, or other time period. This measure reflects the use of fixed assets, such as the dental chairs and equipment. Also, staff members are likely paid by salary, so the more patients the dentist can see, the more profits the clinic receives.

Learning and growth

·         Number of continuing professional education hours would be a good measure for the dentists, so that they can be reminded to increase hours if they fall behind. Retaining licensure in this industry is extremely important.

·         Training hours for staff members could be measured to keep staff up to date with the latest technology for this field.