Today, every organization is focused on the pillars of market share, customer delivery and profit making. The health care management firms have too used the model of the four perspectives of the balanced scorecard to manage their operations. This paper will look at the one of these perspectives; the financial perspective. The reason why this perspective is important is because of its profitability and measure of performances in terms of finance. The financial perspective covers the profit and revenue targets of the organization, its cost-saving strategies and the budget for non-profitable organisations (Kaplan, et.al, 1995).It is important for the managers to keep track of the financial health of their companies using this perspective because it assists on mechanisms of helping stakeholders, customers and the business to become financially successful.
Another advantage of this perspective is the fact that once the managers understand the concept, it becomes easy and straightforward to use and apply as no other financial training is required. It is simple and convenient to implement, together with the other perspectives.
The limitation of this perspective is its nature of being subjective; the fact that it is only quantified using either opinions or surveys. Direct analysis of finances that can indicate economic value and help in risk management are not possible with this model (Lipe, et.al, 2000).
Finance management in health care is very complex due to the fact that most of the funding comes from government .However, there are other sponsors and private companies such as private insurance companies and individuals who may opt to pay for hospital and clinic funding. Coordinating and controlling the health care funding from all these sectors requires a system controlling and organizing the files, balance sheets and financial records. Therefore, the financial perspective of the scorecard model may be very effective in finance management.
However, the scorecard model requires training and if not properly used, this may translate into poor financial reports and because it does not show direct analysis of finances, the mistake may not be detected earlier which translates into erroneous system. This can be detrimental if it starts from the finance office.
- Lipe, M. G., & Salterio, S. E. (2000). The balanced scorecard: Judgmental effects of common and unique performance measures. The Accounting Review, 75(3), 283-298.
- Kaplan, R. S., & Norton, D. P. (1995). Putting the balanced scorecard to work. Performance measurement, management, and appraisal sourcebook, 66, 17511.