How an Automated Balanced Scorecard Has Helped a Health Plan Achieve More Than $150 Million in Savings

Background & the "Burning Platform"
The Claims Department for one of the nation's largest integrated health plan providers supports 3 million people through the receipt, processing, and payment of nearly 2 million medical services claims each year.

This department faced serious challenges in the summer of 2005. While the department's vision was to "deliver world-class claims administration to providers, regulators, and stakeholders," it suffered from mediocre operational performance, which resulted in high inventory levels and inferior claims processing quality. It was no surprise that the Centers for Medicare & Medicaid Services (CMS) had repeatedly found the department unprepared for audits and stipulated that it correct its significant deficiencies or face the possibility of nonreimbursement. Anecdotal evidence also suggested that the health plan's providers were dissatisfied with the department's performance, but there was no real way to measure this.

The Beginnings of Strategy Execution
The following year brought new leadership to the Claims Department and a fresh focus on turning around the department's performance. The first task was to develop a primary vision for the department and a clear way to get there. With senior executive guidance, the vision became "Get Compliant." While there were other important goals that had to be met, this directive provided the focus needed to organize the department's priorities.

Leadership, recognizing that simply stating a vision was not enough, dedicated resources to the task of developing, mapping, and executing strategy. One of those resources was a new Office of Strategy Management, responsible for developing a strategic management roadmap for the department. They determined that they needed three components to be successful:

1. A clear and simple visual method of communicating strategy (a strategy map)
2. A sustainable way to track progress toward goal achievement (a Balanced Scorecard)
3. Process improvement tools and skills to sustain in success

With a team comprised of an experienced manager, an internal process improvement consultant, and the existing claims leadership, the vision, "Get Compliant," evolved into a simple but powerful strategy map outlining the key areas that the department needed to focus on to achieve its vision. It utilized five perspectives, chosen to support all of the department's key stakeholders. The map also illustrated the causal relationships among these stakeholders, reinforcing critical interdependencies: