Essay on Performance Measurement Systems: Enhancing Decision-Making in Healthcare Organizations

Paper Type:  Research proposal
Pages:  6
Wordcount:  1479 Words
Date:  2023-11-20


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. Therefore, 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.

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Recent studies suggest that healthcare organizations have been aggressive in implementing innovative changes in customer demand. 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 put systems into place so that 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.

Conceptual Framework

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 that 40% of FTSE 100 companies have used a performance measurement scorecard (Storto and Goncharuk, 2017). Other studies have found 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, where a 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's 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 the 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 monitor 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. It is because performance measurement has become core to ensuring accountability in the spending of 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. In recent years a better sense of accountability has emerged that emphasizes achieving stipulated goals effectively and efficiently (Taheri et al., 2019). PMS implementation in healthcare services mostly involves four stages: conceptualization, strategy, 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.

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 their attention 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 empowerment of healthcare staff, 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 the field or sector of an organization, measurement and monitoring of strategic performance is critical. This can be used successfully in measuring quality in healthcare organizations.

Problem Statement

This study aims to identify the current healthcare organization's performance measurement systems and design strategies that can enhance their effectiveness. A few studies have covered this area and found out that most healthcare organizations have not fully embraced the use of performance measurement indicators in their management decision-making protocols.

Research Aims and Objectives

This study attempts to explore and add more knowledge to strategies that can be used in implementing successful Performance Measurement systems in healthcare organizations. Specifically, the study's objective is to research healthcare organizations' practices in performance measurement systems application, usage, advantages, and challenges that they experience when using their current PM systems. The research deploys an explorative type of survey that reflects how performance systems work in various organizations. Based on this study, the survey also provides in-depth evidence of performance measurement systems in organizations and the best strategies to adopt. This research study aimed to determine the following:

  1. Whether performance measurement systems applications affect the decisions and plans of senior health care management
  2. Whether performance measurement have a net impact on the achievements of the organizations?
  3. Do performance measurement systems lead to cost reductions?
  4. Does performance measurement lead to optimal healthcare processes in patient safety and satisfaction?
  5. To identify how performance measurement indicators affect healthcare services.
  6. To identify the benefits of using performance measurement in healthcare organizations.


Asiaei, K., Jusoh, R., and Bontis, N., 2018. Intellectual capital and performance measurement systems in Iran[Online]. Journal of Intellectual Capital. Available at: [Accessed 28 August 2020].

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