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Procedia Economics and Finance 28 (2015) 202 212

7th INTERNATIONAL CONFERENCE ON FINANCIAL CRIMINOLOGY 2015

13-14 April 2015,Wadham College, Oxford, United Kingdom

Organizational Structure and Performances of Responsible

Malaysian Healthcare Providers: A Balanced Scorecard Perspective
Nur Faezah Mohd Shukria, Aliza Ramlia*
Faculty of Accountancy, University Teknologi MARA, Shah Alam, Malaysia

Abstract

This paper aims to assess the organizational structure and performances through the Balanced Scorecard of Malaysian private
hospitals by focusing on top managements perceptions. A structured questionnaire was used and 97 private hospitals registered
with the Association of Private Hospitals Malaysia were included in the survey. In total, 39 responses were received which
resulted in an overall usable response rate of 40.2%. The descriptive results illustrated that the majority of the private hospitals
that adopt the Balanced Scorecard are highly centralized and formalized. These private hospitals subscribed to formalized rules
and written formal procedures to ensure the management and governance of the health providers act in accord with espoused
values. As such, there is a legitimate link to improved performances within this sector on the key aspects: internal business
processes, patient quality services, safety and satisfaction, organizational learning and growth, and financial. Thus far, despite the
evidence from this study that can be attributed to becoming responsible healthcare providers, drivers used which incorporate
responsibility, integrity, accountability and transparency in assessing performances can be taken up. This paper adds value to the
limited academic BSC literature and responsible issues pertaining to quality improvements and patient satisfaction within the
private healthcare sector in Malaysia.

2015
2015 The
The Authors.
Authors. Published
Published by
by Elsevier
Elsevier B.V.
B.V.This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of ACCOUNTING RESEARCH INSTITUTE, UNIVERSITI TEKNOLOGI MARA.
Peer-review under responsibility of ACCOUNTING RESEARCH INSTITUTE, UNIVERSITI TEKNOLOGI MARA
Keywords: Balanced Scorecard, Private Hospitals, Organizational Structure, Performance, Responsible Healthcare Providers

* Corresponding author. Tel.: +603-55444980; fax: +603-55444921.

E-mail address: aliza629salam.uitm.edu.my

2212-5671 2015 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of ACCOUNTING RESEARCH INSTITUTE, UNIVERSITI TEKNOLOGI MARA
doi:10.1016/S2212-5671(15)01101-6
 Nur Faezah Mohd Shukri and Aliza Ramli / Procedia Economics and Finance 28 (2015) 202 212 203

1. Introduction

Healthcare industry has become one of the worlds largest, costly and fastest-growing industries as it forms a
massive part of a countrys economy (Kocakulah and Austill, 2007). Both private and public healthcare
organizations have to deal with an unstable environment due to various forces such as rapid transformation of
technology, demographic factor and change in lifestyles (Koumpouros, 2013). The average annual growth of 2.6 per
cent over the next four years (2014-2017) has put pressure on the governments, healthcare agencies, insurance
agencies and consumers to overcome issues such as chronic diseases, high medical costs, inconsistent quality
services, aging population and imbalanced access to care due to employees shortages as well as technology and
infrastructure limitations (Deloitte, 2014). This is due to the increase in population growth (Rye and Kimberly,
2007) which has led to the rise in the spending on medical services per individual to 4.4. per cent from 2014 until
2017 (Deloitte, 2014). The top issues for public sector in 2014 are managing healthcare costs and meeting
consumers demand for equitable and quality access to healthcare (Deloitte, 2014). Therefore, this paper aims to
assess the structure of responsible private hospitals in Malaysia as well as their performances through Balanced
Scorecard. A responsible healthcare provider would need to use drivers which incorporate responsibility, integrity,
accountability and transparency in assessing performances.
The healthcare organizations worldwide are struggling to deal with increasing health costs while providing high
quality services to consumers at lower costs (Deloitte, 2014). However, in comparison to other industries, the
healthcare industry is a very costly industry as the medical practice today requires more usage of technology and
modern medical tests (Boon, 2002). Most of the hospitals spend millions to purchase and to upgrade their medical
equipments.
Significant issues faced by private hospitals include difficulties in meeting patient satisfaction (Silow-Carroll,
2008) and, effectively maintaining their operations and improving their financial accountability due to stiff
competition in this sector (Deloitte, 2014). Moullin (2004) explained that patients pay high consultation fees and
expensive medical services rendered by hospitals as such they demand short waiting time to see their physicians,
transfer to ward and obtain test results. However, due to the complex operational processes and various patient
conditions, it caused a long waiting time (Huang, Chen, Yang, Chang, and Lee, 2004). This situation led to patient
dissatisfaction and increased in patient complaints towards the hospital services which will then affect the hospital
performance (Yuen and Ng, 2012). Gurd and Gao (2008) pointed out that patient satisfaction is an overall indicator
of hospitals internal process and service towards their client which consequently influence patient loyalty and its
survival in the competitive environment. Thus, Silow-Carroll (2008) emphasises the need for a better performance
measurement for private hospitals.
The BSC perceived as the most suitable framework is able to provide significant information pertaining to the
organizational internal and external factors that will subsequently contribute to the organizations success. To the
extent of the researchers knowledge, there are limited studies conducted to examine the performance of healthcare
sectors in Malaysia. Most of these studies focused on other sectors such as the construction industry (Hiap, 2012),
manufacturing industry (Jusoh, Ibrahim, and Zainuddin, 2008), public sector (Yu, Hamid, Ijab, and Soo, 2009);
implementation of BSC in a Government-linked company (Zin, Sulaiman, Ramli, and Nawawi, 2013); adoption and
implementation of BSC in Malaysian companies (Ong, Lee, and Wong, 2010). However, based on a review of
relevant literature in Malaysia, there is also a dearth in the study on BSC in the local healthcare sector. Thus, the
issues discussed above provided an opportunity for this study to be carried out. Therefore, this study aims to assess
the organizational structure of Malaysian private hospitals and their performances using the Balanced Scorecard as
well as in relation to being a responsible healthcare provider.
This paper is organised into five sections. The first section provides the background of the study. The second and
third sections present the literature review and research method, respectively. The fourth section discusses the
results of the study. The significance of the study, its limitation and recommendation for future work are presented
in the final section.

2.0 Literature Review

2.1 Performance Measurement System

204 Nur Faezah Mohd Shukri and Aliza Ramli / Procedia Economics and Finance 28 (2015) 202 212

Performance Measurement System (PMS) is a process of assessing the organization progress in achieving the
goals and objectives (Kairu et al., 2013). PMS can be in financial and non-financial measures (Okwo and Marire,
2012). According to Okwo and Marire (2012), the idea of measuring performance is not only to identify the current
performance of the business but it also allows the business to perform better in the future. PMS is crucial in business
as it assess the effectiveness of the organization's operations that will contribute in creating value to stakeholders as
well as the efficiency of the transformation of resources into goods/services, the quality of goods/services provided
and the outcomes of the organization activity (Kairu et al., 2013; Okwo and Marire, 2012). According to Aguinis
(2011), PMS can also make several important contributions to organization such as increasing the motivation to
perform, achieving organizational goals, improving employees competency and clarifying the definitions of the job.
Numerous PMSs such as Six Sigma (Khaidir, Habidin, Ali, Shazali, and Jamaludin, 2013), Knowledge
Management , Quality Program such as ISO (Ismail, 2003), Total Quality Management (Demirbag, Koh, Tatoglu,
and Zaim, 2006) and Balanced Scorecard (Grigoroudis, Orfanoudaki, and Zopounidis, 2012) have been developed
and applied in order to manage organizational activity and performance. According to Martinez (2005),
organizations need to focus on the internal effects of PMS as it will directly influence the way organizations
operate. This is because the internal effects are developed within the organization and they are the factors that
affect organizations profitability, reputation and productivity (Martinez, 2005). As such, it is crucial for
organization to understand the effects of PMS in order to maximise its benefits. Therefore, one way to achieve this
is through the use of BSC as a performance measurement system. BSC is seen as a powerful tool for organizational
change and as an effective performance measurement system at both the individuals and organizational levels. The
next section will deliberate on the Balanced Scorecard.

2.2 Balanced Scorecard

Balanced Scorecard (BSC) developed in 1992 is a management accounting tool that translates an organization's
mission, strategies and objectives into performance measures which comprise of four perspectives such as financial,
customer, internal business process and learning and growth (Rababah, 2014; Koumpouros, 2013; Zanini, 2003).
The BSC is formally defined as a multidimensional approach to measure the management performance through
examining relationship between the organizational strategies and operational performances (Lin, Yu, and Zhang,
2014). The main characteristic of a BSC is it emphasizes on financial perspectives and non-financial perspectives
(Kocakulah and Austill, 2007; Mcwhirt, 2013) as well as combining the strategic financial goals with day-to day
operations in the organization (Bhagwat and Sharma, 2007; Flak and Dertz, 2007; Kaplan and Norton, 2001). The
financial and non-financial measures were combined in BSC and eventually linked all of the perspectives that
represent the overall organizational performance into firm strategies (Kairu et al., 2013). The term balanced
indicates that the system is balanced between the short-term and long-term objectives, financial and non-financial
measures, lagging and leading indicators (Rababah, 2014) as well as internal and external performances
perspectives (Vesty, 2004). The term scorecard is an approach of documenting the events of the organization
activities (Christesen, 2008).
According to Atkinson (2006), the BSC focuses on the management attention of the performance drivers by
clearly encouraging the insertion of lead and lag indicators. It is because a good BSC must contain a mix of lead
and lag indicators or also known as Performance Drivers and Outcomes Measures respectively (Jensen, 2001).
It is also noted by Kaplan and Norton (2001) that a mix of lead and lag indicators will enable employees to
differentiate between measurers they could not control and measures that can be influenced by their action. Leading
indicators or also known as short term performance drivers (Olden and Smith, 2008) provide information pertaining
to current performance that most likely will be the drivers of future performance (Zanini, 2003). For example,
product quality is the organizations revenue key indicator, therefore it is crucial to ensure continuous improvement
in product quality to drive sales and performance of the organization (Zanini, 2003). Apart from that, Zin et al.
(2013) explained that customer perspective in the BSC is one of the leading indicators as it assists the organization
to assess customer satisfaction towards its products and services.

2.3 Balanced Scorecard in the Healthcare sector

Based on a review of prior studies, it can be concluded that the majority of the study utilized the case study as
 Nur Faezah Mohd Shukri and Aliza Ramli / Procedia Economics and Finance 28 (2015) 202 212 205

their research method. Besides that, those studies focused on the application and utilization of BSC in the healthcare
sector. For instance, Mcwhirt (2013) applied the BSC framework in the Calvert Memorial Hospital through case
study method. He found that, BSC was able to manage the success of long term and short term of the hospital
mission and vision. In addition, Lin, Yu, and Zhang (2014) investigated the current application of BSC in the
Chinas public hospital by utilizing survey method. They identified that the BSC has positively impact the hospital
administration. Further to that, they revealed that there are various factors that influenced the BSC performance such
as hospitals technology quality and medical equipment Table 1 present summaries of BSC applications the
Healthcare industry in various countries, respectively.

Table 1. Summary of BSC applications in healthcare organization

Author Objectives Methodology Main Findings
Radnor and Lovell To assess the BSC system to Document reviews BSC is a key management system widely used in private
(2003) enhance performance within and public sector organization. It is applicable to all sizes of
healthcare organization
Kollberg and Elg To increase understanding on Case study BSC is used in annual planning, reporting, communication
(2003) BSC use in Swedish healthcare. tool and follow-up the activities in organization.
Zelman et al. (2003) To study the use of BSC in Literature reviews BSC has become a strategic management tool but required
healthcare few modifications to reflect the industry and organizational
characteristics.
Gumbus, Bellhouse, To explore the Bridgeport Case study BSC was used as a planning tool and created by the
and Lyons (2003) Hospital and using BSC as a individuals involved within the organization.
strategic tool.
Urrutia and Eriksen To address the question of Case study BSC is applicable to any type of organisation but need a
(2005) whether the BSC can be utilized few modifications. The hospital needs to have an additional
in Spain public hospital perspective which pertaining to the hospital operating
environment.
Kocakulah and To understand the BSC Case study Crandon Hospital started to focus on the customer
Austill (2007) utilization in healthcare sector. perspectives by integrating the Six Sigma into the BSC
system.

The Diffusion of Innovation theory provided the premise for the study because the BSC is considered as an
innovation adopted by private hospitals to enhance their organizational performance. As noted by Rogers (1995),
there are factors that influenced an organization to adopt innovation. These factors are management leadership
characteristics, internal organizational characteristics and external company characteristics. Therefore, it is suitable
to apply this theory in the context of this study. As mentioned earlier, the main issues faced by the healthcare
providers worldwide are costs and quality. Therefore, Rye and Kimberly (2007) suggested that these issues are the
factors influencing the adoptions of innovation such as BSC.

2.4 Organisational structure

Organizational structure describes an organizations formal reporting relationships, allocation of responsibility as

well as procedures that are carried out among organizational members (Hao, Kasper, and Muehlbacher, 2012). It
also indicates a continuing arrangement of organizational tasks and activities (Mahmoudsalehi, Moradkhannejad,
and Safari, 2012). Mahmoudsalehi et al., (2012, p.521) defines organizational structure as a formal allocation of
work responsibility and administrative mechanism to control and integrate work activities. According to Hunter
(2002), organization of work is a key factor that influences the productivity of the organization as the authority
relationship determines the way the employees work. Basically, organizational structure consists of work division
and coordination mechanism (Meijaard et al., 2005). Broadly speaking, organizational structure is mainly important
for decision making process because it includes the characteristics of authority centralization, hierarchy levels and
horizontal integration (Hao et al., 2012).
Three most important aspects in organizational structure comprised of centralization, formalization and
integration. Centralization refers to the concentration of management and power of decision-making process at the
top of an organizations hierarchy (Mahmoudsalehi et al., 2012). They further added that organization with high
centralization tends to restrain interactions among the organization members, hinders inventive solution to problems
and diminishes the opportunity for individual development. Mahmoudsalehi et al., (2012) highlighted that
centralization is highly related to the decision-making power by the top management of the organization. Therefore,
206 Nur Faezah Mohd Shukri and Aliza Ramli / Procedia Economics and Finance 28 (2015) 202 212

it provides a little delegation of decision making power to the employees and causing a non-participatory
environment that reduces communication as well as task involvement among the employees (Martnez-Len and
Martnez-Garca, 2011). Besides that, Mahmoudsalehi et al. (2012) stated that high centralization impedes the
opportunity for employee development and growth. On the other hand, low centralization will encourage
employees creativity and involvement in organization projects (Pertusa-Ortega, Zaragoza-Sez, and Claver-Corts,
2010).
Mahmoudsalehi et al., (2012) relates formalization to the level of work roles within an organization that are
structured and activities of the employees are governed by rules and procedures. Organization with high
formalization, introduces an innovation within organization by setting a comprehensible rules and procedures to
reduce ambiguity and flexibility of employees (Pertusa-Ortega et al., 2010). Meanwhile, integration is defined as the
extent to the different level of employees in the organization that can be coordinated through the formal
coordination instrument (Liao, Chuang, and To, 2011).
However, to a certain extent, organizational structure is affected by the external environment (Nahm et al.,
2003). According to Ireland et al. (2013), it is difficult to develop an organizational structure that effectively
supports the firm strategy due to the uncertainty of causality in the global economy rapidly change and competitive
business environment. Nevertheless, organizational structure plays crucial role in assisting the organization to
achieve better performance (Weir, 1995). The achievement of any organization strategy depends profoundly on its
uniformity with the organizational structure (Jabnoun, 2005). Therefore, in order to improve their performance, most
of the firms followed a successful firm by adopting their organizational structure, encouraging innovations and
learning from their experience (Hao et al., 2012). Based on the discussion above, the framework of this study is
presented below.

Fig. 1. Research Framework

Source: (Inamdar and Kaplan, 2002; Ismail, 2014; Meijaard, Brand, and Mosselman, 2005; Rogers, 2003)

3.0 Research Method

A survey on BSC adoption was conducted on private hospitals registered under the Association of Private
Hospital of Malaysia (APHM). There were 117 organizations listed in the APHM website as at April 2014.
However, the total number of 117 included the clinics and nursing home which are not suitable to be included in this
study as this study focused on private hospitals. The exact number of private hospital after excluding clinics and
nursing homes are 97. Therefore the entire population of 97 private hospitals were taken as the sample for this study.
The target respondents were the Chief Executive Officer (CEO),Chief Financial Officer (CFO), Chief Operating
Officer (COO), General Manager, Manager, Head of Department or Accountant. This is because, they involved in
making decisions and are able to provide reliable information pertaining to the organization characteristics as well as
its operations (Sony and Naik, 2012). Furthermore, according to Mcwhirt (2013) the leadership team involved in the
implementation of BSC within an organization, comprised of the chief executive officer, chief operating officer,
managers of human resources, finance and information services. Mcwhirt(2013) further explained that, the
leadership team would develop a framework based on the BSC to meet the organizations goals and vision. As such,
the selection of the target respondents for this study is seen as appropriate.
Data were collected firsthand from the respondents by using the method of questionnaires. The questionnaire is
basically divided into four sections. Section A focuses on the organizations characteristics such as age, number of
employees and number of beds. Section B focuses on the organizational structure. Meanwhile Section C explored
the adoption of BSC in the private hospitals, Section D seek to collect data on the respondents background. The
target respondents were the Chief Executive Officer (CEO),Chief Financial Officer (CFO), Chief Operating Officer
(COO), General Manager, Manager, Head of Department or Accountant. This is because, they involved in making
 Nur Faezah Mohd Shukri and Aliza Ramli / Procedia Economics and Finance 28 (2015) 202 212 207

decisions and are able to provide reliable information pertaining to the organization characteristics as well as its
operations (Sony and Naik, 2012)
Survey questionnaires were distributed by mail to all 97 private hospitals registered with APHM and only 39
responses were received after three follow-ups. The overall usable response rate was 40.2%.

4.0 Results and Discussion

This section discusses the descriptive results on respondents background, BSC adoption, organizational
characteristics and organizational performance.

4.1 Respondents background

Table 2 presents the results on respondents background. The respondents are from different hierarchical levels
and functional areas. Just below half of them have been employed by the hospitals for five or more years. In
addition, the majority of the respondents has attended tertiary education with several of them with masters and also
professional qualifications. Further to that, there are almost equal distributions between the genders. Overall, the
respondents background indicated to some extent that they have sufficient experience and knowledge about the
respective hotels where they have been employed.

Table 2. Respondents Background

(N=39) Frequency Percent Valid Percent Cumulative Percent
Job Position
Head of organization 11 28.2 28.2 28.2
Assistant manager 4 10.3 10.3 38.5
Manager 24 61.5 61.5 100.0
Current Division
Human Resources and Administration 23 59.0 59.0 59.0
Finance 8 20.5 20.5 79.5
Operation 4 10.3 10.3 89.7
Public Relations and Marketing 4 10.3 10.3 100.0
Length of Service
Less than 1 year 1 2.6 2.6 2.6
1-5 years 21 53.8 53.8 56.4
5-10 years 15 38.5 38.5 94.9
More than 10 years 2 5.1 5.1 100.0
Highest educational level
Diploma 5 12.8 12.8 12.8
Bachelors Degree 21 53.8 53.8 66.7
Master Degree 2 5.1 5.1 71.8
Professional 11 28.2 28.2 100.0
Gender
Male 20 51.3 51.3 51.3
Female 19 48.7 48.7 100.0

4.2 BSC adoption

The result shown in Table 3 revealed that 31% (12) of private hospitals have adopted BSC. Meanwhile, 27
private hospitals (69%) had not implemented the BSC.

Table 3: Balanced Scorecard Adoption

Frequency Percent Valid Percent Cumulative Percent

No 27 69.2 69.2 69.2

Yes 12 30.8 30.8 100.0
Total 39 100.0 100.0
208 Nur Faezah Mohd Shukri and Aliza Ramli / Procedia Economics and Finance 28 (2015) 202 212

Further analysis indicated that BSC had been diffused rather slowly with only four at the beginning then
reaching five in 2010. However the number of BSC adopters became less with two in 2011 and only one in 2014.
Based on the theory of diffusion of innovation, these four hospitals can be classified as early adopters of BSC in
Malaysian healthcare sector. The early adopters is perceived as the minority group of the population that first try the
innovation invented by the innovators (Rogers, 1983).

4.3 Organizational Structure

The measurements used to measure the 10 dimensions were based on a 5-Likert scale that ranged from 1
(Strongly Disagree) to 5 (Strongly Agree). Based on the results shown, the dimensions of Our organization use
rules and procedures to prescribe behaviour such as the details on how, where and by who tasks are to be
performed reported the highest mean value of 4.83 (SD=.389), suggesting that the employees behaviour and tasks
were monitored and controlled based on the policies and procedures of the organization. This was then followed by
the dimension Policies exist for most decisions made by the management and Our organization used formal
communication procedures, respectively with a mean value of 4.75 (SD=.622) and 4.67 (SD=.652). This indicates
that the existence of formalization as the management needs to follow the organizations policies and procedures in
making decision and communicating within the organization. The lowest dimension was Our organizations
operational decisions are influenced by employees (M=3.00, SD=.953). This suggested that to a certain extent,
employees do contribute to the decision making process at the operational level.
Generally, to a certain extent, the result explained that most of the organizations that adopted BSC are highly
centralized with formalization of rules and procedures. This is because decisions were made by top management
based on the policies and procedures of the organization. The involvement of top management suggested that they
have authority in making decision pertaining to the management of their organizations. Further to that, the results
suggested that there is an existence of formal administrative control through formal reporting relationship and
communication procedures within the organization. Therefore, this explained the existence of high formalization in
most of BSC adopter organizations. Table 4 shows the descriptive analysis for organizational structure of 12 private
hospitals that had adopted BSC.

Table 4: Descriptive Statistics- Organizational Structure of BSC adopters

N=12 Minimum Maximum Mean Std.

Deviation
Our organization's consists of many hierarchical levels 4 5 4.33 .492
Our organization use rules and procedures to prescribe behavior 4 5 4.83 .389
such as the details on how, where and by who tasks are to be
performed
The top management made all the decisions in the organization 2 5 4.50 1.000
Policies exist for most decisions made by the management 4 5 4.75 .622
Our organization used formal communication procedures 4 5 4.67 .652
There are existence of written formal procedures in our 4 5 4.50 .522
organization
There are existence of separate departments for different types of 4 5 4.33 .492
service in our organization
Our organizations operational decisions are influenced by 2 4 3.00 .953
employees.

There are existences of standardization of activities in our 3 4 3.50 .522

organization
There are existence of standardization of goals in our 3 4 3.67 .492
organization
Overall Average of Organizational Structure 3.4 4.7 4.208 .3679
 Nur Faezah Mohd Shukri and Aliza Ramli / Procedia Economics and Finance 28 (2015) 202 212 209

4.4 Organizational Performance

Respondents to rate the organizational four dimensions based on a 5-Likert scale which ranged from 1
(Strongly Disagree) to 5 (Strongly Agree) and the results are presented in Table 5.
The irst dimension is financial. The overall mean value for financial dimension indicated that most of the
respondents agreed that the BSC have positive effects on their organizations financial performance (M=4.70,
SD=.298). The result also revealed that both Increase operating revenues and Increased hospital profits were
ranked the highest with mean value of 4.92 (SD=.289) suggesting that the revenues increased due to an increase in
profits through a decrease in costs and debts. Due to that, respondents also reported that through the implementation
of BSC, the hospitals managed to achieve cost savings and decrease debts (M=4.83, SD= .389; M=4.50,
SD=.522).
The next dimension is customer. The result of overall average for customer dimension revealed that to a certain
extent the BSC adoption have positive effects towards the customer (M=4.44,SD=.404). Apart from that, the result
also revealed that Reduce patient complaint was ranked the highest with mean value of 4.58 (SD=.515). This is
then followed by increase in patient satisfaction and increased customers retention with mean value of 4.42
(SD=.515). This explained that as when the patient satisfaction increases, it managed to reduce the number of
complaint received and gain their loyalty.
Table 5. Organisational Performance
Minimum Maximum Mean Std. Deviation
Increase operating revenues 4 5 4.92 .289
Achieve cost savings 4 5 4.83 .389
Increased hospital profits 4 5 4.92 .289
Decreased debts 4 5 4.50 .522
Overall Average for Financial 4 5 4.79 .298
Increase patient satisfaction 4 5 4.42 .515
Reduce patient complaint 4 5 4.58 .515
Gain customer's acceptance 4 5 4.25 .452
Increased customer's retention 4 5 4.42 .515
Overall Average for Customer 4 5 4.42 .404
Improvement of products, service and programs quality 4 5 4.42 .515
Improve internal process efficiency 4 5 4.50 .522
Improvement of management efficiency 4 5 4.58 .515
Improvement of patient safety and health through risk
4 5 4.42 .515
management
Overall Average for Internal Business Process 4 5 4.48 .391
Improve employee training and learning 3 5 4.00 .739
Improve employee satisfaction and attitude towards work 3 5 4.17 .577
Encourage creativity and innovation development 3 5 4.08 .515
Allow continual feedback and learning process 4 5 4.08 .289
Overall Average for Learning and Growth 3.5 4.75 4.083 .404
Overall Average for Organizational Performance 4 4.69 4.44 .228

The next dimension is customer. The result of overall average for customer dimension revealed that to a certain
extent the BSC adoption have positive effects towards the customer (M=4.44,SD=.404). Apart from that, the result
also revealed that Reduce patient complaint was ranked the highest with mean value of 4.58 (SD=.515). This is
then followed by increase in patient satisfaction and increased customers retention with mean value of 4.42
(SD=.515). This explained that as when the patient satisfaction increases, it managed to reduce the number of
complaints received and gain their loyalty.
Internal business process is the third dimension in BSC. Based on the result, the overall mean value of customer
dimension was 4.48 (SD=.391) suggested that most of the respondents agreed the BSC has a positive effects on this
dimension. This can be seen where the mean values for entire internal business process dimension were between
4.42 and 4.58 and suggested the existence of a greater positive effect of BSC towards the internal business process
dimension. The result pointed out that the Improvement of management efficiency was ranked the highest
(M=4.58, SD=.515) and indicated that respondents agreed that the BSC could improve the management towards
becoming more efficient in performing their roles. This is then followed by Improve internal business process
efficiency with mean value of 4.50 (SD=.522). Meanwhile, both Improvement of products, service and programs
210 Nur Faezah Mohd Shukri and Aliza Ramli / Procedia Economics and Finance 28 (2015) 202 212

quality and Improvement of patient safety and health through risk management (M=4.42, SD=.515) were
reported lower than other items within the dimension. This result suggested that as the efficiency of the hospital
internal business process increase, it will lead to a service improvement and consequently increase the management
efficiency. This is because the internal business process emphasized on the internal processes that the hospital needs
to focus in order to increase patients satisfaction.
The final dimension in BSC is learning and growth. The result of overall mean value average of learning and
growth dimension revealed that to a certain extent, the BSC has positive effects on the dimension (M=4.083,
SD=.4036). Besides that, the mean values of all of the items within their dimensions are between 4.00 and 4.27
hence, suggested that there is a high agreeable level on the effect of BSC towards the organizational learning and
growth. The mean value of Improve employee satisfaction and attitude towards work reported the highest
(M=4.27, SD=.452) which eventually showed that BSC was able to enhance employees satisfaction towards their
work through support provided by the management such as skill development training. This is then followed by
Allow continual feedback and learning process with mean value of 4.08 (SD=.289). This implied that respondents
agreed that the BSC provided continual feedback to the management as they were able to improve their current
performance and identify opportunities for improvement.
In general, the results revealed that to a certain extent, the BSC managed to improve the overall performance of
the hospitals (M=4.44; SD=.2284). This is because the mean value was 4.44 and near to 5 (Strongly Agree). This
result suggested that majority of the respondents were strongly agreed that through the adoption of BSC, the
hospitals performance has positively improved.

4.5 Discussion of results

This paper focuses on the survey results of 12 private hospitals that were the adopters of BSC. It appeared that
the BSC had been diffused fairly slowly in the healthcare sector as the private hospitals only started to implement
the BSC in 2009 with declining number of adopters from then on as shown in this study. It was apparent that a high
degree of centralization with high formalization of rules and procedures were evident within the private hospitals in
this study. The findings revealed that top management made all of the decisions following the policies and
regulations of the hospitals to ensure that all decisions made and actions undertaken are in accordance with the
values set by the hospitals and also to ethically meet the needs of the patients. The purpose of the policies and
procedures is to restrict the employees unethical actions as it will reduce the flexibility of the employees to act
unethically within the organization (Mahmoudsalehi, Moradkhannejad, and Safari, 2012). The main findings also
indicate that the majority of the respondents agreed that the BSC has positively improved their financial
performance. This is because through the adoption of BSC, the hospitals managed to increase their revenues (Karra
and Papadopoulos, 2005; Urrutia and Eriksen, 2005), reduce costs (Gurd and Gao, 2008), increase hospitals
profitability (Kairu, Wafula, Okaka, Odera, and Kayode, 2013) and consequently improve their financial
performance (Davis and Albright, 2004).
This study also found that most of the respondents have agreed that the BSC have increased their overall
customer dimension. This is because, the adoption of BSC had successfully reduced patients complaint suggesting
that the patients were satisfied with the medical services and treatments provided by the hospitals. Hence, it will
consequently improve the patient retention rates along with their loyalty towards the hospitals (Koumpouros,
2013;Christesen, 2008). The findings also suggest that private hospitals have taken great length to become a
responsible hospital by rendering top quality medical services to its patients and to act ethically. In addition, it was
discovered that respondents strongly agreed that the BSC had positive effects on the organizations internal business
process. The result revealed that the implementation of BSC was able to improve the efficiency in managing the
hospitals through a clear and transparent performance measures. Consistent with the findings found in the studies by
Karra and Papadopoulos (2005) and Ukko, Tenhunen, and Rantanen (2007), the findings from this study also
revealed that the BSC had improved the hospitals internal business process efficiency. Therefore, the results suggest
the effectiveness of BSC in assisting the management to identify their internal business process requirement and
successfully and responsibly performing the internal business processes towards delivering quality services to
customers.
As for the learning and growth, the descriptive results showed that the adoption of BSC had effectively improved
employee satisfaction, attitudes and ethical conduct. This might be due to the training (Kairu et al., 2013), support
services (Ong, Lee, and Wong, 2010) and incentives provided by the organization (Davis and Albright, 2004). In
 Nur Faezah Mohd Shukri and Aliza Ramli / Procedia Economics and Finance 28 (2015) 202 212 211

addition, the ability of private hospitals in developing employees skills and enhancing their performances led to
efficient internal business process (Kairu et al., 2013). Moreover, employees with talents and knowledge are more
capable to understand the patients needs. Therefore, it is crucial to retain employee and customer loyalty as both are
closely related and essential for organizational success (Kairu et al., 2013). Similar with the findings discovered by
Inamdar and Kaplan (2002), the findings from this study also revealed the overall agreement that the adoption of
BSC had enable private hospitals in this study to obtain continual feedback through learning process as well as
identify opportunities for improvement.

5.0 Conclusion

The aim of this paper was to assess the organizational structure and performances through Balanced Scorecard
of Malaysian private hospitals and to link the findings to being a responsible private hospital. The main findings
revealed that the majority of the private hospitals that adopt Balanced Scorecard are highly centralised and
formalised. These private hospitals subscribed to formalised rules and written formal procedures to ensure the
management and governance of health providers act in accord with espoused values. As such, there is a legitimate
link to improved performances within this sector on the key aspects: internal business processes, patient quality
services, safety and satisfaction, organizational learning and growth, and financial. Thus far, despite the evidence
from this study that can be attributed to becoming responsible healthcare providers, drivers used which incorporate
responsibility, integrity, accountability and transparency in assessing performances can be taken up. This paper adds
value to the limited academic BSC literature and responsible issues pertaining to quality improvements and patient
satisfaction within the private healthcare sector in Malaysia.

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