Balanced Scorecard and Financial Performance of a Healthcare NFP

This article discusses the balanced scorecard and financial performance of a healthcare NFP. It explains the lead and lag indicators and the relevant performance measures for a non-profit organization. It also highlights the importance of budgetary deficit and other financial indicators.

ACCOUNTING & FINANCE
STUDENT ID:
[Pick the date]

The balanced scorecard tends to focus on four different perspectives and one of these is the
financial perspectives. The various performance indicators in relation to the financial
performance of the organisation are reflected here. It is noteworthy that for a profit based
company, one of the key indicators would be a measure of profitability which is not the case
here since the assumed organisation is not for profit (Heisinger, 2014). Considering that a
healthcare based NFP, the financial objectives would focus on ensuring efficiency on
spending. As a result, the relevant performance measures would consider the costs of
extending service to patients.
The performance of the concerned healthcare NFP must be made considering both lead and
lag indicators. The lead indicators are typically input oriented and are easy to influence but
their precise impact is difficult to measure (Petty et. al., 2015). A relevant lead indicator for
the given organisation could be the money spent by the NFP organisation on the lowering of
heart attack incidence in a particular vulnerable indigenous group through organising
frequent check up camps along with offering counselling. This is a lead indicator since the
organisation can measure the amount of money spent on the campaign but cannot definitively
access the outcome of the same. Similarly programs which the organisation organises for
various groups to ensure prevention of certain chronic disorders would require lead indicators
for measurement.
The lad indicators are essentially output oriented owing to which these are easy to measure
but difficult to control (McLaney & Atrill, 2014). A typical example of this would be the
money spent by the company in providing medicines to patients suffering from a particular
disorder. In this case, the relevant aspect to be measured would be the per patient cost
incurred by NFP organisation and whether it shows any improvement from previous
incidence in terms of cost savings. This would be a lag indicator since the organisation can
measure the costs but cannot prevent the disease from occurring in the vulnerable population.
As a result, for this organisation the lagging indicators would pertain to the costs incurred in
managing or curing the illness that has already occurred as the organisation cannot lower the
incidence of these illnesses.
Considering the organisation is not for profit, hence an important measure of financial
performance would be amount of budgetary deficit. This is the difference between the cash
inflows and cash outcomes for the NFP. It is imperative that the organisation should aim to

minimise this deficiency by rationalising expenses and reaping efficiency in the same. Also,
other measures related to funding such as the donations received over the period would be
imperative. Finally, any realisation from the customer by offering a subsided service would
also be a key financial indicator as improvement in this regards would enable higher
availability of resources and less dependence on donors.
References
Heisinger, K.(2014) Essentials of Managerial Accounting 4th ed. London: Cengage Learning.
McLaney, E. & Atrill, P. (2014) Accounting and Finance: An Introduction, 7th ed. Harlow:
Pearson Education Limited
Petty, J.W., Titman, S., Keown, A.J., Martin, P., Martin J.D. and Burrow, M.(2015),
Financial Management: Principles and Applications 6th ed. Sydney: Pearson Australia