Using Path Analysis to Examine Causal Relationships Among Balanced Scorecard Performance Indicators for General Hospitals

Abstract

Examining whether the causal relationships among the performance indicators of the balanced scorecard (BSC) framework exist in hospitals is the aim of this article. Data were collected from all twenty-one general hospitals in a public hospital system and their supervising agency for the 3-year period, 2000-2002. The results of the path analyses identified significant causal relationships among four perspectives in the BSC model. We also verified the relationships among indicators within each perspective, some of which varied as time changed. We conclude that hospital administrators can use path analysis to help them identify and manage leading indicators when adopting the BSC model. However, they should also validate causal relationships between leading and lagging indicators periodically because the management environment changes constantly.