Chapter Service and Health Care Processes Chapters 7 and 8

Service Processes

Learning Objectives 1. Understand the characteristics of service processes and know how they differ from manufacturing processes. 2. Demonstrate how services are classified. 3. Explain the involvement of the customer in services. 4. Have a perspective on the unique operations and supply management (OSM) challenges faced in health care. 5. Understand how selected OSM concepts and approaches can be applied to hospitals.

The Nature of Services  The customer is the focal point of all decisions and actions  The organization exists to serve the customer  Operations is responsible for service systems  Also responsible for managing the work of the service workforce LO 1

The Customer Centered View The Customer The Service Strategy The People The Systems A philosophical view that suggests the organization exists to serve the customer, and the systems and the employees exist to facilitate the process of service. 8-5

Service Package 1. Supporting facility  The physical resources that must be in place before a service can be offered 2. Facilitating goods  The material purchased by the buyer or the items provided to the customer 3. Information  Data provided by the customer 4. Explicit services  Benefits that are observable by the senses 5. Implicit services  Psychological benefits the customer may sense only vaguely LO 1

An Operational Classification of Services  Customer contact: the physical presence of the customer in the system  Extent of contact: the percentage of time the customer must be in the system relative to service time  Services with a high degree of customer contact are more difficult to control  Creation of the service: the work process involved in providing the service itself LO 3

How Service Design is Different from Product Design 1. The process and the product must be developed simultaneously 2. The service package constitutes the major output of the development process 3. Many parts of the service package are defined by the training individuals receive 4. Many service organizations can change their service offerings virtually overnight LO 1

Structuring the Service Encounter: Service-System Design Matrix  Service encounters can be configured in a number of different ways 1. Mail contact 2. Internet and on-site technology 3. Phone contact 4. Face-to-face tight specs 5. Face-to-face loose specs 6. Face-to-face total customization LO 3

Virtual Service: The New Role of the Customer  Customers no longer just interact with the business  Pure virtual customer contact: customers interact in an open environment  eBay  SecondLife  Mixed virtual and actual customer contact: customers interact with one another in a server-moderated environment  YouTube  Wikipedia LO 4

Virtual Service: Website  Ask - What do you want to have the customer know?  Ask – How are you going to engage the customer?  Ask – How do you communicate with your customer?  Ask - How do you get the customer to come back?

Service Fail-Safing Poka-Yokes (A Proactive Approach)  Poka-yokes: procedures that block a mistake from becoming a service defect  Common in factories  Many applications in services  Warning methods  Physical or visual contact methods  Three T’s 1. Task to be done 2. Treatment accorded to the customer 3. Tangible features of the service  Must often fail-safe actions of the customer as well as the service workers LO 2

Managing Customer Introduced Variation Arrival variability Request variability Capability variability Effort variability Subjective preference variability 8-13

Degree of Patience No Way! BALK RENEG

Healthcare Processes

Healthcare Trends  In the 2003, there were approximately 37 million people - age 65 and above  By 2011, baby boomers will begin turning 65 and by 2030 – 1 in 5 will be 65 and older (projected 71.5 million) (Federal Interagency Forum on Aging Related Statistics January 2005 )

The top trends in HEALTHCARE  Heath Care Price Transparency - would reveal healthcare pricing on the web sites, and government reports, or upon request.  Time to walk the talk on technology – In 2004, President Bush adopted the electronic health records (EHRs), which has to be done by  Research indicates that healthcare providers will be spending approximately $65 billion on the IT.

The Nature of Health Care Operations  Health care operations management: the design, management, and improvement of the system that deliver health care services  Health care as a service  Extensive customer contact  Wide variety of providers  Life or death as outcomes  Key focus is on hospitals  Hospital: a facility whose staff provides services relating to observation, diagnosis, and treatment of patients LO 1

Factors that Set Hospital Operations Apart from Others  Key operators are highly trained professionals  Generate requests for service  Deliver the service  Relationship between prices and performance is not direct  No single line of command  Balance of power between groups  Product specifications are often subjective and vague  Not a commodity that can be stocked  Resource-oriented service organization LO 1

Hospital Layout and Care Chains  The layout sets the physical constraints on operations  The goal of layout is to move patients and resources to minimize wait and transport time  A general rule is to separate patient and guest traffic from staff traffic  Principal element is the nursing station  Flow of work through a hospital is called a care chain LO 2

Scheduling Efficiency  A major distinction among health care processes is the extent to which resources can be scheduled efficiently  Emergency situation must be dealt with immediately  Inherently inefficient  Elective procedures can be scheduled to achieve efficient use of resources LO 2

Steps  Resource use and schedule complexity are effected by:  The number of steps  The time of each step  Whether the care chain has a definite end  Complexity is also increased by:  The need for rapid diagnostics  Extensive consultation  The need to work with other specialties  Decoupling points: steps in the process where waiting takes place LO 2

Tracking of Work Flow Using RFID  Radio frequency identification: uses electronic tags that can store, send, and receive data over wireless frequencies  Used to track the location of:  Patients  Medical staff  Physical assets LO 3

Capacity Planning  Capacity planning: matching an organization’s resources to demand  Resource requirements is a function of: 1. Number of patients 2. Length of stay  Capacity is measured in terms of multiple resources including  Beds  Clinics  Treatment rooms  Doctors  Nurses  And more LO 2

Developing a Capacity Plan  Starting point is determining the effective capacity of a resource Effective capacity = Design capacity X Utilization  Subsequent steps: 1. Forecasting patient demand 2. Translating this demand into capacity requirements 3. Determining the current capacity level 4. Calculating the gap between demand and capacity 5. Developing a strategy to close the gap LO 2

Workforce Scheduling  Nurse shift scheduling  Largest component of hospital workforce  Schedules can be classified as either:  Cyclical schedule The work is planned for four-to-six weeks Nurses work a fixed schedule  Flexible schedule Several types are used Most common is 8-hour days and an average of 40 hours per week  Operating room scheduling  Typically largest revenue-generating center LO 2

Quality Management and Process Improvement  TQM approaches have been used for decades  Hospitals are well suited because so much of health care involves precise measurements  Six Sigma and Lean concepts are being instituted in may hospitals LO 2

Gap Errors and Bottlenecks  Gap errors: information mistakes that arise when a task is transferred between people  Handoffs are a significant source of serious patient harm  One successful approach to managing handoffs is a checklist technique for communicating information  Bottleneck: part of the system that has the smallest capacity  Frequently result from departments optimizing their own throughput LO 3

Service Quality  Hospitals have been raising their level of customer service  Improved customer service saves money  Fewer malpractice suits  Reduction in no-shows  Lower nurse turnover LO 2

Health Care Supply Chain LO 2

Inventory Management  Average inventory for a medium size hospital is $3.5 million  Represents 5-15 percent of current assets 2-4 percent of total assets  Largest working capital requirement  Hospital inventory systems can be broken down into two categories 1. Push systems 1. Fixed-order quantity systems 2. Fixed-time-period systems 2. Pull systems LO 2

Safety Stock  A major distinction between health care inventory management and other businesses is safety stock  The standard calculation of safety stock is based on trading off the cost of carrying additional inventory with the cost of being out of stock  This is much trickier in a hospital when the cost of a stockout might be death  For critical items, backup contingency plans such as borrowing from a nearby hospital are often developed LO 2

Any Questions? 8-35