Chapters 7 and 8

1. Chapter Service and Health Care Processes Chapters 7 and 8

2. Service Processes

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

4. 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

5. 8-5 The Service Strategy The Customer The Systems The People The Customer Centered View 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.

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

7. 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

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

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

10. 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

11. 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?

12. 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 • Task to be done • Treatment accorded to the customer • Tangible features of the service • Must often fail-safe actions of the customer as well as the service workers LO 2

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

14. BALK RENEG Degree of Patience No Way! No Way!

15. Healthcare Processes

16. 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)

17. 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 2014. • Research indicates that healthcare providers will be spending approximately $65 billion on the IT.

18. 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

19. 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

20. 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

21. 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

22. 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

23. 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

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

25. Developing a Capacity Plan • Starting point is determining the effective capacity of a resourceEffective capacity = Design capacity X Utilization • Subsequent steps: • Forecasting patient demand • Translating this demand into capacity requirements • Determining the current capacity level • Calculating the gap between demand and capacity • Developing a strategy to close the gap LO 2

26. 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

27. 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

28. 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

29. 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

30. Health Care Supply Chain LO 2

32. 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 • Push systems • Fixed-order quantity systems • Fixed-time-period systems • Pull systems LO 2

34. 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

35. 8-35 Any Questions?