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

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The Customer Centered View

TheCustomer

The ServiceStrategy

ThePeople

TheSystems

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.

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.

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Service Package

1. Supporting facility The physical resources that must be in place before

a service can be offered2. 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

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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

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How Service Design is Different from Product Design1. The process and the product must be

developed simultaneously2. The service package constitutes the major

output of the development process3. Many parts of the service package are defined

by the training individuals receive4. Many service organizations can change their

service offerings virtually overnight

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Structuring the Service Encounter: Service-System Design Matrix Service encounters can be configured in

a number of different ways1. Mail contact2. Internet and on-site technology3. Phone contact4. Face-to-face tight specs5. Face-to-face loose specs6. Face-to-face total customization

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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

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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 done2. Treatment accorded to the customer3. Tangible features of the service

Must often fail-safe actions of the customer as well as the service workers

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Managing Customer Introduced Variation

•Arrival variability

•Request variability

•Capability variability

•Effort variability

•Subjective preference variability

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Degree of Patience

No Way!No Way!

BALKBALK

No Way!No Way!

RENEGRENEG

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 (Federal Interagency Forum on Aging Related StatisticsAging Related Statistics

January 2005January 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 2014. 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

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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

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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

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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

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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

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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

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Capacity Planning

Capacity planning: matching an organization’s resources to demand

Resource requirements is a function of:1. Number of patients2. Length of stay

Capacity is measured in terms of multiple resources including

Beds Clinics Treatment rooms Doctors Nurses And more

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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

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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

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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

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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

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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

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Health Care Supply Chain

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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 categories1. Push systems

1. Fixed-order quantity systems2. Fixed-time-period systems

2. Pull systems

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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

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Any Questions?

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