Chapter Service and Health
Care Processes
Chapters 7 and 8
Service Processes
Learning Objectives
1.
2.
3.
4.
5.
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.
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
8-5
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.
The
Systems
The Service
Strategy
The
Customer
The
People
Service Package
1.
Supporting facility

2.
Facilitating goods

3.
Benefits that are observable by the senses
Implicit services

LO 1
Data provided by the customer
Explicit services

5.
The material purchased by the buyer or the items provided to the
customer
Information

4.
The physical resources that must be in place before a service can
be offered
Psychological benefits the customer may sense only vaguely
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.
2.
3.
4.
LO 1
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
Structuring the Service Encounter:
Service-System Design Matrix

LO 3
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
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


LO 4
YouTube
Wikipedia
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.
2.
3.

LO 2
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
8-13
Managing Customer Introduced Variation
•Arrival variability
•Request variability
•Capability variability
•Effort variability
•Subjective preference variability
Degree of Patience
No Way!
BALK
No Way!
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 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

LO 1
Hospital: a facility whose staff provides services relating to
observation, diagnosis, and treatment of patients
Factors that Set Hospital Operations
Apart from Others

Key operators are highly trained professionals




Relationship between prices and performance is not direct
No single line of command



Generate requests for service
Deliver the service
Balance of power between groups
Product specifications are often subjective and vague
Not a commodity that can be stocked

LO 1
Resource-oriented service organization
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:




Complexity is also increased by:




The number of steps
The time of each step
Whether the care chain has a definite end
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.
2.

Capacity is measured in terms of multiple resources
including






LO 2
Number of patients
Length of stay
Beds
Clinics
Treatment rooms
Doctors
Nurses
And more
Developing a Capacity Plan

Starting point is determining the effective capacity of a
resource
Effective capacity = Design capacity X Utilization

Subsequent steps:
1.
2.
3.
4.
5.
LO 2
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
Workforce Scheduling

Nurse shift scheduling



Largest component of hospital workforce
Schedules can be classified as either:
Cyclical schedule



Flexible schedule



The work is planned for four-to-six weeks
Nurses work a fixed schedule
Several types are used
Most common is 8-hour days and an average of 40 hours per week
Operating room scheduling

LO 2
Typically largest revenue-generating center
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




Largest working capital requirement
Hospital inventory systems can be broken down into two
categories
1.
Push systems
1.
2.
2.
LO 2
5-15 percent of current assets
2-4 percent of total assets
Fixed-order quantity systems
Fixed-time-period systems
Pull systems
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
8-35
Any Questions?