Accepted as congress paper for the 75th Annual Meeting of the Academy of Management August 7-11, 2015 Vancouver, British Columbia, Canada
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153 ABSTRACT
The impact of the design of the operating system on operational performance is seldom discussed in health care. We conducted a comparative mixed-method case study analysis of sequential care processes in hospitals. We examined differences in the organization of sequential care processes, whether sequential care processes with fully compatible operating systems perform better than those not fully compatible with the operating system, and the causes of variation in sequential care processes. Our findings suggest that, overall, hospitals design their operating system for low turnover times and smooth transitions. They show that aligning structure and processes components with the operating system positively influences operational performance. However, we note that not all cases make optimal use of this concept. Besides special-cause variation disrupting flow efficiency, the results demonstrate that other variables that can be taken into account in planning care processes influence the process. Above that, this paper provides practitioners and academics with a fresh perspective on standardized practices and the factors limiting standardized processes. It also serves as a foundation for future initiatives for improving operational performance in hospitals.
Key words: health care, standardization, operational performance, operations management, cataract
154 1. INTRODUCTION
Worldwide, hospital care plays a central role in health care delivery and is the largest category of health care spending (American Health Association, 2011), accounting for about one third of all health care expenditure. From an organisation perspective, hospitals dominate the rest of the health care system (McKee and Healy, 2000). Yet, in spite of their importance, hospitals show high degrees of variability and a lack of standardization, resulting in unsatisfactorily low efficiency (McGlynn et al., 2003). In addition, costs vary widely across geographic areas and these geographic differences are not associated with more reliable delivery of evidence-based care or better health outcomes (Fisher et al., 2003). In sum, hospitals are critical but costly resources in health care, so the challenge is to design processes that are flexible while also working to standards that create consistency (Walley, 2007).
In order to improve, our view of health care delivery needs to change (Porter and Teisberg, 2007, Porter and Teisberg, 2006). More precisely, the main purpose of health care systems is not to minimize costs but to maximize value for patients, which in the long run results in better health per dollar spent (Kaplan and Haas, 2014). Value for patients encompasses many of the other goals, such as quality, safety, patient centeredness, and cost containment, and integrates them (Porter and Teisberg, 2006). One key principle guiding the change in health care delivery is that medical practice should be organized around medical conditions and care cycles, instead of around providers. Similarly, the Institute of Medicine (1999, 2001) promotes transparent care processes organized around patients’ needs (Kohn et al., 1999, IOM, 2001). Research into improving health care should deal with finding new ways of organizing care and identifying the best methods of organizing and delivering services.
Accordingly, the following research question emerges: How should the delivery of care be organized in order to achieve value?
To answer this question, multiple authors (Bohmer, 2005, Bohmer, 2009, Lillrank and Liukko, 2004, Christensen et al., 2009) have claimed that health care professionals are charged with providing two very different types of care: sequential care and iterative care.
Sequential care refers to care provided to patients that can be quickly diagnosed (e.g., urinary tract infections and cataracts). These patients have well-known, structured problems; they can be treated by predictable, reliable, low-cost care. In contrast, iterative care refers to patients with unknown conditions (e.g., endocarditis or complex cancer). Such care may require many resources to diagnose and treat, and the outcomes are often uncertain (Bohmer, 2009). From
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an operational point of view, these unstructured problems make work highly variable. In reality, health care entails a mix of standard and nonstandard processes, certain and uncertain circumstances, and different approaches to disease and illness. The reason we differentiate structured and unstructured problems is that they require different ‘operating systems’. An operating system describes the configuration of all the resources and activities that come together to create a service or product (Bohmer, 2009). The operating system for patient problems that are addressed by sequential processes differs from that required when care is provided through an iterative process (Bohmer, 2009). Sequential care requires the (re)organization of care by standardizing the care process, leading to less variation and greater transparency in the performance of care. In contrast, iterative care needs a customized approach.
The impact of the design of the operating system on the organizational level is seldom discussed in health care. A few studies have focused on the effects of lean or six sigma projects (Mazzocato et al., 2010, Radnor et al., 2012), frequently on a single unit level (Andersen et al., 2014), and thereby neglect the degree of fit between process and the underlying system. Because a good fit will facilitate the creation of value in health care, we believe that the design of the operating system should be studied in more depth. We do this in the context of sequential care, because the operating system of such processes is much better described than in the context of iterative care.
This study aims to assess (1) differences in the enrolment of sequential care processes; (2) whether sequential care processes with fully compatible operating systems perform better than sequential care processes not fully compatible with their operating system; and (3) the causes of variation in sequential care processes.
This study builds further on the insights developed in previous research in the field of Operations Management (OM) that explores how, in the manufacturing and service sectors, the design of the operating system should be aligned with the nature of the product or service (Hayes and Wheelwright, 1979, Schmenner, 1986, Schmenner, 2004). Although the importance of achieving a fit is implicit in almost every OM study, the literature has paid limited attention to actually aligning the care processes and the underlying design of the operating system to the nature of care.
This paper is structured as follows: first, an overview of the literature is given and the evaluative framework is described. Second, the research methodology is outlined. Third, the
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findings are presented and interpreted. Finally, conclusions are drawn, followed by practical implications, research limitations, and avenues for further research.
2. FRAMEWORK
2.1 Theoretical framework
Health care is a complex, multiproduct environment where services are often highly variable and care is customized to individual patient needs (Bohmer, 2009, Christensen et al., 2009). In addition, the level of uncertainty in health care indicates that the care processes differ according to the nature of both illness and care (Christensen et al., 2009, Bohmer, 2009). We can distinguish two ways of problem solving: (1) by applying preformed, pretested solution to a understood problem, and (2) by constructing a unique solution to a less well-characterized problem. Both ways are very different: the former is a sequence of well specified steps and the latter is an iterative process of trial and error with multiple feedback loops. Health care professionals are tasked with providing these two very different types of care (Bohmer, 2009). From an operations point of view, such processes require different operating systems and should be organized in separate ways (Bohmer, 2009, Bohmer, 2005, Christensen et al., 2009, Lillrank and Liukko, 2004, van Merode et al., 2004). Yet the way today’s hospitals organize their care processes is not always in line with the nature of illness and care; nowadays the majority still use a one-size-fits-all approach to treat patients with different needs. It is clear that this approach, referred to as ‘the full-service model’ (Porter and Teisberg, 2006) cannot meet the variety of needs of patients in a qualitative, cost-effective way. In this study, we build further on the insight that the design of the care process and the underlying operating system should be in line with the nature of illness and care—a view that is supported throughout the OM literature (Bohmer, 2005, Bohmer, 2009, Christensen et al., 2009, Lillrank and Liukko, 2004).
2.1.1 The design of the care process
Processes are the way an organization gets things done, how it implements its business strategy, how it makes and delivers its products, and how it meets its objectives. Processes should be planned, and require resources, skills, and management (Slack et al., 2009).
For optimal care delivery, the organizational structure and care process should be designed to promote quality and efficiency. The design must take the characteristics of the care process into account. It is also essential to understand the nature of what is being managed (Bohmer,