Leadership and change management in hospitals

First of two parts

The changing health-care landscape

One of the most difficult industries to innovate is the health-care industry, in particular, the hospital industry. While the manufacturing industries and most services industries, like airline, hotel, restaurants and banking have reinvented themselves to provide better quality and services to their customers, hospital processes have not dramatically changed over the years as to impact overall patient satisfaction.

It is common and ironic to see out-of-date management practices mixed with state-of-the-art medical equipment and sophisticated information technologies. Service quality has lagged behind hardware and software quality in many hospitals.

Given the rapid changes in the hospital’s operating environment and stakeholders, change and innovation have become strategic in managing hospitals; in fact, key to their survival. New government regulations, including the impending malpractice law, the increase in health maintenance organizations (HMO) and capitated (fixed fee) patients, the high turnover of medical staff, particularly nurses, the current economic hardship that prompts more self-medication, and the increase in new hospitals in the country, are going to challenge traditional hospital practices and paradigms.

Hospitals stakeholders—patients, their employers, doctors, nurses and HMOs—have likewise become more demanding and have raised their expectations from hospitals. Meanwhile, operating costs—salaries, supplies and utilities—have continuously gone up. Addressing the need to provide better service with rising costs and regulations requires strategic thinking and solutions.

Need for long-term thinking

Unfortunately, long-term strategic planning is seldom done by hospitals. One excuse for lack of long-term thinking is the short-term, day-to-day firefighting nature of the business.

Hospitals are always engaged in a constant flurry of activities and admissions. It seems you cannot stop the clock in these 24/7 mills and ask strategic questions like: Are we still doing the right thing? Is there a much better way or different way of doing things? Are we still moving in the right direction? Should we change gears and our heading?

Paradoxically, there seems to be no change, but only constancy and complacency amid the flurry of activities and people milling around in many hospitals. Hospitals are essentially repair and restoration facilities—most go there because there is already something wrong with them, either to have something removed from or fixed in their bodies.

Thus hospitals, by nature and by necessity, have become reactive and diagnostic (after-the-fact) in their medical and clinical processes. The problem arises when this same reactive attitude is applied to the hospital’s management, and service processes like planning, admission, discharge, housekeeping, billing, hiring, purchasing, medical records and ancillary services.

The consequence is short-term firefighting, constant problem-solving and finger-pointing that eventually affects the medical processes. While a hospital’s medical staff may be reactive in their medical processes, its management should be proactive and strategic in outlook and decision-making.

Perhaps the most significant result of the short-term thinking and firefighting stance of hospital managers is the all too familiar indifference to the plight of patients. Hospital processes are often characterized by bureaucratic delays and long agonizing waits for almost anything: waiting for the doctor, waiting for a room, waiting for the results, waiting for the bill and the elusive doctor’s professional fees. No wonder hospitals call their customers “patients,” since they need a lot of patience during their stay.

On top of the delays is the lack of transparency; patients are not informed adequately or not at all of the reasons for these delays. Many policies are anticustomer, like multiple handoffs—the point of sale or service is separate from the point of payment, resulting in multiple queuing by the same customer.

There is, likewise, a large room for improvement in quality in health care. While the manufacturing sector can boast of very high quality levels of 200 defects per million (dpm) or even 6 sigma quality (3 dpm), mistakes in hospitals still range from 60,000 to 300,000 per million opportunities.

Like medical and medication errors, hospital infection is also high. A Fortune article, “The Killer Bug,” cited hospital infection as the unofficial No. 5 cause of death in the US in 1999. 90,000 died of it in that year, beating No. 6 killer diabetes, which claimed 68,000 lives. A large number of delays and errors in hospitals are truly unnecessary, avoidable and preventable.

Hospitals do not seem to realize that their customers are the most sensitive in the service industry. Hotel guests are just tired, restaurant customers are just hungry. These people could endure some degree of delays and bad service. But hospital customers are physically, psychologically and financially distressed upon arrival, and if they are welcomed by slow, uncaring and erroneous service, we have the proverbial case of “adding insult to injury.”

Some hospitals might rationalize their complacency as: “Patients are dying [figuratively and literally] to get into our hospital, why bother about service?”

Like the telephone application backlogs and year-long waits, the days of high hospital occupancy rates are numbered, as new players, technologies, and market behavior change the health-care playing field.

(To be concluded)

Prof. Rene T. Domingo, a consultant in hospital management, is the Sime Darby Professor for Manufacturing. He is on the core faculty of the Master in Business Management Program of the W.SyCip Graduate School of Business (WSGSB). He teaches operations management, total quality management (TQM), quantitative analysis, service delivery, management information systems and business process reengineering. He was the former program director of the Advanced Manufacturing Management Course. As a consultant to major local and Asian firms, Professor Domingo has conducted training seminars and workshops on productivity improvement, TQM, just-in-time production, world-class manufacturing, inventory management, cost reduction, bank service operations, management information systems, business process reengineering, and strategic planning.
E-mail comments to rtd@aim.edu or visit his web site: www.rtdonline.com

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The changing health-care landscape

One of the most difficult industries to innovate is the health-care industry, in particular, the hospital industry.

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