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Written Analysis and Communication

Individual Assignment No 2 Case Analysis Report on The Quality Improvement Customers Didnt Want

Submitted by Name: Ashish Agarwal Roll No: 121115 Section: A

Institute of Management, Nirma University August 14, 2012

Executive Summary

This report is about Quality Care, a staff based HMO, third key player in health care industry. It has a customer satisfaction rate of 86%. The other competitors, Health-Care One and MediCenters have implemented a computerized reception system. The company is facing a dilemma as any change might reduce its objectives of customer retention and may harm its brand image. The company can either computerize the reception system completely or may do it partially. It may also leverage the same by increasing the workforce or by increasing value added services to retain customers.

Situational Analysis
Quality Care is a staff model HMO [Exhibit 1]. It is third key player in the health care sector others being Health-Care One and MediCenters. It has around 3000 employees and serves around 200,000 members. Last year its revenue has been $450 million with profits of $8.1 million (profitability around 1.8%). Health-Care One, the market leader, is on a brink of creating a revolution in the healthcare industry by developing a computerized reception system. This new technology will require Quality Care to take some serious steps in order to protect its position and reputation among its existing members else it may face serious problems. This technology has yet been untried but it can be a potential game changer for healthcare industry. The treatment procedure is going to reach a new dimension. No more queues, intelligent systems that guides a patient to the required staff, increased personal attention to every patient, ease of access to information, simplified and improved processes for medical examination leading to accuracy in diagnosis and treatment. It will lead to completely satisfied members. The staff will be able to dedicate more time in interacting with the members. All monotonous work of data entry, blood pressure checks and report creation will be taken care of by the computer. It will improve productivity, up scale quality of service and reduce stress in staff allowing them to focus more on the work at hand. They will have more time to spend with the patients and improve upon their relationship with the patients and also ease follow up care. These systems provide a single point of access to high quality reports which also eases the work of insurance companies which require the medical history of the patient. Also many IT consulting industries will be benefited with new support projects. The future of healthcare is changing. Members are fickle and narrow minded. The new technology may catch on with them therefore Quality Care must change or it will lose its members who will eventually shift to other HMOs who provide them with better facilities. The question that Quality Care needs to ask is not whether but how should they change their operations and better serve the members. How it should adapt itself to changing competitors strategy and how to influence the wants of the members.

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Problem Definition
Short term: 1. Organizational and procedural change management. 2. High employee turnover 3. Quality Vs Cost. 4. Changing customer preferences Long term: 1. Maintain brand value. 2. Customer retention

Objectives
Short term: 1. Increase customer perceived value (cpv) among patients. 2. Reduce stress in staff. 3. Deliver superior service quality. 4. Achieve total customer satisfaction for existing members. 5. Minimize cost of operations. 6. Enhancing operational efficiency and effectiveness [Exhibit 4]. Long term: 1. Maintain and enhance brand image to become No.1 brand overtaking Health-Care One. 2. Maintain or increase market share. 3. Increase retention rate both in customer and staff

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Alternatives
The various alternatives which can be implemented are: 1. Complete implementation computerized reception system for all members. 2. Partial implementation computerized reception system. 3. Keep the traditional system and increase workforce 4. Keep the traditional system and provide more value added services.

Evaluation of Alternatives
1. It will lead to increased CPV[Exhibit 2], reduced stress by technological advancement leading to superior quality service, operational efficiency and effectiveness of staff. Quality assurance [Exhibit 3] leads to improved image of the organization which further leads to high retention rate both of customer and staff. It may lead to inconvenience to elderly members as they may not be as tech savvy also may create nervousness in some members who prefer humans to machines. Incorrect data entry may be a problem so may need monitoring. There is one time investment cost but in the long run advantages outweigh the investments. 2. It will lead to reducing the stress level of staffs by automating the manual processes like bill payments, report generations and also ensure operational efficiency and effectiveness. It will ensure increased interpersonal interaction leading to high CPV[Exhibit 2], high quality delivery from staff. However in the long run there is an uncertainty and a lot depends upon the other players and customer as their requirement changes. Also cost and quality will always be a tradeoff and we choose quality over cost. 3. It aims at reducing stress level of staffs by hiring and thus increasing staff member ratio (currently around 67) , may lead to increased operational efficiency and increased interpersonal interaction leading to superior quality service and high CPV. The overall cost increases as there are hiring and training costs and salaries to be paid out every month. In the long run due to changing customer preferences may lead to uncertainty. Increased workforce size may cause friction between one another leading to added problems. 4. It aims to provide customer satisfaction by increasing services (clubs) which will act as an added benefit with all the present services it provides. It will add to the stress of the employees leading to quality degradation, higher employee turnover which leads to increased cost of employee procurement as well as training. These problems may compound exponentially leading to defection of members, reduction in brand image, decreased operational efficiency and leading to slip in market share.

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Decision
The decision is Install the new system. Justification: Pros 1. Problem of increased employee turnover reduced due to reduction in stress. 2. More free time to staff so increased personal attention to members. 3. Technology advancement leading to increase in operational efficiency 4. Well poised to manage changing customer requirements. 5. Increased quality and CPV for members leading to brand building and retention Cons 1. Initial cost of investment 2. Uncertainty of customers preferences. The risk taken is warranted as pros outweigh the cons.

Action plan
1. Hire a consulting firm to install system 2. Improve on infrastructure. 3. Train employees. 4. Communicate the change to members and staff stating the advantages and disadvantages. 5. Provide training manuals to members.

Contingency Plan
1. Decide which systems to automate. 2. Procure required software and systems. 3. Train employees.
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Exhibit 1
Health Maintenance Organization ( HMO)
It is a medical firm funded under Public Health care Services Act 1973. It provides basic and long term health maintenance care to people who have enrolled through a network of hospitals, doctors and physician chosen from a panel of medical professionals. The members pay a period sum to the HMO on a prepaid basis and in turn receive services ranging from diagnostics, surgery, routine medical check up, medical advice. There are three kinds of HMO: 1. Staff model: The staffs are salaried professionals who can only examine patients of the HMO only. 2. Group model: The physicians are not salaried employees but are on contract basis. 3. Network model: The HMOs will contract from any no of groups of physicians.

For more information please log on to

http://en.wikipedia.org/wiki/Health_maintenance_organization

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Exhibit 2
Customer Perceived Value

Image source: www.google.com

The customer perceived value is the difference of total benefits received out of a product or service to the costs incurred to acquire it. The costs maybe monetary or non monetary in nature. In this case the time required for service, the energy spent and psychological costs are also taken into account along with the monetary (cash) paid. The benefits not only include product benefit but also service, experience, personnel as in staff interaction.

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Exhibit 3
Quality Assurance
Wikipedia defines quality assurance as Quality assurance (QA) refers to the planned and systematic activities implemented in a quality system so that quality requirements for a product or service will be fulfilled. Quality Assurance is not the quality itself but is in a way makes a customer assured that the quality provided will be good. For example: If you go for a travel and you see a AC bus clean and in good shape you can be rest assured that your journey will be comfortable. On the contrary if you see a normal bus which is old you will have a feeling that its going to be a bumpy ride ahead. This is basically in the minds of the customer and is a perception. They generally see the external factors and perceive the quality. In the hospital case if the hospital has a state of the art infrastructure with well maintained equipments in good shape and clean the customers are well assured they will be served well though it may not be the case.

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Exhibit 4
Operational Effectiveness and Efficiency
Effectiveness means doing the right things that create value for the company or for its customer. In an operational context effectiveness is said to mean doing right things. Efficiency means doing something at a lowest possible cost. In an operational context it means doing things right. There is always a tradeoff between efficiency and effectiveness and to maximize one we need to compromise other. For example: In a HMO being efficient means to have fewest possible counters serving largest possible patients. Being effective would mean minimizing the amount of time a customer needs to wait in line. We can clearly see that if we maximize efficiency the effectiveness goes for a toss and if we maximize effectiveness the efficiency is compromised. We need to strike a balance between these two parameters in order to better serve a customer.

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To Whom It May Concern:

I, Ashish Agarwal hereby declare that this assignment is my original work and is not copied from anyone/anywhere. If found similar with sources, I take complete responsibility of action taken thereof by WAC Team.

Signature Name: Ashish Agarwal Roll no: 121115 Section: A

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