Relationship between expenditure in service quality improvement initiatives and profitability in healthcare

What is the relationship between expenditure in service quality in healthcare and profitability? A daunting question that arose in my mind which prompted me to explore various research studies based on this question. Quite a lot of data was found from various sources ranging from Mathews and Ketal (1992) showing negative relationship between expenditure on service quality and profitability to studies by Subramanian et al showing very strong positive relationship. A common factor arose from these studies is that variables other than service quality improvement such as pricing, distribution, marketing and advertisement influence profits more than expenditure on service quality improvements like TQM. Interestingly there is striking evidence that expenditure on service quality benefits cannot be experienced short term and accumulate overtime making them less amenable to detection. The literature review also brought to my attention that mere spending in service quality does not actually lead to profits and the relationship between expenditure on service quality and profitability is neither straightforward nor simple. When we think of investing in improvement of service quality the right variable needs to identified and invested upon. It is however evident that the aforementioned service quality benefits accumulated overtime is what healthcare needs now to stay in the business and to increase the market share continuously. Hence expenditure in variables such as pricing distribution, competition, marketing, advertisement, etc should be considered as a short term investment to create a sudden change and expenditure in service quality should be considered as a long term investment, which will benefit the organization in a long run and keep them in business in this ever changing and challenging world of healthcare.

Yours

Binu. Gopinathan

A new world - how do the exisiting healthcare providers sustain

With lots of new initiatives and projects, the healthcare organizations are facing a stiffer challenge to maintain and to increase the market share. New theories are developed, new organizational forms formulated, and all aims to tackle a single challenge: to improve the quality of care and reducing cost. For the existing providers to sustain in the market, the only realistic hope is by substantially improving care delivery by launching a revolution from within. It time for them to seriously think about redesign their service or what we call to do a service reengineering. They must refurbish themselves by revamping the organizational structure, their core clinical processes, management systems, and cultures supporting them so that they excel at performing three discrete tasks simultaneously: rigorously applying scientifically established best practices for diagnosing and treating diseases that are well understood; employing a trial-and-error process to deal with complicated or poorly understood conditions; and capturing and applying knowledge generated by day-to-day care. It should be noted that no single dominant design exists as each organization has its own unique structure, culture, and environment. More important than the specific designs are the four principles on which they are based: focus on the decisions, tasks, and workflows crucial to optimizing patient care; separate high- and low-variability care; reconfigure the supporting infrastructure and practices to match redesigned clinical processes; and design structure and processes to help organizations learn from their daily work. This post will follow with a deeper discussion of SLM's in healthcare. Yours Binu. Gopinathan

Management in Healthcare: Why good practice really matters

Hi All,

Please see the attached interesting research study jointly performed by McKinsey & Company, London School of Economics, Harvard University and lots of hospitals around the world.

http://worldmanagementsurvey.org/wp-content/images/2010/10/Management_in_Healthcare_Report_2010.pdf

Yours

Binu. Gopinathan

Healthcare Management Some Useful Article

Dear All,

I have been reading an article written by Dr. Bashar on hospital management. Though not very modern, but will give an insight into the basics of hospital management.

Have a look, the link below will take you to the article.

http://www.scribd.com/doc/10054257/Hospital-Management-Dr-Bashaar

Yours

Binu. Gopinathan