How do we achieve service excellence?

As a consultant and anesthesiologist, frequently I am asked to assist hospitals in evaluating their perioperative services.

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They recognize that perioperative services are a main driver of hospital profitability, and that surgeons, as key customers of these services, have choices as to where to bring their business.

They also understand that perioperative resources are limited. Shortages and competition for operating room nurses, technicians, anesthesiologists, and certified registered nurse anesthetists have not only driven up the cost of providing service, but have limited when and to what degree service can be provided.

Administrators can push their operating room (OR) personnel hard to accommodate the surgeons, but risk losing those personnel to competitors. Likewise, they can accommodate the OR personnel by limiting the number of OR cases and times they may be posted, but then risk losing cases and surgical volume to competitors due to disgruntled surgeons.

What can they do to ensure service excellence, while meeting the needs of both the surgeons and OR personnel?

Francs Frei of Harvard Business School has argued that the success or failure of a service business depends on how well it manages and balances four elements:

* The service offering

* Funding mechanism to provide that service

* Employee management system

* Customer management system. (1)

How do these four elements come into play when we look at perioperative services?

The first and most fundamental element is to determine what you plan to offer to your surgeons. The worst mistake is to try to offer excellence in everything to everybody.

Take for example, two well-known companies, Wal-Mart and Nordstrom. Wal-Mart, offers low prices but little in the way of customer service or ambience. Nordstrom, on the other hand, offers comfortable. well-decorated facilities and excellent customer service, including personalized concierge service.

Wal-Mart doesn't try to offer the service of Nordstrom, yet neither does Nordstrom offer the pricing of Wal-Mart. Both have pricing and customer service to deal with, since each is a part of their business. However, rather than trying to provide excellence in both aspects, each decided to perform one aspect of their service exceptionally well, to the detriment of another aspect of their service offering.

The point is that service excellence can be defined as much as by what a business chooses not do well. as what they choose to excel at. (1) Trying to excel in all aspects of service only will lead to mediocrity across many aspects of your service. This is a lesson that many hospital administrators have yet to recognize.

For example, most academic, tertiary care hospitals will never be able to provide service excellence in terms of efficiency in their operating rooms. The complex nature of their cases, and the mission to teach residents and fellows will decrease efficiency.

Once they accept they will not excel at efficiency, they can concentrate their efforts on providing service excellence for the elements of their service, which compare more favorably than community hospitals. They should concentrate their efforts and resources to providing perioperative service excellence for very sick, complex patients. Strategy is as much about what you decide not to do, as it is about what you choose to offer. (1)

Funding

The second element of service excellence involves funding. There is a cost to providing excellent service; however, unlike manufacturing and most other service industries, hospitals cannot simply increase the price of products or services to cover these costs. There are only two solutions to deal with the problem of funding your service excellence.

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The first is to accept that you will spend more now, but with the improvement in service excellence you will attract additional volume from your existing customers or provide an environment, that will draw customers from competitors.

The second and more difficult solution to achieve in practice is to create a "win-win" between value-added services and operational savings.

For example, a community hospital that does not offer cardiac, obstetrics, or trauma services decides its strategy to achieve service excellence will be based on offering excellence in efficiency, including on-start case times and rapid room turnovers. To achieve this service excellence they create turnover teams, that ensure that patients, rooms and equipment are available and prepared.

They also streamline the preoperative process by purchasing documentation software that prevents duplication of documentation requirements of registration personnel, nursing and anesthesiology. The efficiency excellence results in cases being started on time and completed earlier, which not only improves surgeon and patient satisfaction, but reduces the cost of having to use agency nurses and technicians by lowering staff turnover, as well as the cost of paying on call personnel to complete elective cases during late evenings and nights.

The result is the added cost of the documentation software and personnel on the turnover team is more than offset by the savings in agency personnel and overtime.

Employee management

The third element to achieving service excellence involves management of employees. Having decided on the elements of service upon which you want to provide excellence, your success or failure will depend on your employees. To be successful, two points must be addressed.

First, have you provided the resources, training and environment to allow employees to be able to achieve excellence?

Let's take the previous example of the community hospital that decides to concentrate its efforts on achieving service excellence in efficiency. How successful will that strategy be if an individual surgeon or group of surgeons are allowed to bypass all OR rules and processes designed to support efficiency, by going to the hospital administration and having demands immediately met, even when those demands are detrimental to achieving service excellence in efficiency? It won't be since the employees are set up to fail under that scenario.

The second question that must be addressed is whether you have developed appropriate incentives to allow employees to be motivated to achieve excellence? (1)

It is not unusual for individuals working in perioperative areas to work beyond what is required and often what is paid for to do "what is right" to provide better care to patients. However, if your ability to provide service routinely depends on daily heroics by your perioperative staff, your employees will not be motivated to achieve excellence.

Self-sacrifice is not sustainable. Many organizations provide monetary incentives to motivate their employees to achieve excellence. The mistake they make, however, is that they tie incentives to factors that are not under the direct control of the employees.

For example, the hospital administration may offer a bonus to employees in perioperative services if case volume exceeds a predetermined target. Yet, how much direct control, if any, do nurses, surgical technicians, or housekeepers have over case volume?

The answer is none. Therefore, it makes no sense to tie an incentive to factors they cannot control. Surgical case volume is influenced by many factors beyond service excellence. How long will employees continue to be motivated to achieve service excellence, if regardless of their efforts, some arbitrary case volume target is not achieved?

Customer management

The final element to consider in achieving service excellence involves the management of your customers. In the case of perioperative services, this involves management of your surgeons. Service-oriented businesses cannot play by the same rules as product-oriented businesses.

Operations managers in manufacturing industries focus on eliminating variability, since greater variability in production invariably leads to a decline in quality. The same is not true for services. Customers of service industries introduce variability on a daily basis, since they are an integral component of the production process. (1)

Unlike manufacturing, you cannot eliminate all variability in service industries, since part of the customer experience and satisfaction is dependent upon how well the variability he or she introduces to your processes is accommodated. (2)

Surgeons may complain about a lack of consistency in operating room processes, yet they introduce tremendous variability to those very same processes. They want to operate when it is convenient for them. They want different instruments and equipment based on their personal preferences.

They also differ in their capabilities, which results in the same surgical procedure taking variable times to complete depending on the skill and experience of the surgeon. Recognizing, accepting, and managing variability is an integral component to managing your customers. In the case of surgeons, do you accommodate the variability they introduce and absorb the cost of that accommodation, or do you reduce the variability and risk losing them to competitors?

The answer is you need to manage the surgeons so you can achieve both within reason. For example, if you have surgeons who want to operate only late in the day after completing office hours, you may decide to partially accommodate them by extending your staffing one or two days each week.

In this way, the surgeons, as your customers, gain an accommodation they desire. Yet, you can reduce variability and manage the accommodation by setting the days of the extended hours, and by limiting the extended time to only those days.

Hospitals like to proclaim that they provide service excellence in their delivery of perioperative services. What is observed around the country seems to suggest otherwise. The solution to achieving true service excellence requires deciding what you are going to be excellent at, finding a way to pay for it, and balancing the needs of employees and customers.

References

(1.) Frei F. The Four Things a Service Business Must Get Right. Harrard Business Review. April 2008.

(2.) Frei F. Breaking the Trade-Off Between Efficiency and Service. Harvard Business Review. November 2006.

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David P. Tarantino, MD, MBA 

David P. Tarantino, MD, MBA, is CEO of The MD Consulting Group, LLC, and president of Lifebridge Anesthesia Associates, LLC, in Randallstown, Md. He can be reached at 410-521-2200 or [e-mail]