Fisher College of Business logo

Research Spotlight

Access to research in the Fisher College of Business’ Department of Management Sciences is a valuable part of your membership in the Center for Operational Excellence. Our faculty are unlocking doors to innovation that can keep you on the cutting edge of operational excellence.

Chasing Zero: Hospitals and the balance of clinical quality and patient experience

April 2012

Fisher College of Business professors Aravind Chandrasekaran and Kenneth Boyer are co-authors of new research that sheds light on hospitals’ efforts to keep in step with government mandates and reduce medical errors – namely that those strategies initially come at the expense of the patient experience.

The research, which Chandrasekaran conducted with Boyer and Management Sciences doctoral candidate Claire Senot, is online now and will appear in the journal Manufacturing & Service Operations Management.

We recently spoke with Chandrasekaran and Boyer about what the findings mean for the health-care sector and how that trade-off can be avoided.

Dr. Chandrasekaran (pictured left), you’ve said patients are often treated as commodities these days. Does that correlate to a push for quality guidelines over the past decade or do you see a different trigger point?

What we find is that sometimes hospitals mandate clinical quality guidelines to avoid federal penalties or sanctions, what we call  an “institutional effect.” In these circumstances, we may find that health-care providers are more focused on getting things done correctly and can sometimes trade off communicating and catering to individual patient needs. Our research also shows that if hospitals adopt clinical quality guidelines not just to abide by rules but to focus on improving patient experiences, very minimal tradeoff exists between clinical quality and patient experience.

This trade-off with the patient experience came as a surprise in this research. What was your initial hunch before seeing the results?

Although it was somewhat surprising to us, there is some theoretical reasoning behind this trade-off, or tension, that we find in other contexts such as innovation. In earlier research, we’ve found that innovative companies sometimes struggle to balance incremental innovation, which is focused on refinement and efficiencies, and radical innovation, which can introduce more variation and is riskier. This is referred as “productivity dilemma.” Our study used a similar theoretical lens to argue that sometimes clinical quality, which aims to reduce variation, can trade off with experiential quality, which can sometime promote variation.

Dr. Boyer (pictured right), You’ve said “What gets watched gets better” in reference to clinical quality. Why hasn’t the patient experience always been a metric in overall quality, something that “gets watched?”

The culture of medicine is very challenging. It’s very hierarchical, very scientific and somewhat phobic. A sizeable number of people die in front of your eyes, so it’s only natural to develop defense mechanisms that see patient death because of illness, not because of strains in the system or human error. The Center for Medicare and Medicaid Services next year will start tying reimbursements to patient experience in addition to clinical quality, and part of that stems from a belated recognition that there is “normal” variation – patients who will die even if they get “perfect” treatment – as well as an “assignable cause,” known in medicine as preventable errors. Quality and lean experts in the private sector routinely have worked with and developed an understanding of the difference between these two for the past several decades. In contrast, the idea of preventable errors in medicine is relatively new. It’s simultaneously comforting and scary, because more patients can be treated better and saved, but medical professionals need to be open in examining where things could and should be done differently.

Removing the veil covering this difference in clinical quality inevitably leads to the same exposure for patient experience. When healthcare providers can no longer pretend that clinical quality is near 100 percent, it isn’t as easy to justify patients having a poor experience because they got the “right medical treatment.” In other words, revealing that there are excellent opportunities for improving one dimension leads to a realization that the other can be too.

This tension between standard procedures and the nuances of individual care seems to be a far-reaching issue in the health-care field. Based on your research, how well has the sector progressed in finding that balance over the past decade?

Over the past decade, there has been tremendous improvement in the health-care field to balance dual goals of clinical quality and patient experience. For instance, exemplary hospitals such as Virginia Mason and ThedaCare are already doing this through patient centered health care delivery. Note also the push from CMS toward patient-centered care.

It seems a large driver of the gap between quality and satisfaction lies in communication between the provider and the patient. What complicates what sounds like such a simple solution? 

Several things play a role. First, health-care providers are increasingly compensated based on efficiency, or how many patients they see. While communicating with patients clearly is of critical importance, many patients often will communicate in a very inefficient manner, so it’s only natural for providers to seek to streamline and automate this interaction just as the retail sector has. Hospitals and health-care providers, however, are increasingly showing a willingness to experiment with new methods of communicating with patients, many of which are adapted from and based on methods in the private sector.

For example, the Cleveland Clinic “found out” a few years ago that patients did not like being woken in the middle of the night for testing, blood samples or other medically necessary procedures.  Providers can take for granted that patients understand their care must be the first consideration and that this involves waking up in the middle of the night.  The clinic used a technique learned from several private sector companies: Communicate with the customer up front about the need to do something unpleasant. For example, McDonald’s uses two windows for the drive-thru so customers can get the pain out of the way by paying first. They’re then much less likely to balk or leave. Similarly, the clinic found giving patients a pamphlet discussing the need for nighttime testing significantly improved their satisfaction scores.

 

Quality control goes abroad

September 2011

John Gray, an assistant professor of operations at Fisher, is the lead author of a new study that suggests drugs produced in offshore manufacturing plants – even those run by American manufacturers – pose a greater quality risk than those produced in the U.S. The study, featured in the November issue of the Journal of Operations Management, shows the difficulty of transferring world-class quality control to an offshore plant even under the best of conditions.

We spoke with Gray about the spark behind his research and what it means for companies implementing lean initiatives stateside and overseas.

COE: What motivated you to pursue this topic from a research standpoint?

John Gray: My motivations were both practical and theoretical. Practically, an overarching goal of my research is to understand the hard-to-measure, long-term effects of outsourcing and offshoring decisions. Quality risk was one such effect for which I felt there was limited rigorous theoretical and empirical work. Theoretically, the quality literature is deficient in an understanding of how contextual factors, including location and distance from headquarters, affect outcomes. Theory from other literature bases provides insights used in this study to develop our hypotheses.

 COE: Were you expecting cultural distance to play such a role in the results of the study?

JG: We did expect there to be a difference between onshore and offshore plants, but we did not originally expect cultural distance to be the only highly-plausible explanation. It is important to note that while we deem cultural distance to be the most likely explanation of our main result, there are other possible explanations outlined in the paper. Having said that, we did eliminate many plausible factors through control variables, including education level of the population, geographic distance and local industry-specific knowledge. Additionally, our setting eliminates many explanatory factors related to local institutions, as Puerto Rico is part of the U.S. And because we match plants from the same firm and with similar products, we eliminate firm-level differences as an explanation and reduce the likelihood that product-level differences are the cause of the result. 

COE: What can a company  in a pursuit of operational excellence learn from your work?

JG: Our study indicates that established plants of big U.S.-based pharmaceutical companies have not been able to implement a mindset of process compliance in their established offshore operations equal to that of their onshore operations. That indicates this risk is likely widespread across many industries and locations. This result may very well translate to other attempts to implement programs to achieve operational excellence, such as lean and six sigma. Of course, future research is needed to test that claim.

COE: Can that risk vary by industry?

JG: In some industries there is likely a limited quality risk in offshoring. These are industries with limited tacit production knowledge and infrequent planned or unplanned changes to processes and process instructions. In such settings, processes can be designed, translated and implemented once with little need for follow-up. Instructions can be documented and translated if necessary, with no need for face-to-face explanation. The process being stable (a lack of planned changes) and robust (a lack of unplanned changes) means that there is rarely tension on the shop floor between operating strictly in compliance with procedures and cost/delivery pressures, and therefore limited need for face-to-face monitoring and reinforcement. Processes with simple transformations – standard machining processes, for one - may meet these criteria.

 However, in industries with non-trivial levels of either of these factors, maintaining a low quality risk operation offshore may require more resources and energy than is demanded onshore because of the need to have face-to-face interaction to implement and/or maintain an organizational mindset of compliance. Across different cultures and languages, face-to-face interactions are known to be more challenging. Pharmaceutical production certainly is a situation with tacit production knowledge and changes both planned and unplanned.