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Chapter 2. History of Performance Improvement
Daniel B. McLaughlinJulie M. Hays
Healthcare Operations Management
Copyright 2008 Health Administration Press. All rights reserved. 2-2
Chapter 2History of Performance Improvement
• Knowledge Based Management (KBM)• Scientific Management
- Mass Production- Frederick Taylor- Frank and Lillian Gilbreth
• Quality- Quality Gurus
• TQM, CQI, Six Sigma• ISO 9000, Baldrige Award• Lean• Service Typologies
Copyright 2008 Health Administration Press. All rights reserved. 2-3
Operations Management
• What is operations management?
Operations management is the design, operation, and improvement of the processes and systems that create and deliver the organization’s products and services. The goal of operations management is to more effectively and efficiently produce and deliver the organization’s products and services.
Copyright 2008 Health Administration Press. All rights reserved. 2-4
Operations Management in Healthcare Organizations
• Cost and level of healthcare is increasing- 1987 11% of US economy for healthcare- 2004 15% of US economy
• Control costs
• Improve level of service
• Improve quality
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Systems View
Labor MaterialMachinesManagementCapital
Goods or Services
OUTPUTINPUTTransformation
Process
Feedback
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Knowledge Hierarchy
Importance
Learning
Information
Data
Knowledge
Understanding
Wisdom
Relationships
Patterns
Principles
Morals
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Mass Production
Two men use hammers on
Ford factory assembly line
Men work on Ford on assembly line and then drive away
Two men assembling car in
Ford factory
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Frederick Taylor
• The Principles of Scientific Management (1911)
• “Wasted” human effort
• One best way
• Four principles- Standard work- Training- Cooperation- Planning
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Frank and Lillian Gilbreth
• One best way
• Time and motion studies
• Cheaper by the Dozen
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Project Management
• Gantt chart (early 1900s)
• Program Evaluation and Review Technique (1950s)- U.S. Navy- Beta distribution for task times
• Critical Path Method (1950s)- DuPont and Remington Rand
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Quality Gurus
• Walter Shewhart- SPC and PDCA
• W. Edwards Deming• Joseph M. Juran
Do
Act
Plan
Check
PDCA Cycle
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W. Edwards Deming
• Father of the quality revolution
• 1970s energy crisis
• Common cause versus special variation
• 14 points
• System of profound knowledge- Appreciation for a system- Knowledge about variation- Theory of knowledge- Knowledge of psychology
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Joseph M. Juran
• Quality trilogy- Quality planning- Control- Improvement
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TQM (CQI) → Six Sigma
• TQM less codified than Six Sigma
• Based on the teachings of Shewhart, Deming, Juran
• Top management support and leadership
• Continuous improvement
• DMAIC, PDCA
• Six Sigma goal of 3.4 DPMO
Copyright 2008 Health Administration Press. All rights reserved. 2-15
Quality Certification and Awards
• ISO 9000- To be certified, an organization must
demonstrate compliance with the standards- Standards are concerned with the processes of
insuring quality
• Baldrige Award- Based on organizational excellence in seven
categories- Dissemination of best practices- 2005 winners
Copyright 2008 Health Administration Press. All rights reserved. 2-16
JIT → Lean → Agile
• Just In Time (JIT)- Inventory management strategy aimed at
reducing inventory
• Lean- Philosophy of eliminating waste
• Agile- Ability to respond quickly to changing conditions
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Service Process Matrix
Adapted from Schmenner, R. W. 2004. "Service Businesses and Productivity." Decision Sciences 35 (3): 333–347.
Degree of VariationCustomer Interaction and Service Customization
Service factory
Rel
ativ
e T
hrou
ghpu
t T
ime Low
LowHigh
High
Service shop
Mass serviceProfessional service
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Supply Chain Management
Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. It also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies.
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Important Events in Performance Improvement
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Performance Improvement
Improve the quality, safety, efficiency, and effectiveness of healthcare using knowledge-based tools, techniques, and programs for system improvement.
