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Managing a Hospital is No Child’s Play

Governments and administrations are breaking their heads to solve the conundrums presented by the healthcare delivery system. Elections in many countries across the world have healthcare as one of the crucial agenda items.

When Peter Drucker remarked, “Hospital is perhaps the most complicated enterprise ever created by mankind” – he couldn’t have been more correct. There are other businesses and there is healthcare delivery. Nowhere are the stakes as high in terms of human life and emotions as in healthcare services. The psychological association with hospitals is seldom a positive one as they are associated with pain, sorrow and sometimes even death.

The complexities in the business are many and growing with each passing day. Given below are some factors that make healthcare delivery a complicated business to be in:

  • No one is unilaterally responsible for consumer experience:

Everyone plays a part in serving the customer and one cannot pin point as to who is actually responsible for the over-all service delivery. For example, a surgeon would like to think that if the surgery was done well and was uneventful then the patient has received what he came for. However, the overall patient experience consists of a lot of other elements like the quality of food, nursing care, discharge process, etc over which the surgeon has no direct control. Each stakeholder in the care cycle can only do her or his part and is not in a position to influence the overall experience of the patient.
One bad moment at any of the numerous ‘touch-points’ will cast a shadow on the good work done by others. Unlike a restaurant or air-travel, which has fewer touch-points, a patient will visit the parking attendant, the reception desk, doctors, laboratory, radio-diagnostics, canteen and pharmacy in one visit.
To make matters worse, the management control is limited to the service delivery. The people who run and manage hospitals are usually dependent on these numerous departments to deliver the desired experience and results. This adds to the complexity.

  • Consumers are not equipped to judge the quality of service being provided:

How will a patient know during and after the surgery that the theatre in-charge had sterilised one instrument less for the surgery? As a result, the surgeon was not able to give his 100% skill to the surgery. How will an OPD patient come to know that if the doctor had prescribed another antibiotic, it would have been better for him?
Consumers judge the service quality through a very limited perspective. Mostly, the judgement is limited to the elements that a patient can either see, touch or feel. For instance, the ambience, the body language of the staff, the tone of voice used by the front office, will be the parameters for a patient to judge the quality of care being provided by a hospital.
Cold food served to a patient will sometimes outweigh the precision with which the surgery is done. The pain of bad service often outlives the post-operative surgery pain in the long run only because the patient cannot really assess the surgeon’s precision. An accurate diagnosis of a rare medical condition gets overlooked (even if temporarily), if the receptionist did not smile to the liking of the patient. The tangible factors tend to outweigh the non-tangible ones because the patients are not technologically equipped to evaluate the latter.

  • Healthcare delivery is a service that no one wants to buy:

Going to a hospital is not akin to going on a vacation or buying a new car. No one is looking forward to his or her next surgery. People go to the hospital not out of willingness but out of necessity. The tricky question for private healthcare providers is – ‘How do you make them willing to buy from you?’ The services of a private hospital are for general good of human beings and yet they are paid for. So, it becomes a complex contradiction when your objective is to make everyone healthy and yet you want people to come to you in sickness. Healthcare is one of the trickiest services to market.

  • The management of large variety of workforce makes things intricate:

From a highly-skilled neuro surgeon to a janitor, the cross-section of the work force in a hospital is huge. Unlike a software company or a law firm, where everyone is at a similar level in terms of skill and education, hospitals have a huge variety of workforce. The biggest challenge is to integrate the diversity and urge every member of the myriad workforce to work towards a common goal of customer satisfaction. The system has to work like a well-oiled machine in spite of all variance, which is not an easy thing to ensure.

  • Decider, user and payer may not be the same people:

Consider this – An old man going for his prostate surgery may not be paying for it himself. His son may pay for it. However, the son is not the one who decides which hospital the old man will go to. That decision may be taken by the wife of the gentleman. Now put the insurance and third-party administrators (TPAs) in the picture, which pay up for many patients that a hospital treats today. In short, multiple people may be involved in the decision making and paying process and none of these people may be using the service. Sometimes, the ones paying for the treatment would not even know the patient personally. The hospital will get paid for the services rendered today after a few weeks. The system for claiming this payment involves complex data entry and coding. Sometimes, the hospital will not be paid the complete amount as there will be deductions from the insurance companies. This ends up in payor, provider and patient competing with each other to shift the burden of the cost on each other. Complex indeed!

  • Working capital is a perpetual challenge:

The expenses of a hospital happen before the hospital earns money. Salaries, electricity bills and other overheads are to be dispensed within “this month”. A big chunk of money nowadays comes after a couple of months or more. How does a hospital meet its day-to-day expenses? Working capital is something that hospitals have to keep a close watch on all the time. Another complicated twist to an already complicated scenario!

  • Technology keeps changing every passing year:

Equipment is expensive. Moreover, it gets upgraded before you have learnt how to use the existing version fully. Even if a cash-stripped hospital does not want to buy the new ‘white elephant’, it is forced to. The competitor may somehow manage to buy the new version and the hospital may lose out on the market share. Buying upgraded equipment even when you don’t need it sometimes becomes a necessary evil in order to survive the competition. Additionally, some equipment are an absolute must in order to complement the existing services. For example, a hospital may have to install an expensive MRI machine if it wants to hire and retain good neurologists.

  • It is both a labour and capital-intensive business:

Most businesses are either dependent on manpower or money. Healthcare delivery is dependent on both. It requires a huge amount of investment and a high number of skilled staff to set up hospitals and maintain them. The global shortage of skilled professionals is another challenge the business has to deal with. The demand for doctors and nursing staff is far more than the supply. Most countries have their independent systems to qualify and license doctors in order to allow them to practice. This sometimes deters medical professionals to relocate themselves to other countries.

In Summary:
The business of healthcare is evolving with every passing day. Healthcare providers are learning to cope with these complexities. The riddles may never be cracked fully, but incremental progress is being made. The pace of learning will perhaps determine which player will survive in the long term. What is required of the hospital promoters is their need to widen the horizons and question the norms all the time.

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