Nursing a Fortune

In healthcare services, customer satisfaction means improved market shares and higher revenues

Few services affect the lives of people as directly and personally as those offered by healthcare professionals. Quality determines how successfully we prevent and treat physical and mental illness - the key concerns affecting the lives and well-being of our patients and their families.

What is quality? There are many short definitions of quality, including “fitness for use”, “meeting customer expectations, and “doing the right things right”. Any useful definition of quality must incorporate these two dimensions: Product features (product includes both goods and services) and freedom from deficiencies.

In today’s competitive environment, quality has a direct impact on organizational success. In its study of hundreds of thriving organizations, the Juran Institute has identified the practices most characteristic of a quality environment.

In healthcare services, product features could include private hospital bills, short-stay surgery, gourmet menu options for patients, “Nurse-serve” medication cabinets located outside each patient room, and so on. Product deficiencies would include factors like delays in admission, overcharging for supplier received, late starts for surgery, meals delivered cold.

Well-designed goods and services create customer satisfaction because they provide the features or characteristics customers need. Customer satisfaction is a high priority for any organization because customers continue to use the goods and services that meet their needs.

The better an organization meets customer needs by providing the right combination of desirable features, the higher its revenue is likely to be. This happens because the organization will attract more customers. At the same time, providing more features will usually cost more.

Products with deficiencies create customer dissatisfaction. They are also costly to an organization because mistakes must be identified and corrected, and the customer must be appeased. What is more, the original work is wasted. All these costs can be trimmed when quality is improved by reducing deficiencies.

Who are the customers? Customers are all those affected by our work, thus they ultimately define quality for us. It is helpful to look at customers from two perspectives: External customers are those people outside of our organization whom we affect, ie, patients. And also physicians who are not in the organization, third-party payers, etc. Internal customers are those within the organization for whom we supply goods and services. Satisfying our external customers requires that we also satisfy our internal customers.

Not long ago, the concept of quality simply meant the absence of defects from a manufactured physical good. In healthcare, quality tended to be limited to established standards for structure and process in clinical care. We now realize that this “limited quality” or “little Q” view restricts our ability to delight our customers. To succeed today, we need to expand our approach to one of “Total Quality” or “Big Q”.

If  all work processes were consistently performed correctly, there would be no need to check them. There would be no need to redo them, and customers would have no reason to complain. In most healthcare organizations, however, work does need to be checked. Much of it needs to be corrected, and considerable time and effort are spent reassuring dissatisfied customers. The cost involved are high, but they would disappear if everything were done perfectly the first time. For most organizations, cost associated with wasted efforts and correcting work are between 20 and 40 per cent to total operating expenses. In healthcare settings, these costs are found in all administrative and clinical areas.

Most costs for correcting work are invisible because the customary practice is to budget for waste. Budgets tend to be based on performance which includes all this work of correcting. With fewer deficiencies, not only are the customers happier but costs are also dramatically lower.

There are three categories of costs associated with poor quality. The accumulated results of many studies of costs for poor quality indicate these costs generally fall into three major categories: appraisal/inspection costs, internal failure costs and external failure costs.

Appraisal and inspection costs are associated with finding errors before customers are affected by them. For example, such costs can be incurred to review physician order requisitions before transmission to ancillary departments, check patient medication records against existing medication stock, inspect  purchased equipment/supplies, examine preoperative/pre-procedure checklists, proof-read medical record transcriptions, or audit patient charges prior to billing.

Internal failure costs are those for repairing, replacing, or discarding work in progress or completed work. The customer does not see the associated deficiency directly, but customer service may well be impaired. Internal failure costs might be incurred to replace discarded medication because of improper labelling of data and time; purchase extra lines and other suppliers because of hoarding to prevent shortages; make up for unplanned computer downtime wait for late input of admissions data, patient orders, lab results; re-design clinical processes that were poorly planned; perform lab tests on a STAT basis when there is no emergency; correct improper recording of narcotics used on a nursing unit; locate medical records that are unavailable when needed.

External failure costs are those that directly affect the customer and are the most expensive to correct. Besides remedial costs, external failures incur expenses to attempt to regain customer confidence. What is more, there is another price to pay for external failures that cannot be fully accounted for - the costs associated with losing dissatisfied customers.

Common external failure costs include the likes of treating post-operative wound infections, re-starting improperly taped patient IVs, returning a patient to surgery because of complications, performing unnecessary procedures or tests, correcting billing errors, making up for delays in surgical procedures in surgical procedures, appeasing customers dissatisfied because of excessive waiting time and processing patient or physician complaints.

Quality features drive an organization’s revenues, and reduced deficiencies lower costs. Both improve overall financial performance. Organizations that have initiated quality improvement efforts report significant results. According to J M Juran, founder and chairman emeritus of Juran Institute, the most visible features of these achievements is their stunning magnitude. There are numerous cases in which, during a few years, the time to provide customer service has been reduced. Defect levels have been reduced, productivity has been doubled and costs have been cut by 50 per cent.

We should notice that the companies have made extensive gains beyond the measurable results. For example, as a by-product of making all these improvements, their personnel have become experienced at making improvements. Equally significant for healthcare professionals are studies of clinical outcomes in hospitals. These results were detailed in an article by Gregory S Binns and John F Early in Juran  Report, Number 10, Autumn, 1989 entitled “Hospital Care: Frontiers in Managing Quality”. The bottomline: improving quality increased both market share and financial performance.