Business model innovation in hospitals

Master Thesis

Entrepreneurship and Innovation Summer Term 2015

Business Model Innovation in Hospitals

Name: Manuel Mayer (10828184) Submitted to: Prof. Dr. W. van der Aa Submission Date: 31 August 2015

1 Statement of Originality

This document is written by, Manuel Mayer, who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

2 Table of Contents

5.1! Specialization on services in hospitals ... 4!

5.2! Business Model Innovation ... 7!

5.3! Schmenner ... 8!

5.3.1! Schmenner 1986 ... 9!

5.3.2! Critique ... 10!

5.3.3! Schmenner 2004 ... 11!

5.3.4! Schmenner’s modified model ... 11!

5.4! Length of stay (LOS) in hospitals ... 13!

5.5! Frei’s Model ... 14!

5.5.1! The Service Offering ... 14!

5.5.2! The Funding Mechanism ... 15!

5.5.3! The Employee Management System ... 19!

5.5.4! The Customer Management System ... 19!

5.5.5! Developing a multi-focused firm ... 20!

5.5.6! Critique ... 21!

5.5.7! Positive aspects and limitations ... 23!

5.6! Theoretical Framework ... 25!

6! Data and Method ... 27!

6.1! Data processing ... 28!

6.2! First level of analysis ... 30!

6.3! The second level of analysis ... 31!

6.4! The third level of analysis ... 31!

6.5! Measurement indicators ... 31!

7! Results ... 45!

7.1! The Vinzenz Group (VG) ... 45!

7.2! Specialization of the Vinzenz Group ... 46!

7.4! Transformation of the St. Josef hospital ... 51!

7.4.1! The breast-care center in the SJK ... 52!

7.5! St. Josef KH according to Frei’s (2008) model ... 53!

7.5.1! The Service Offering ... 53!

7.5.2! Financing Mechanism ... 63!

7.5.3! Employee Management System ... 66!

7.5.4! Customer Management System ... 71!

7.5.5! Analysis of the second level ... 72!

8! Discussion ... 76!

8.1! Discussion of the first level of analysis ... 76!

8.2! Discussion of the second level of analysis ... 78!

8.2.1! The service offering ... 78!

8.2.2! The financing mechanism ... 80!

8.2.3! The employee management system ... 82!

8.2.4! The customer management system ... 84!

8.3! Discussion of the third level of analysis ... 85!

9! Conclusion ... 86! 10!References ... 88! 10.1! Internal Documents ... 93! 10.2! Table of figures ... 95! 11!Appendix ... 96! 11.1! Appendix 1 ... 96! 11.2! Appendix 2 ... 96! 11.3! Appendix 3 ... 97! 11.4! Appendix 4 ... 98! 11.5! Appendix 5 ... 98! 11.6! Appendix 6 ... 99! 11.7! Appendix 7 ... 102! 11.8! Appendix 8 ... 103! 11.9! Appendix 9 ... 105! 11.10! Appendix 10 ... 106! 11.10.1! Communication ... 106!

11.10.2! Training and education ... 107!

3 Management Summary

The Vinzenz Group (VG) is specializing its hospitals in Vienna and has developed a strategy to specialize each hospital in a specific field, whilst still ensuring the comprehensive care through the collaboration of the hospitals on the other hand.

This transformation process has implications on the business models of every hospital. One very important aspect is to understand which parts of the business model trigger the performance in what way. Accordingly, this research shows how the specialization affects the different parts of the business model.

The business model framework used for the analysis is based on four elements, namely, the service offering, financing mechanism, employee management system, and customer management system. As a metaphor one can see the BM as a tree. The service offerings are the leaves that show the outside stakeholder what it has to offer. The employee and customer management system can be seen as the branches that hold together the whole system. The employees are a crucial element to offer the service offering. The customer management system is the way patients are managed and the financing mechanism can be compared with the roots that nourish the system. All aspects interact with each other. The research showed that three out of four elements had positive effects of the specialization on their performance, namely, the service offering, financing mechanism, and customer management system. Solely the specialization of the employee management had a negative effect on the performance. One explanation was that in such a transformation process change management is necessary. Such a change process creates a lot of uncertainty, anxiety, and discomfort among the affected people and thus, needs much attention. Additionally, the employees criticize the leadership and organization. Organizational issues also create negative feedback among patients that impacted the

performance of the service offering. One possibility to tackle these aspects is to split up the process of care into its components and evaluate where patients need the most attention in terms of information, guidance, and assistance. This enables employees to excel and also has a positive impact on the service offering. If employees know on which aspects the patient puts the most emphasis on in what stage of the process, then the organization improves and patients experience a superior care in medical, non-medical, and organizational aspects. Moreover, the time needed in each step has implications on the efficiency and productivity. If one knows how much time is essential to satisfy the patient in the best way in each step, the process becomes leaner. Therefore, it affects the financing mechanism. Splitting up the process into its components enables to create cost-buckets. Furthermore, it is possible to evaluate where there lies potential to reduce the costs, save time, and become more efficient. Another challenge that derives from the specialization is the management of the multidisciplinary teams. The survey about the satisfaction of employees revealed that there has been a negative development in the aspects leadership and colleagues. Through the specialization, the management of the process and employees gets more important. One possible solution could be to implement another level of management in the multidisciplinary teams. The BGZ has the breast-care nurse that is in charge of managing the whole process and functions as an intermediary. Accordingly, organizational issues might be solved and thus, enhance the care experienced by patients. The customer management system also revealed positive effects of the specialization. The findings showed that additional offerings around the hospital, that complement the pre and post treatment phase, might trigger the performance of the customer management system.

This research showed that specialization has a positive effect on the performance of the business model. When specializing attention needs to be put on all four elements equally to use synergy effects and trigger the performance.

4 Introduction

This Master thesis will address solving a problem that is concerning a variety of healthcare systems around the world. Due to demographic changes and aging societies healthcare systems are constantly being challenged to cope with environmental changes (Pieters et al., 2010; Purbey et al., 2007). Moreover, globalization and upcoming new technologies put a great amount of economic pressure on healthcare institutions such as hospitals (Meyer Goldstein et al., 2002; Purbey et al., 2007; Capkun et al., 2012). Specialization on particular services is a promising tool and allows hospitals to obtain a competitive advantage and become more efficient (Kaplan and Porter, 2011; Porter, 2009; Hwang and Christensen, 2007; Holt, 2014; Herzlinger, 2006; Czypionka et al., 2012; Capkun et al. 2012).

Several studies looked at the effects of specialization in hospitals (Pieters et al., 2010; Huckman and Zinner, 2008; Capkun et al., 2012) and argued that the business model of hospitals has to change in order to stay competitive and increase the efficiency (Amit and Zott, 2012; Chesbrough, 2010; Johnson et al., 2008; Hwang and Christensen, 2007; Tersago and Visnjic, 2011). The study of Barro et al. (2006) revealed that specialized hospitals outperform non-specialized ones for several reasons, such as economies of scale, learning curve effects and favorable patient selection. Additionally, the high volume of treatments in specialized hospitals enables to prevent deaths by 67 percent (Porter and Lee, 2013) and increases the output (Porter, 2009). However, there has not been a study yet, that looked at the effects of specialization on the different parts of the business model.

The aim of this research is to analyze how the specialization on particular services in hospitals affects the performance of the parts of the business model. Thus, the according research question for this Master thesis will be the following:

How does the specialization of hospitals affect the performance of the different parts of the business model?

The research was done in cooperation with the Vinzenz Group (VG) in Austria. This organization is currently specializing all hospitals in the eastern region of Austria. The analysis will be done on three levels. The first will show how the specialization of the VG east affects the hospitals. The second will look at how the specialization affects the parts of the business model of the St. Josef hospital. The third level of analysis will look at the breast-care center in the St. Josef hospital in order to get a deeper understanding of how the BM was affected by the specialization. The research was done with interviews, studying internal documents, and getting a variety of data provided by the VG.

The structure of this thesis starts with an illustration on what has been done in the field of specialization and business model innovation of hospitals. Followed by a description and critical analysis of the models used for this research. The theoretical framework and the data and method section show how the research was done. Followed by the results of the thesis and the discussion. The conclusion gives the answer to the research question, and concludes this thesis. The following section looks at the literature used for this thesis.

5 Literature Review

The following section examines what the literature contributes to the specialization on services in hospitals and business model innovation. Moreover, the two models used for this research, namely Schmenner (2004) and Frei (2008) are described and critically analyzed.

Due to demographic changes and increasing economic pressure on healthcare systems different approaches of providing the care for society become necessary. One possibility of tackling this issue is to transform the care within hospitals. For the first time the differences of mortality rates between hospitals have been identified in 1957. Several years later, in 1973, the relationship between volume of surgery and clinical outcome was examined. It revealed that low-volume centers had higher complication rates. (Chowdhurry et al., 2007) In the recent years several scholars have argued that the specialization on services in hospital is a promising method in order to enhance performance. (Czypionka et al., 2012; Porter, 2009 and 2010; Holt, 2014, Capkun et al. 2012; Herzlinger, 2006) Based on Skinner’s (1974) “Focused Factory” model, several studies have been done in order to show the positive effects of specialization on hospitals. (Pieters et al., 2010; Huckman and Zinner, 2008; Capkun et al., 2012) Capkun et al. (2012) looked at 142 hospitals in Austria and showed that the specialization had positive effects on operational performance. However, this study only took length of stay of patients in hospitals into consideration, which is a rather generic approach of measuring performance. Chowdhurry et al. (2007) show that specialist surgeons outperform general surgeons in overall outcome in lower mortality rates, shorter hospital stay, and fewer complication rates. According to Skinner et al. (2003) there exist three possible explanations for the positive effects of specialist surgeons. First, through volume effects, a surgeon performs better due to high volume of a specific surgery. Second, the skills of a surgeon affect the performance. Thirdly, the more appropriate use of adjuvant therapies. Skinner et al. (2003) argue that the multidisciplinary teams in cancer center are an important factor of the specialization. The study shows that high-volume surgeons affect the long-term survival of patients significantly. Nonetheless, the volume of a hospital has an ambiguous effect on outcome. Only in retrospective studies a positive effect could be found. (Chowdhurry et al., 2007)

A study by Czypionka et al. (2012) looked at the Austrian healthcare system and analyzed the effects of collaboration of hospitals on cost and quality. The analysis is targeting three levels of processes in hospitals: the primary, secondary, and tertiary. The secondary level is regarding the care provided indirectly to the patient and tertiary has no direct affects on the patient. The part used for this Master Thesis is about the primary level that is focusing on collaboration in between hospitals. The study of Czypionka et al. (2012) reveals that there exists a negative correlation between the collaboration of hospitals and costs. Additionally, a positive correlation between the collaboration and the quality of care can be observed. Thus, if hospitals specialize on particular services and therefore, enable collaboration, positive effects such as economies of scale can be achieved. Additionally, bigger hospitals in Austria tend to have diseconomies of scale, whereas middle-sized hospitals obtain the highest economies of scale. Looking at the U.S. healthcare systems, scholars (Kaplan and Porter, 2011; Porter, 2009; Hwang and Christensen, 2007; Holt, 2014; Herzlinger, 2006) argue that increasing competition and rising costs are the main driver of restructuring and therefore, specializing hospitals. One example is the Shouldice Hospital Limited that is based in Toronto, Canada and is specialized in hernia surgeries. The specialization on hernia surgeries led to nationwide recognition as the leader in this field, higher efficiency, and better customer experience. (Heskett and Hallowell, 2005 and 2013) Nonetheless, Porter and Lee (2013) argue that specialization has “[…] traditionally been an unnatural act in health care.” (Porter and Lee, 2013, 25) In Austria the healthcare system is less competitive (Czypionka et al., 2012, 3) and due to the “Versorgungsauftrag” a solely focus on particular services is not entirely possible. (Capkun et al., 2012) The “Versorgungsauftrag” is a law (KAKuG) that forces the different provinces of Austria to ensure the care for all inhabitants. (gesundheit.gv.at) According to § 2a Abs. 1 lit a KAKuG each hospital has to provide at least a department for surgery and internal medicine. (Czypionka et al., 2012, 54) Kaplan and Porter (2011) argue that in terms of measuring the

costs and outcomes in such systems it leads to the dilemma, that effective and efficient provider are not rewarded and inefficient ones have no incentive to improve.

According to the previous section the term specialization can be understood as focus on particular diseases and treatments (Internal document). All aspects that are needed to undertake actions are specialized (Skinner et al., 1974) and nowadays healthcare providers are typically structured around them (Kaplan and Porter, 2011). Through the specialization and focus on diseases and treatments positive effects can be achieved for example in a breast cancer center (Skinner et al., 2003). The VG also refers to specialization as “Schwerpunktbildung” that can be translated as concentration on services. (Internal document) In the context of specialization, collaboration is understood as a mean to enable it. Through the collaboration between hospitals each one is able to specialize on certain services. In the case of the VG the collaboration is a necessity in order to ensure a comprehensive care among all hospitals, regardless of the specialization of each house. 5.2 Business Model Innovation

The main insights from the literature are that BMI is a crucial aspect for the competitiveness of organizations (Amit and Zott, 2012; Chesbrough, 2010; Johnson et al., 2008; Hwang and Christensen, 2007; Tersago and Visnjic, 2011). The healthcare industry is under a vast amount of pressure to rethink its BMs and enhance performance. The healthcare industry can be described as an industry that is greatly influenced by stakeholders (Porter, 2010) such as governments or doctors and thus, BMI appears to be challenging. Therefore, managerial implications for the development and implementation might ease these processes.

Johnson et al. (2008) stress the importance of business-model-innovation (BMI) and Chesbrough (2010) argues that the development of an innovative business model (BM) can

be as effective as an innovative new technology. Hwang and Christensen (2007) claim that over time hospitals tended to accumulate different disciplines and business models, which increase the possibility of being disrupted. According to Amit and Zott (2012) BMI can enable an organization to make use of underutilized sources of future value. Furthermore, the replication or imitation of an entire new activity system is more difficult than a single product or process. Thus, this can transform the BM-performance into a sustainable advantage.

Creating value for the customer and measuring the whole cycle of care are essential aspects when innovating the BM. (Porter, 2009 and 2010; Porter and Lee, 2013) Thus, value created needs to be defined around the customers and therefore, determine the rewards for all actors involved. (Porter, 2010) Porter (2010) argues that the challenge lies within the shift of focus from creating volume to creating value.

The models that will be used for this research are Frei’s (2008) and Schmenner’s (2004) model.

5.3 Schmenner

One part of the analysis will be done with the service process matrix (SPM) of Schmenner (1986; 2004) to illustrate how the VG east has developed over time. The first model published in 1986 is slightly different than the one of 2004. However, both try to show developments of services. According to Rosen and Karwan (1994) Schmenner’s model (1986) is one of the most “[…] noteworthy ones in the operations literature” and is a promising tool for analyzing services from an operations perspective. Schmenner’s service process matrix (1986) has been used in management textbooks as a framework for analyzing service operations and cited in various research papers (Verma, 2000). Furthermore, according to Verma (2000) the service process matrix is considered to be the

primary service classification scheme and it thus, appears to be a suitable tool for conducting this analysis.

5.3.1 Schmenner 1986

Schmenner (1986) developed a model that is divided into “Degree of Interaction & Customization” and “Degree of Labor Intensity” which can be of low or high degree respectively. The model shows four quadrants, namely: the service factory, service shop, mass service, and professional service.

Figure 1 Schmenner, 1986, 25

“Labor intensity is defined as the ratio of the labor cost of incurred to the value of the plant and equipment.” (Schmenner, 1986, 21). Whereas the degree of interaction and customization is more complicated according to Schmenner (1986). On the one hand it is about the degree of interaction between the customer and the service process. On the other hand it is about the extent of customization for the customer. Thus, whether it is a high value depends on both aspects. Schmenner (1986) argues that the efficiency is depended on the ratio of customer contact time to service creation. There is a negative correlation between the customer contact time and the efficiency of the service. Due to the objects of analysis for this paper the explanation of Schmenner’s (1986) service process matrix will

be focusing on the “service shop” in which hospitals are situated according to Schmenner (1986). He characterizes hospitals with a low degree of labor intensity relative to their high degree of plant and equipment and a high degree of interaction and customization due to treating every patient individually. The challenges managers face in hospitals are: firstly, to implement new technologies and secondly, that the demand of services is rather unstable and not always possible to plan in advance. The customization of services and costs are relatively high in hospitals, and managing staff is a crucial aspect. The degree of hierarchy is usually low among employees, which needs to be considered.

Schmenner (1986) states that hospitals in a traditional sense are set up to treat any disease and providing the necessary equipment and technology. However, a trend towards less customization and more standardization can be observed. Thus, it is able to obtain a higher degree of labor intensity and a lower capital-to-labor ratio.

5.3.2 Critique

The model of Schmenner (1986) argues that the shift of services is solely towards the diagonal, which seems plausible (Tinnilä and Vepsäläinen, 1995). Tinnilä and Vepsäläinen (1995) argue that Schmenner (1986) does not offer a theoretical explanation of the technological or economic drivers. Additionally, they state that e.g. for-profit hospitals shifting towards the diagonal enables to obtain a higher productivity. This was also acknowledged by Schmenner (2004), which led to the re-classification of his SPM. Another aspect mentioned (Tinnilä and Vepsäläinen, 1995) is that operational changes in hospitals, that lead to a higher customization or less interaction does not affect the labor intensity. Verma (2000) argues that the theoretical classification schemes lack ability to capture all differences among service firms. Therefore, the analysis of this paper also covers the part of the business model of a hospital with Frei’s model (2008). Additionally, Verma (2000) states that the classifications are of rather generic nature and only provide a general

guideline for groups. However, it can be a useful mean to focus thoughts and simplify complex relationships (Verma, 2000). Tinnilä and Vepsäläinen (1995) argue that regardless of Schmenner’s (1986) limitations, the model provides a “useful management tool in analysis of repositioning strategies.”

5.3.3 Schmenner 2004

Schmenner (2004) slightly modified his initial service process matrix from 1986. Schmenner (2004) states that productivity for any process such as labor and machines can be narrowed down to the “[…] speed by which materials flow trough the process […]” (Schmenner, 2004, 335). Accordingly, the “relative throughput time” becomes the mean to measure it. Furthermore, it indicates that waste in a process has a negative correlation with time. A higher relative throughput time or greater degree of waste slows down the flow of materials or information. This can appear in form of overproduction, waiting time, and unnecessary processing steps among others. Schmenner (2004) argues that the service process matrix (1986) was mainly focusing on control of firms over their services. However, the problem is more on the productivity side. Latter explains the over-performance of firms more appropriately than control. Accordingly, the service process matrix was modified.

5.3.4 Schmenner’s modified model

Schmenner (2004) changed the x-axis to “degree of variation” which measures the customization for and interaction with the customers. The y-axis was renamed to “relative throughput time”. The focus lies on the evaluation of the “critical interval (the throughput time) […] between 1) the moment when the service and any facilitating goods are available for use in the service encounter (where customer and service process meet) and 2) the moment when that service encounter is completed and the customer exits satisfied. “ (Schmenner, 2004, 339) Thus, the aim of this modified matrix is to measure the productivity rather than profitability of a firm. Accordingly, moving up the diagonal of the

matrix implies a higher productivity and not necessarily a superior profitability. Schmenner (2004) argues that in the quadrant of the service shop, where the hospitals are situated, the need of reducing the variation is pressing. Therefore, it is crucial to standardize the service, spread the overhead costs throughout more units, and gain greater control in the process. Accordingly, the hospital must move to the left and decrease its variation. Through this movement Schmenner (2004) expects the relative throughput time to drop and thus, going up the diagonal. Regardless of the changes of the x and y axis the challenges managers face in service firms remain the same.

Schmenner’s (2004) model focuses on the decrease of variation and thus standardization. Therefore, it is important to link it with specialization to clarify how this term can be understood. According to Ms. Gebhart (Interview: Gebhart) 80 percent of the patients can be treated in a standardized way and the remaining 20 percent need more individual care. Huckman and Zinner (2008) argue that focused and thus standardized organizations outperform non-focused ones. Simply, because they can handle more patients in less time in a better way. Specialization, however, does it to a fewer extend, nonetheless, there exist similarities between this two terms. Traditional hospitals “treat every patient” and thus are rather unfocused. Through specialization and a more narrow focus on particular patient groups it is possible to emphasize the service offering and increase the medical and administrative focus. (Capkun et al., 2012) Accordingly, Schmenner’s (2004) approach of standardization can be linked to the specialization of the hospitals in the VG.

Figure 2 Schmenner, 2004, 339

5.4 Length of stay (LOS) in hospitals

In order to analyze the VG with the model of Schmenner (2004) the relative throughput time will be linked to the average length of stay in hospitals. Several studies examine the effects on the LOS in hospitals. (Burns et al., 1991; Czplinski and Diers, 1998; Shi, 1996; Skinner et al., 2003; Chowdhurry et al., 2007, Capkun et al., 2012) McDermott and Stock (2007) argue that “most hospitals have identified ALOS (average length of stay) as a critical performance metric.” (McDermott and Stock, 2007, 1021) Accordingly, the LOS can be seen as a suitable indicator to evaluate the performance of hospitals. Several factors have an effect of the LOS. The hospital volume in general has a positive effect on the LOS, however, only in retrospective studies and thus, only to a certain extend. (Chowdhurry et al., 2007) Czaplinske et al. (1998) have found a positive correlation of hospital volume and mortality rates. Other scholars have found that the surgeon volume also has a positive effect on the LOS. (Chowdhurry et al., 2007; Shi, 1996; Burns et al., 1991) Contrary, Czaplinski et al. (1998) have found no direct effects of physicians-volume on LOS. However, another study reveals that specialized nurses have a positive effect on the LOS and mortality of patients. McDermott and Stock (2007) found an interesting correlation of LOS, salary of employees, and investments. The higher employees are paid, the more productive they get

with lower levels of capital investments. On the other hand, lower skilled and paid employees require more capital resources in order to be productive. Thus, “the impact of higher levels of capital investments appears to be greater for lower paid workers than for higher paid workers” (McDermott and Stock, 2007, 1035) According to Theurl and Winner (2006) the LKF system introduced in Austria in 1997 reduced the LOS in the Austrian hospitals.

Considering the wide recognition of LOS as a performance indicator among scholars, one can assume that the evaluation of the VG’s overall performance with this indicator is useful.

The following section will provide a description of Frei’s (2008) model, which will be used to analyze the BM of the SJK.

5.5 Frei’s Model

Frei (2008) argues that in order to take a product to the market a company has to make sure that the product is compelling and that it is able to produce it in a productive way. Her model consists of four interlocking elements, namely: service offering, funding mechanism, employee management system, and customer management system. However, she stresses the fact, that there is no “right way to combine the elements with each other”. (Frei, 2008) The first part is the service offering.

5.5.1 The Service Offering

The service offering is a crucial aspect of the service and must meet the needs and desires of an appealing group of customers. In order to offer an attractive service, a company must address the experience customers want to have. Additionally, it is crucial to know on which attributes the customers place the highest importance and where there exists the biggest competition. Frei (2008) argues that a company needs to decide on which aspects it wants to excel and on which ones to underperform. Therefore, it is essential to know on which

attributes the customers put importance on. Accordingly, customer segments in terms of attribute preferences need to be discovered. When this is achieved a new service offering for these customers is developed, in order to meet those needs and desires. Frei (2008) states that companies that excel at certain aspects charge up to 50% more as their competitors. However, excellence comes at a cost that leads us to the funding mechanism. In the Austrian healthcare system hospitals are paid according to the LKF-system (will be addressed in a latter section). This system provides a flat rate for treatments. Thus, for a better service a hospital cannot charge more than another. Accordingly, a better service can lead to a higher patient satisfaction, higher efficiency, and better processes, however, less to a higher price paid per patient. Consequently, the analysis will be made according to the following indicators.

Measurement indicators:

• patient satisfaction (ambulant and stationary), • evaluation of care documentation,

• ratio of decubitus • feedNET

5.5.2 The Funding Mechanism

The biggest challenge is to convince buyer about the premium performance of the offering. This involves a variety of elements of value. Tangible products are easier to sell in the sense that one can see and experience the difference of products. It is crucial to a service’s success to evaluate how people will pay for the excellence. Frei (2008) identifies four different forms of funding. First, charge the customer. Because of a superior offering the customer is willing to pay a higher price. However, this is the least creative and easiest way to fund a service. Second, the company can create a win-win situation between the operational savings and value-added services. Nevertheless, this funding mechanism is hard

to find and only provides a temporary competitive advantage because competitors can copy it. Frei (2008) argues that letting the customer benefit from a service, it can lead to an advantage for the company. In order to do that it is crucial to determine the biggest cost buckets and evaluate how to reduce costs on the one hand and create value on the other. A promising approach is to look at potential time reduction in a service, which leads to benefits of customers and can reduce costs. Third, spend now to save later as a funding possibility. Investments now will pay off by a reduction of customer’s needs in the future. Forth, one can let the customer do the work, however, a situation needs to be created where the customer prefers to do the work himself/herself. Which funding mechanism is used is dependent on each service individually.

The funding mechanism is an important aspect of the BM. However, in the Austrian healthcare system it is a rather complex construct. The analysis will be made according to financial indicators that can be linked to the efficiency of the SJK. The following section will explain the financing of the Austrian healthcare system and the LKF-point payment system.

5.5.2.1 The financing of the Austrian healthcare system

The financing system of the Austrian hospitals has a dualistic approach. The financing of the investments is separated from the financing of the operating costs. The owner of the hospitals is in charge of the financing. (Schützinger et al., 2007) The assignment of functions is separated between the central state, the provinces, the hospital owners, and the management of the hospital. The Austrian constitution determines that the state and the nine provinces are in charge of the hospital system. The state is responsible for the legislation and the provinces for its execution and the enforcement of the laws. Latter are accountable for ensuring the supply of the healthcare for all citizens. (Hagelbichler, 2010) The Austrian constitution determines that for the public hospitals “[…] the central state has

to define the hospital types, to fix the specialties offered by the different hospital types, to regulate the criteria for the non-profit and public status of hospitals and to prescribe minimal standards for the regional hospital capacities.” (Theurl and Winner, 2007, 376) In Austria the provinces own 60 percent of the hospitals, 20 percent the communities, and 12 percent religious institutions and orders. (Schützinger et al., 2007)

The financing system is divided into the origin and the use of means. The origin is regulated according to the article 15a B-VG (Bundesverfassungsgesetz) of the constitution. The main income source is the mandatory insurance of each Austrian citizen provided through the social security system. Additionally, the provinces and the communities contribute via tax money. According to Hagelbichler (2010) in the year 2005 44 % was financed by the social security system, 31 % by the provinces, 15 % by the state, and 10 % by the communities. Another source of financing is the private insurance of patients.

The article 15a (Bundesverfassungsgesetz) also determines the use of the financing generated through the channels mentioned earlier. The distribution of means is calculated according to a distribution key for the nine provinces. (Hagelbichler, 2010)

5.5.2.1.1 The(LKF,System(

Through the “Leistungsorientierte Krankenanstaltenfinanzierung” (LKF) (achievement-oriented financing of hospitals) introduced in 1997 the financing system of the hospitals in Austria changed. The provinces finance the hospitals via funds provided with money from the state and the provinces distributed by a distribution key. (Schützinger et al., 2007)

The LKF system has changed the Austrian hospital system in three major ways. First, the financing of the hospital investments changed. Accordingly, the central “hospital cooperation fund” was replaced by a fund on province basis and enabled to decentralize the system. Second, the payment system has changed from a per diem-based to a per

case-based one. Thirdly, the system transformed from a retrospective to a more prospective financing system. Under the per diem-based system the coverage of hospital deficits signified that, efficient hospitals were not covered sufficiently by the central “hospital cooperation fund”. The central state, the provinces, the local communities, and the hospital owners covered the deficits. Accordingly, from a hospital management perspective it was a retrospective approach and thus, “without” substantial financial risk. The per case-based system eliminated the possibility of financing hospital’s deficits outside of the province funds. Therefore, financial risk increased for the management of hospitals and the methods of financing deficits changed. (Theurl and Winner, 2007)

The LKF system is a categorization of diagnoses to calculate the costs of treatments. The LKF-points are calculated in accordance to the treatment deriving from costs such as personnel, operation-team, operation-costs, and room and board. The system is homogenous for the whole state and its nine provinces. However, through the “LKF-Steuerungsbereich” it is possible for provinces to make exceptions for certain hospitals. (Embacher, 2013) Schützinger et al. (2007) argue that there exists a difference between the provinces on how the hospitals are financed. Between 2005 and 2007 a flat rate approach was introduced to the LKF system. According to the categories of diagnoses for each treatment a flat rate payment is paid to the provider. (Embacher, 2013) According to Theurl and Winner (2007) the Austrian hospital system follows an integrated approach. Thus, the hospitals are part of the public budget and the employees of a hospital are considered to be government workforce. An illustration of the financing of the Austrian healthcare system can be found in the Appendix 4.

Measurement indicators:

• degree of capacity utilization,

• total number of tumor and plastic surgeries mamma,

• LKF-point/tumor surgery ratio, LKF-point/plastic surgery ratio The third part of a service is the employee management system.

5.5.3 The Employee Management System

Especially, services employees are considered to be highly important and significant for the organization’s success or failure. Accordingly, careful attention needs to be paid on recruiting and selection of employees, their training, job design, and performance management. Frei (2008) particularly states that a company needs to figure out if employees are able to reasonably achieve excellence and to know what motivates them. Additionally, it is essential to connect the customer service preferences with the employee management system. Giving employees the chance to excel while interacting with the customers is a promising approach. However, Frei (2008) argues that employees that are higher than average in aptitude and attitude are rather expensive. Nonetheless, it needs to be considered that there exists a trade-off between those attributes and must be acknowledged.

Measurement indicators:

• HiSAM

• survey about the employee satisfaction

5.5.4 The Customer Management System

According to Frei (2008) the customer can be involved in the operational processes, which also influences the experience. Thus, employees and customers are both important for the value-creation process. Customer’s work is less expensive than employee’s. However, one needs to consider that they are not as easily trained as employees, which must be considered. Additionally, customers need to be motivated in a different way than

employees. One approach is through rewards and penalties, yet, this has to be implemented carefully.

The aspects a customer, and in this case the patient, is able to do him/herself are limited. The interviews revealed that patients do certain aspects themselves, however, due to the complexity of treating medical issues they remain restricted. Accordingly, in order to analyze the customer management system it becomes a restraining aspect if the focus is solely based on Frei’s (2008) characteristics. Thus, the analysis will address the role the customer plays during the care process.

Measurement indicators:

• Total number of participants in workshops • survey of the assigning doctors

5.5.5 Developing a multi-focused firm

Frei (2008) argues that implementing all four elements is crucial. Nonetheless, there is no best practice model because it depends on the interconnection of the elements rather than single ones. Additionally, it is important to notice that a company does not focus on delivering all things to all customers but specify their target group. However, it is possible to generate a multi-focus on services, which consists of a service model for each service individually. Thus, a company is able to offer multiple services with competitive models under its umbrella.

Frei (2008) states that a critical test to evaluate whether the company has assembled the right portfolio of models is to assess whether each service model is better off as a result of the others or not. If it is not, a decline of performance can be expected.

Multi-focused firms usually include several business functions such as finance, purchasing, IT, human resource, and executive training. Therefore, scale advantages can be generated

through pooled purchasing, access to credit, and cost benefits. However, economies of experience are harder to realize. The challenging aspect is to use the knowledge gained in one particular service and use it for the others. Accordingly, the essential aspect is to leverage experience across the service models through formalized processes and knowledge transfer. Formal best-practice models are: sharing, centralized dynamic employee training, and job-rotation of managers are promising tools according to Frei (2008).

Interestingly, Frei (2008) argues that directive and even autocratic leadership characterize successful multi-focused firms. Therefore, the influence of the top management appears to be important to influence subordinates. If this is not possible, line managers might overrule shared-service manager in moments of strategic distress.

5.5.6 Critique

Hertog et al. (2010) argue that “[…] frameworks for the strategic management of service innovation remain scarce.” (Hertog et al., 2010, 491) The following section provides a critical view on the four elements of the model.

5.5.6.1 The service offering

Frei’s (2008) service offering, as putting the customer in the focus of creating value, can be found to a similar extend throughout the literature (Hertog et al., 2010, Johnson et al., 2008; Hwang and Christensen, 2007; Adam, 2008) A variety of scholars argue that the focus on the customer is the essential aspect when changing a BM (Johnson et al., 2008; Porter, 2009 and 2010; Kaplan and Porter, 2011; Porter and Lee, 2013). Johnson et al. (2008) call it the customer value proposition that can also be found in the “Canvas Business Model” (Osterwalder, n.d.) as the starting point to redefine the BM. Porter (2009 and 2010) and in collaboration with Kaplan (2011) and Lee (2013) stress the fact that the patient needs to be in the center of healthcare. Kaiser Permanente (McCreary, 2010), Shouldice Hopsital (Heskett and Hallowell, 2005 and 2013) and the Mayo Clinic (LaRusso et al., 2015) are

examples of hospitals that use customer experience to boost performance and enhance the patient’s treatments.

A customer experience (CE) can be described as the reaction provoked “[…] by a set of interactions between a customer and a product, a company, or part of its organization […]” (Verhoef et al., 2009, 32). According to Verhoef et al. (2009) it can be described as a holistic construct that involves the cognitive, affective, emotional, social, and physical response to the company or organization. Johnston and Kong (2011) argue, that the CE is the personal interpretation of a service process and contains touch points that make a customer feel in a certain way. However, no two customers are able to have the same experience. Thus, when we talk about a CE we assume, that there exist numerous subjective feelings that Johnston and Kong (2011) narrow down to customer’s judgments that can be good, bad, or indifferent.

Berry et al. (2002) and Johnston and Kong (2011) specify two perspectives of services. According to Berry et al. (2002) the first category is about the actual functioning of the good or service which Johnston and Kong (2011) call the operational service quality. The second one is concerning the emotions that come along with the service or the good, such as the smell, sound, taste, etc. (Berry et al., 2002) and the perceived quality from customer (Johnston and Kong, 2011).

5.5.6.2 The funding mechanism

Frei’s (2008) funding mechanism can also be found in other literature (Amit and Zott, 2012; Johnson et al., 2008; Hertog et al., 2010) However, it is called differently such as revenue model (Hertog et al., 2010) or profit formula (Johnson et al, 2008).

The employee management system Johnson et al. (2008) subsume it under key resources and Hertog et al. (2010) under new delivery system: personnel, organization, and culture. Porter together with Kaplan (2011) and Lee (2013) argue that employees are a crucial aspect within the BM of the hospital. Especially, to establish better care for the patients it is essential to manage employees accordingly. (Porter and Lee, 2013) Porter and Lee (2013) stress the need of integrating different disciplines in order to improve the care. Additionally, it is important to create a cost measurement system for the care of patients that is more accurate than traditional ones. (Kaplan and Porter, 2011)

5.5.6.4 The customer management system

Hertog et al. (2010) and Porter (2009) stress the fact that involving the customers in the processes is important. Patients need to be responsible for their own health. (Porter, 2009)

5.5.7 Positive aspects and limitations

In order to create a well functioning BM it is crucial to determine what are the important aspects of each part to create the most value. Moreover it is essential to know how the parts can be linked with each other.

Frei’s (2008) model can be illustrated as a tree. The financing mechanism is the root that nourishes the whole system. The three other parts do not care about from where the resources come from but they need to be managed accordingly. Frei (2008) identified four different financing mechanisms to nourish the tree. The service offering on the other hand is the most visible aspect of the system. It is the most exposed component to the exterior and thus the most judged one. In that sense it is crucial for the competitiveness of an organization to carry the most attractive leaves to lure customers. The employee management system can be seen as the branches of the tree that enable the service offering. The customer management system is the interaction the customers have with the system and how they are involved in it.

This illustration is a very simplistic one of Frei’s (2008) model, however, it makes it possible to see the connection between the 4 interlocking elements. One positive aspect of this model is that it makes it possible to tackle the BM from different angles. If you change one aspect, let us assume the employee management system, it affects all other components of the system. The service offering will not appear as attractive to customers as before and also the financing mechanism has to change accordingly.

For this research the model had one crucial benefit. It enabled to see the problem from a more holistic point of view. Rather than only taking into account financial or medical aspects the model gave a framework to look beyond.

If you want to analyze e.g. the service offering one needs to take factors such as the quality of care, how patients feel during the process and are treated, and the actual offering into consideration. However, not all factors could be included. For example the intentional underperformance of certain aspects resulting in the over-performance of others is only applicable to a limited extend. Especially, the use of the term underperformance is problematic when talking about the care and treatments of sick patients. Nonetheless, the literature showed that focus is needed in healthcare and therefore, hospitals should specialize.

The financing mechanism as stated by Frei (2008) is useful to a limited extend. The financing of hospitals is rather complex and there exist differences among healthcare systems. However, it is a crucial aspect of the BM and needs proper attention. Without a well functioning financing system hospitals will not be able to provide good care.

The employee management system is very useful to analyze hospitals and gives a good overview of the things to look at in order to improve. Again, it shows that not only the

financial aspects of employees affect a BM, but also other aspects such as employee satisfaction or how employees are managed.

The least useful part of Frei’s (2008) model for hospitals is the customer management system. The degree to which patients are able to overtake steps of their treatment are limited. Nonetheless, aspects such as living a healthy lifestyle, and proactively taking measures to improve the pre and post treatment phase, can have an impact on the process. To conclude, Frei’s (2008) model is a useful tool to analyze the BM of hospitals, however, certain parts need to be used in a different way in order to be applicable.

5.6 Theoretical Framework

The generation of data was done on the one hand with internal documents of the Vinzenz Group (see in References, Internal Documents). On the other, five interviews were done with the General Manager Mr. Lampl and the head of strategy of the Vinzenz Group Ms. Gebhart. Furthermore, interviews were done with the General Manager of the St. Josef hospital Mr. Doering, the head of care Ms. Marcher, and the head of the breast-care center Dr. Schmidbauer. The Interviews with the Vinzenz Group were used to get a broad overview of the transformation within the Vinzenz Group and the interviews with the St. Josef hospital were used to get a deeper understanding about the transformation process of the breast-care center and the hospital itself.

Figure 3

The conceptual model illustrates that if a hospital is aiming for a specialization its BM has to change. The analysis will be done on three levels. First, the transformation process of the VG east will be analyzed to illustrate how the specialization affected the VG. Second, the SJK will be analyzed with the model of Frei (2008) in order to show how the business model has changed. The third level of analysis is the breast care center in the SJK that was introduced in 2008 and can be considered as an already finished specialization process. Czypionka et al. (2012) argue that through the specialization on services, hospitals are able to generate economies of scale, higher efficiency, and achieve a higher quality of care. Especially the cooperation between hospitals enables such opportunities. The Vinzenz Group (VG) is specializing its hospitals in Vienna and has developed a strategy to specialize each hospital in a specific field and ensure the comprehensive care through the collaboration of the hospitals. This strategy is called “Strategy 2020” (“Strategie 2020”) (Internal Document, 2015). The model of Schmenner (2004) will be used to show and illustrate this transformation within Vinzenz Group east in Austria. For the analysis with Schmenner’s (2004) model the average length of stay (LOS) is used. To get a deeper

Business Modell Specialization of Hospitals Performance Illustration of the transformation of the St. Josef hospital with Frei

‘s(2008) Model

Indicators:

Every part of St. Josef hospital will be analyzed with Frei’s (2008) model and evaluated according different indicators provided by the VG. To gain a deeper understanding Frei’s (2008) model will be used to analyze the BGZ.

• The service offering • Funding Mechanism

• Employee Management System • Patient Management System

understanding of the transformation process towards specialization the focus will be on the St. Josef hospital in Vienna. This hospital is currently being transformed and restructured to a hospital specialized on parents-child care and oncology. The process will be finished in 2018 and has impact on the four elements of Frei’s model (2008), namely, offering, financing mechanism, employee management system, and customer management system. During the analysis the focus will be on the transformation process that led to the development of a breast-care center in 2008. Throughout the analysis the aim is to generate a deeper understanding of the processes behind the transformation towards the specialization on a particular service. Frei’s (2008) model will be used in order to show how the different parts of the BM changed and which implication can be derived from that. To evaluate whether a part of the BM had a positive or negative impact on the performance several indicators provided by the VG will be used. These indicators will be discussed in the section Data and Method.

The aim of this research is to give managerial implications for the ongoing transformation process in the St. Josef hospital. The following section will provide an overview of the used measurement indicators, its sources and the critique.

6 Data and Method

The research of this Master Thesis is based on a mixed method. The main research is based on qualitative methods. A variety of internal documents (References; Internal Documents) such as Power Point presentations, memos, and reports have been studied and included in the analysis. Additionally, quality reports from the years 2012, 2013, and 2014 were used to measure several indicators. These quality reports are based on quantitative surveys done by the VG and the SJK in order to evaluate indicators such as the HiSAM, feedNET, patient satisfaction, employee satisfaction, and decubitus reports. Moreover, the “market

Markt- und Meinungsforschungsinstitut GesmbH & Co KG” made a survey about the satisfaction of employees for the VG. Especially, the satisfaction of patients is a recommended performance measurement indicator according to Beitel et al. (2013). In order to gain a deeper understanding of the processes within the VG and the SJK several interviews with key persons were undertaken. To evaluate the transformation on the level of the VG east, interviews with the head of the VG east (Mr. Lampl) and the head of strategy in the VG east (Ms. Gebhart) were conducted. In order to understand the process in the SJK, interviews with the head of the SJK (Mr. Doering) and the head of care (Ms. Marcher) were held. For the third level of analysis, the transformation process of the breast-care center one interview with the head (Dr. Schmidbauer) of the BGZ was done.

During the analysis several questions about developments came up that have been addressed and answered in follow up interviews (Appendix 6 and 7).

6.1 Data processing

In an initial meeting with Mr. Fuchs, head of quality management of the SJK, the data needed for this research had been discussed. Mr. Fuchs helped in selecting suitable indicators for the research and showed which data was available. The first set of data consisted of several documents: the Qualitätsberichte 2009-2014, illustration of the processes of the BGZ, Selbstbewertungsberichte, guidelines for the employee talks, construction project, and the description of the BCN. These documents were initially screened and coded. The next step was the analysis of the documents. Accordingly, the information was divided into data that was used for numerical and statistical analysis and descriptive information. Descriptive information/documents are considered information such as the Selbstbewertungsberichte that show how things are conducted in the VG and the SJK and do not reveal any numerical data that could be used for the statistical analysis. The numerical data was mainly found in the Qualitätsberichte 2009-2014. This data was

transferred into Microsoft Excel to show the developments of the different indicators over time. Additionally, several set of data were provided in Microsoft Excel Spreadsheets that had been prepared by the SJK. To show them several calculations and graphs were build that appear in the Result section. In the process of analysis the communication with Mr. Fuchs was characterized through questions about the data, how they were generated, whether they are suitable or not, and additional data needed. Other set of data such as the data of the BGZ was received in a later stage.

Initially the recommended process was to gather data from the breast-care center of the Barmherzige Schwestern hospital in Linz in order to gain a deeper understanding of the BGZ. The BGZ in the SJK has not been certified yet and thus, the BGZ in Linz was recommended as a best practice model that is similar to the BGZ of the SJK. After several weeks and mails the head of the BHS Linz informed me that they will not hand out the data needed. Accordingly, this caused the biggest limitation of this research because solely a few data could be used to analyze the third level of analysis.

To analyze the data sets they were put in context of the descriptive documents and compared with the information gathered through the interviews.

The interviews had different lengths from 25 minutes to 2 hours and revealed useful information. The aim of the interviews was on the one hand to generate new information about the processes and to find patterns on the other. Every interview was transcribed and later coded in NVIVO.

The numerical data was the most useful one. It was able to analyze them and show in graphs how they developed over time. Especially, the surveys about the satisfaction of patients and employees, and data about the surgeries in the BGZ were very helpful. Additionally, the interviews revealed deep insights of the transformation process and

important aspects about how to cope with such a situation. The descriptive data showed how things are conducted and which ones are important. However, it can be considered as slightly less useful than the other sets of data.

The analysis of this Master thesis is done on three levels.

6.2 First level of analysis

The first step of the analysis was to illustrate the effects of specialization on the VG east. Therefore, data about the average length of stay of five out of the seven hospitals in the VG east was used. The LOS of the hospital can be compared to Schmenner’s (2004) relative throughput time. Schmenner’s (2004) relative throughput time is the time between the moment the customer and the process meet the first time and the point he/she leaves it. Additionally, the degree of capacity utilization of these hospitals was analyzed in order to deepen the analysis. The degree of utilization of each hospital is used to illustrate the efficiency of the hospitals over time.

The data was provided by the VG in a Microsoft Excel spreadsheet and calculated and illustrated in form of graphs by the author of this Master Thesis. This information and data was used to analyze the transformation hence to Schmenner’s (2004) model. Additionally, information from the interviews with the head of the VG east (Mr. Lampl) and the head of strategy of the VG east (Ms. Gebhart) were included in the analysis.

The limitation of the first level of analysis is that only five out of the seven hospitals of the VG east are included in this research. Moreover, the LOS is only one indicator that can be used to illustrate the effects of a specialization in hospitals. Additionally, Schmenner (2004) uses the term standardization rather than specialization. Nonetheless, the link between these two terms is addressed in the Literature Review. In order to give an overall

understanding of the process and the vast use of this indicator in past studies, however, it can be seen as a significant factor.

6.3 The second level of analysis

The second level of analysis looks at the transformation of the SJK. In order to analyze the SJK the model of Frei (2008) is used. For each part of the BM several indicators have been identified to illustrate and analyze the process. These indicators will be further explained in the following sections (measurement indicators). Additionally, the interviews with the head of the SJK (Mr. Doering) and the head of care of the SJK (Ms. Marcher) were used to complement the findings.

6.4 The third level of analysis

The third level of analysis is the breast care center (BGZ) in the St. Josef hospital. This department was introduced in the year 2008. It is a specialization process that has already been implemented. Thus, an analysis of this process appears to be useful. This analysis includes an interview with the head of the BGZ (Dr. Schmidbauer) and data from the St. Josef hospital. Because the BGZ is not certified yet, the SJK recommended using the data from the already certified BGZ in the Barmherzige Schwestern hospital in Linz. This hospital has a detailed documentation of its processes, is certified and thus, offers the possibility to analyze it. The SJK argued that the processes of Linz are similar to the BGZ in the SJK and is therefore a suitable object of analysis. As mentioned in section 6.1 the data of the BGZ in Linz could not be used which signifies the major limitation of this research.

6.5 Measurement indicators

The following section provides the measurement indicators that have been used for the analysis of the second and the third level. They are divided into the four elements of Frei’s

(2008) model, which are illustrated in the first column. In the second column each indicator is described and explained why this indicator is significant for the analysis. The third column reveals the source of this indicator. All data have been provided by the SJK and the VG east. The data was received either in form of already evaluated reports or generic Microsoft Excel spreadsheets. In order to show the developments, the reports were analyzed by comparing the different years with each other and creating graphs in Microsoft Excel. Data that were provided in form of Microsoft Excel spreadsheets were calculated and illustrated in form of graphs. The third column shows the limitations and the critique of the measurement indicators. This column also reveals that future research is needed and that measurement indicators have limitations which need to be taken into consideration carefully.

Bus ine ss M ode l Innova tion i n H os pi ta ls 33 Indi ca tors S ourc e Cri tique ce O ffe ri ng S urve y pa tie nt s ati sfa cti on: - am bul ant (2009/ 10/ 12) - sta tiona ry (2009/ 10/ 11/ 13) S igni fic anc e: T hi s i ndi ca tor ena bl es to show how s ati sfi ed pa tie nt s are w ith the s ervi ce s and tre atm ent s the hos pi ta l of fe rs . T he re fore , a hi gh re le va nc e ca n be put on thi s i ndi ca tor. 1. A m bul ant (Q ua lit äts be ri cht 2014); am ong 667 pa tie nt s, re turn ra te 45% (2014) 60% (2010); sinc e 2014 the surve y t ool E va S ys is us ed. 2. S ta tiona ry (Q ua lit äts be ri cht 2013); am ong 1269 pa tie nt s, re turn ra te 44% Bot h surve ys w ere conduc te d i n t he w hol e V G A m bul ant : T he re turn ra te ha d be en sinki ng (60% i n 2010 t o 45% i n 2014) S ta tiona ry: T he re exi sts a di ffe re nc e be tw ee n the re turn ra te s am ong de pa rt m ent s. T he hi ghe st re turn ra te w as in the de p. gyne col ogy and surge ry 1. T he se tw o de p. als o ha d the hi ghe st sa tis fa cti on. T he le as t ra te of re turn w as in t he de p. i nt erna l a nd s urge ry 2. It is ha rd to eva lua te unde r w hi ch circ um sta nc es thi s s urve y took pl ac e a nd how bi as ed pa rt ic ipa nt s w ere .

Bus ine ss M ode l Innova tion i n H os pi ta ls 34 E va lua tion of the c are doc um ent ati on: D oc um ent ati on of c are (2012/ 13/ 14) E va lua tion of the ca re w ard round (2012/ 13/ 14) S igni fic anc e: T hi s indi ca tor of fe rs the pos sibi lit y to eva lua te the sa tis fa cti on of pa tie nt s w ith the ca re . T he re fore , the re le va nc e of thi s i ndi ca tor ca n be c ons ide re d hi gh. E spe cia lly, for the fut ure de ve lopm ent of the c are pe rs onne l. T hi s eva lua tion w as im pl em ent ed by the he ad of ca re in the f irs t qua rt er of 2011 in orde r to eva lua te the ca re w ard round. O n the one ha nd it eva lua te s how the ca re pe rs onne l w orks a nd on the ot he r how pa tie nt s expe ri enc e t he w ard round. S eve ra l indi ca tors a re not c ons ide re d to be s igni fic ant due to a low re le va nc e for em pl oye es (1, 2, 3, 14) in the “Q ua lit äts be ri cht 2014” . F or thi s a na lys is onl y the pe rc ent age of pos iti ve re spons e ha d be en inc lude d in the re se arc h. T hus , the pe rc ent age of e m pl oye es th at vot ed for pa rt ia lly ye s, and no, ha ve not be en inc lude d. Ra tio of de cubi tus : D ec ubi tus in t he S JK (2011 -2014) D ec ubi tus a t upt ake (2011 -2014) S igni fic anc e: T he S JK em pha siz es the im port anc e of thi s indi ca tor in the T he da ta w as ge ne ra te d by the “Q ua lit äts be ri cht 2012 -2014” . T he e va lua tion looks at the de cubi tus ra te of the cla ss ifi ca tions 2-4, O nl y ve ry fe w c as es of de cubi tus ha ppe n eve ry ye ar. T hi s m ea ns on the one ha nd tha t the c are of pa tie nt s is good, on the ot he r ha nd tha t thi s indi ca tor is onl y appl ic abl e f or a f ew c as es .

Bus ine ss M ode l Innova tion i n H os pi ta ls 35 “Q ua lit äts be ri cht 2012 -2014” . T hus , the signi fic anc e of thi s indi ca tor appe ars to be hi gh. exc ludi ng the c la ss ifi ca tion nr. 1. fe edN E T (2010 -2014) F ee dN E T is a port al for em pl oye es and sta ke hol de rs out side the hos pi ta ls to m ake com m ent s, com pl aint s, and gi ve pos iti ve fe edba ck a bout the S JK . S igni fic anc e: T hi s indi ca tor is re le va nt be ca us e it is im port ant to look at the fe edba ck tha t ha s be en gi ve n from di ffe re nt sta ke hol de r in orde r to eva lua te the pe rf orm anc e of the s ervi ce of fe ri ng. T he da ta is provi de d by the “Q ua lit äts be ri cht e 2012 -2014” It is not c le ar unde r w hi ch circ um sta nc es thi s tool is us ed. A ddi tiona lly, it is not cle ar how m any re port s a re c om ing from int erna l or ext erna l sta ke hol de rs . T hi s indi ca tor ca n be link ed to the se rvi ce of fe ri ng be ca us e it inc lude s se ve ra l as pe cts re ga rds the S O . ing M ec ha ni sm L engt h of s ta y (2010 -2014) S igni fic anc e: T he L O S is a n indi ca tor tha t i s T hi s da ta w as provi de d by the S JK in form of E xc el T he L O S of a pa tie nt c an ha ve s eve ra l indi ca tors . F urt he rm ore , as M r. K ößl er

Bus ine ss M ode l Innova tion i n H os pi ta ls 36 w ide ly us ed to m ea sure the pe rf orm anc e of hos pi ta ls, a s t he lit era ture s how s. Stat iona ry upt ake s (2010 -2014) D egre e of c apa cit y ut ili za tion (2010 -2014) S igni fic anc e: T he num be r of sta tiona ry upt ake s s how s how m any pa tie nt s a hos pi ta l is tre ati ng/ ye ar. T he de gre e of ca pa cit y ut ili za tion show s how e ffi cie nt a hos pi ta l i s w orki ng a nd m ana ge d. spre ads he ets . (A ppe ndi x 6) argue s the L O S doe s not ta ke int o cons ide ra tions the pa tie nt s tha t di d not s ta y ove r ni ght . H ow ev er, it is a m ea sure m ent indi ca tor tha t all ow s eva lua ting the e ffi cie nc y of a hos pi ta l. T he L O S is a n indi ca tor tha t c an be onl y lim ite dl y linke d to the fina nc ing m ec ha ni sm be ca us e it sol ely ha s an indi re ct im pa ct on fina nc ia l a spe cts of a hos pi ta l. H ow eve r, a short er L O S signi fie s m ore fre e ca pa cit y for the tre atm ent of ot he r pa tie nt s. A ddi tiona lly, the L K F sys te m is ba se d on fla t pa ym ent sys te m , w hi ch m ea ns tha t if a hos pi ta l ge ts pa ye d for a surge ry at m am m a and

Bus ine ss M ode l Innova tion i n H os pi ta ls 37 the pa tie nt ha s a low L O S , the n fina nc ia l ga ins c an be obt aine d. T he L O S indi ca tor coul d als o be li nke d to the CM S in the se ns e tha t if pa tie nt s ove rt ake s te ps of the ir pre and pos t-t re atm ent pha se the L O S c oul d be re duc ed. H ow eve r, it is ha rd to eva lua te to w hi ch ext end pa tie nt s re all y do suc h thi ngs a nd how thi s a ffe cts the L O S . T ot al N r. of tum or surge ry m am m a (2009 -2014) T ot al N r. of pl as tic surge ry at m am m a (2009 -2014) S igni fic anc e: T hrough thi s da ta it is a bl e to show how the surge ri es ha ve de ve lope d ove r T hi s da ta w as provi de d by the S JK in form of E xc el spre ads he ets . T he se indi ca tors onl y show the num be r of surge ri es a nd exc lude the e va lua tion of ot he r tre atm ent s suc h as m edi ca tion. A ddi tiona lly, the indi ca tor “tot al nr. of pl as tic surge ry at m am m a” is bi as ed by a hi gh num be r of re se cti ons in 2009 and