The integration of the focused factory in healthcare supply chains ‘Focus on Focus’

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The integration of the focused factory in healthcare supply chains

‘Focus on Focus’

Master’s thesis

Faculty of Economics and Business, University Groningen Supply Chain Management

Deadline: 20-06-2016 Supervisor: Dr. Ing. J. Drupsteen Second supervisor: Dr. M.J. Land

Words: 11,995 Thijs Reehuis

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Abstract:

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Acknowledgment

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1. Introduction

Hospital care is facing two opposing trends. On the one hand, the benefits of a more focused healthcare organization are discussed in literature (McLaughlin et al., 1995; Hyer, Wemmerlov & Morris, 2009) where meanwhile the increased need for supply chain integration is mentioned (Brennan, 1998; De Vries & Huijsman, 2011). These two concepts seem to conflict in the first instance because focus mostly means separating part of the activities and resources from the main organization. This creates a new entity with its own norms and values while integration is focusing on cooperation between departments or organizations. Literature from the manufacturing industry has shown the benefits of both concepts. While in the hospital setting very limited research has been conducted on this topic, the central theme in this research will be the integration of focus factories in the healthcare supply chain.

The advantages of focus or specialization are recognized by researchers and economists. The belief that the introduction of market forces into healthcare will result in the creation of focused factories is repeatedly mentioned. These focus factories are able to outcompete the traditional organizations (Herzlinger, 1997) by dedicating management attention, staff and equipment to only one specific treatment or patient group. This results in focused factories that are able to provide higher quality, lower costs and higher patient satisfaction in healthcare (Casalino et al., 2003). The concept of the focused factory is based on the notion that superior performance can be achieved when resources concentrate on accomplishing a limited set of activities instead of addressing different demands from internal and external sources (Pesch, 1996). Focus is described as the differentiation and selection of market segments and meeting the needs of those specific segments (McLaughlin et al, 1995, p. 1185). In the context of service operations there are different degrees in which healthcare organizations focus. The degree of focus encompasses the independency in which organizations organize their resources, planning and patients. The degree of focus is expressed in three configurations of focus factories, namely the focused hospital unit (FHU), the specialty hospital (SH) and the ambulatory surgical center (ASC) which in the Netherlands are known as ‘zelfstandige behandel centra’. These different kinds of focus factories not only differ in their degree of focus, but they will probably also differ in the degree of integration in the healthcare supply chain while for example the FHU is part of a larger hospital because they are located within the hospital or their focused factory finds his origin in the hospital. Less complex patients are often sent to these FHUs from the larger hospital. Meanwhile the ASCs are in general operating completely independently as they are mostly owned by physicians and hospitals have no share in these organizations.

The origin of the need for supply chain integration comes from the process reengineering literature (Hammer, 1996; Burgess, 1998). The intended goal of supply chain integration is creating and coordinating manufacturing processes in such a way that the competitors are hardly or not capable to copy them (Anderson & Katz, 1998). Integration of processes across functional boundaries is mentioned by Birou et al. (1998) as the key to competitive success. Whereas research in the manufacturing sector has shown the benefits of integration, this is to a much lower extent the case in healthcare research. With the growth of focus factories in the healthcare industry, research on the application of supply chain integration by organizations with different degrees of focus, would be an addition to existing literature. Especially with the development of technology, processes and information flows could be integrated. This integration could lead to a much more efficient work flow which is a benefit for the hospital but also for the patient who will receive a much smoother treatment process.

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6 the consensus among researchers and practitioners as to the importance of supply chain integration, empirical literature on the actual degree focus factories have integrated into the healthcare supply chain is scarce. Besides, the extent to which organizations actually want these focus factories to integrate in the supply chain is unknown. Hence, the following research question will be answered. How do different configurations of focus factories differ in the degree of supply chain integration? This paper is structured as follows. The next chapter provides a review of existing literature in the field of focus factories and the integration of these focus factories into the healthcare supply chain. The degree of focus will help in making a distinction between the different focus factories. In addition, the importance and degree of integration will be discussed. In the third chapter the research methodology it outlined, which describes the different methods for data gathering as well as for data analysis. The fourth chapter analyzes the collected data by conducting both within-case analysis and cross-case analysis. Thereafter, the discussion and conclusion section provides the interpretation of and reflection on the findings. Finally, the paper’s limitations and suggestions for further research are discussed.

2. Theoretical background

The theoretical foundation of this research will be described in this section. First, an overview is given on the concept of focus in healthcare after which the degree of focus will be discussed. The types of focus will be discussed after which the need for integration is mentioned. To further elaborate on integration the degree of integration is shortly introduced. The last section will elaborate on the expectations to what extent the different kinds of focus factories integrate.

2.1 Focus (factories) in healthcare

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2.2 Types of focus

The diversity of focus factories is mentioned above. There are different configurations of focus factories mentioned in literature which are divided by Bredenhof et al. (2010) into three types. The type of focus is indicated by a certain domain which says something about the product a focused factory offers, whereas the configuration of focus says something about how the focused factory is organized. First, the product domain is mentioned, in which the focused factory can be seen as a specialty-based focused factory. This means that these focus factories treat their patients for only one single specialty. Second, the process domain includes focus factories that aim at efficient delivery of specific types of treatments. Finally, the product-process domain considers procedure-based focus factories. These focus factories treat a well-defined group of patients with offering only one type of treatment.

2.2 Degree of focus

With a clear understanding of the degree of focus, a distinction can be made between different configurations of focus factories. In healthcare literature three configurations of focus factories are mentioned that differ in the degree of focus. First the focused hospital unit (FHU) mentioned by Hyer et al., (2009) can be seen as a plant-within-a-plant concept. These FHUs are specialized in specific treatments that are separated from the larger hospital but that are still located within the hospital. Herzlinger (2000) argued that treatments in general hospitals often suffer because doctors have to provide a variety of tasks and proceedings whereby doctors rarely talk to and discuss with each other. By separating a specific treatment more attention can be directed to this treatment. Second, the focus on supply of a limited set of healthcare service has resulted in specialty hospitals (Chukmaitov et al., 2008). Some general, mostly small hospitals, are shifting towards becoming a focused factory. Competition between the hospitals, because of the changing environment and regulations described in the research setting, has resulted in hospitals that only offer a limited amount of treatment because of cost considerations. The last type of focused factory is the so called ambulatory surgical center (ASC) which is approximately the same as the FHU regarding that it also focus on one specific treatment. However, ASCs are freestanding center’s which provide surgical and nonsurgical procedures that do not require an overnight stay, based on ambulatory basis. In general, these ASCs operate completely independent from hospitals. These ASCs are commonly owned or managed by physicians. The physicians desire to get more involved in management decisions, uninterrupted schedules and the possibility to improve the quality and efficiency resulting from specialization, can be seen as an important reason for the growth of ASCs (Mitchell, 2010).

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8 process steps within the cell gives maximum ownership and control (Hyer et al., 2002). The underlying idea of this perspective is the higher the similarity the more efficient the cell processes. From the last mentioned organizational perspective can be derived that a focused factory is an independent administrative unit with its own allocated resources, supply, planning and control. The focused factory is accountable for its own performance and improvement. The distinction is largely based on the independency of the focused factory.

Regarding the abovementioned distinction between types of focus factories and degree of focus the three configurations of focus factories can be ranked. The FHU is the least focused configuration type. This plant-within-a-plant is in itself focused on the treatments it is providing. However the FHU is part of a larger hospital that focuses on multiple product-market-process combinations. A FHU can be seen as the less focused factory in terms of independency as mentioned in the resource or spatial perspective of Hyer et al., (2009). The specialty hospitals are to a higher degree focused while they perform only a limited amount of treatments and services. In terms of the transformational perspective of Hyer et al., (2009), these specialty hospitals perform complete treatments with multiple processing steps on a ‘family’. The most focused factory is the ASC, which according to Heyer et al. (2009) is specified as a pure focused factory that is characterized by the organizational perspective. The ASC focuses on only one specific treatment (Mitchell, 2010)

2.4 Integration in healthcare

The healthcare sector has rapidly changed in the last decade. Increased competition, growing influence of patient associations and the necessity of more efficient and effective health service delivery has prompted many healthcare organizations to start projects regarding patient logistics, data interchange and vertical integration (Aptel & Pourjalali, 2001). Concerning more efficient and effective health services, healthcare organizations face similar problems as manufacturing companies. They have to deal with the highly utilized resources while they simultaneously have to deliver a high customer service level. Therefore it is not a surprise that within the area of patient logistics a strong emphasis is put on the improvement of performance by better integration into the healthcare supply chain (Brennan, 1998). Supply chain integration is the degree to which a manufacturer, or in case of this research the focused factory, strategically collaborates with its supply chain partners and collaboratively manages intra- and inter-organization processes. (Flynn, Huo & Zhao., 2010) The main goal of supply chain integration is to ease the flow of material, cash, resources and information by removing all boundaries regarding this goal (Nayor, Naim & Berry, 1999). Supply chain integration can be divided into three dimensions mentioned by Flynn et al., (2010) Customer and supplier integration is seen as external integration which is defined as the way companies work together with external partners to structure inter-organizational strategies, practices and processes into collaborative processes (Stank, Keller & Daugherty, 2001). This external integration can be both upstream as downstream. Next to this internal integration is the way organizations structure their own strategies, processes and practices (Kahn & Mentzeer, 1996).

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9 Integration and co-ordination of processes

Integration and co-ordination of information flows Integration and co-ordination of planning processes Table 1: Modes of integration (de Vries & Huisman, 2011) Integration and coordination of processes

A special interest in integrating processes has been taken in Workflow Management Systems. These systems are tools in automatization, streamlining and reengineering of processes (Anyanwu et al., 2003). These systems are especially applicable to simple processes which is not the case in healthcare where in general the processes are complex, large-scale and dynamic (Cardoso et al., 2002). Therefore the need for integrating and coordinating of processes has gained increased attention. Processes in the healthcare sector can be either referring to physical products like medical devises, health aids and pharmaceuticals as well as to the flow of patients. The general belief is that intensive integration and coordination between processes in the supply chain might lead to a better performance of this supply chain (de Vries & Huisman, 2011).

Integration and coordination of information flows

In both theory and practice it is widely recognized that integration of information flows throughout the supply chain will improve both the internal and external performance significantly (De Vries and & Huisman, 2011). A recent information flow practice is the implementation of the Electronic Patient Record System. The use of this kind of information technology is also usable in the areas of inventory control, procurement and material planning. Information technology is closely linked to the integration and coordination of processes and plays an important role herein (Harland & Caldwell, 2007). Equivalent to the integration and coordination of processes, the information technology in healthcare is related to both the physical products and the patient flow (Lowell and Celler, 1998). Information flow integration is mentioned as a critical success factor in the success of firms and networks (Patnayakauni et al., 2006)

Integration and co-ordination of planning processes

The high amount of stakeholders in healthcare supply practices asks for organizing and planning processes. Due to often a lack of cooperation, information, well-defined functions, knowledge about the use of available resources and the autonomy of departments planning and control in healthcare remains behind planning and control in manufacturing. (Hans et al., 2012). Especially when focus factories share resources the planning process is an important part of integration. In the manufacturing industry different planning systems are used like ERP, MRP and SAP systems. The planning function of healthcare processes refers to the daily activities that are needed to facilitate patients (Vissers et al., 2001). The most important planning activities in healthcare are the scheduling of patients, monitoring performance and daily adjustments (Peltokorpi, 2011).

2.5 Degree of integration

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10 (Germain & Iyer, 2006).From an operational perspectives these different ways of integration are covered by the integration modes of de Vries & Huisman (2011).

The degree of integration becomes a strategic issue when the need for shared operational activities is accepted in the organization. Many different researchers have examined the relationship between the degree of integration and performance. Empirical evidence supporting the idea that a higher level of integration with suppliers and customers will lead to higher potential benefits is growing (Zailani & Rajagopal, 2005; Prajogo & Olhager, 2012). However, the results from the study of Frohlich & Westbrook (2001) did not show a causal relationship between the arcs of integration and performance. The findings provide more evidence that integration into the supply chain differentiates performance. The study of Fabbe-Costes & Jahre (2008) confirms the results of Frohlich & Westbrook (2001). Their results also show that more supply chain integration (SCI) will not always improve performance. Because of the diversity of measures and definitions of SCI and performance, conclusions like ‘the more SCI the better the performance’, cannot be established. Despite the comment placed by Fabbe-Costes and Jahre (2008), they also mention that SCI in general can lead to higher performance.

2.6 Bringing focus and integration together

As mentioned in the introduction only a scarce amount of research has been conducted in the field of integrative practices of the different configurations of focus factories. Initially the concepts of focus and integration seem to be conflicting. Whereas focus is related to doing less things better (Skinner, 1974) and separate activities, integration is targeting on cooperation between departments or organizations. However, the practical use is overlapping in the aim of both concepts. Focus and integration both strive for higher performance (Pesch, 1996; de Vries & Huisman, 2011).

The expectation is that the configuration of focus, which can also be regarded as the design of the focused factory, will affect the integrative practices and the degree to which organizations integrate these practices. The FHU is mentioned in this research as the least focused of the three kinds of focus factories. While the FHU is located in the general hospital and is still part of this general hospital the expectation is that these focus factories show the most integrative practices and are therefore to a higher degree integrated. They are able to integrate their processes easily because of their location. This also counts for the information flows and planning processes. The specialty hospital will to some extent integrate its processes, information and planning activities. These hospitals focus on a few treatments and mostly operate in a network that was formed already in the past. The last expectation is that ASCs are not really integrated into the supply chain of the hospitals because they are entities that stand alone and are seen by most hospitals as competitors. However, 12% of the people in the management board of the ASCs are also in the management board of a hospital (NZA, 2013). Consequently, the opportunity exists to integrate into each other’s supply chain in some way. Especially the integration of ASCs will be interesting to investigate as very little is known about this in literature.

3. Methodology

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11 industry, this research tries to expand the understanding of how focus factories are integrated and cooperate within the healthcare supply chain. Given the research question qualitative data would be appropriate to employ in order to gain insight in a complicated context with complex processes (Stuart et al., 2002). Interviews are used to collect qualitative data which has the advantage of additional clarification on interesting topics. The research will comprise multiple cases. This may reduce the depth of the study, but has a big benefit in augmenting external validity, helps against observer bias (Karlsson, 2009) and produces more compelling evidence than single cases do (Yin, 2003).

In the next sections the following topics will be sequentially discussed. First, the research setting will be outlined in which the research is conducted, followed by the research design. Thereafter, the data collection method is illustrated and subsequently, the methodology part ends with a description of the method used to analyze the data.

3.1 Research setting

To better understand the healthcare situation in the Netherlands and why the amount of focused factories is increasing, some background information about the changes in the Dutch healthcare system will be provided. The Dutch healthcare system is recognized as one of the best healthcare systems in Europe. The Euro Health Consumer Index (EHCI) even ranked the Dutch healthcare system in 2015 as best in Europe. Moreover, the Netherlands has been in the top three ranking since 2005. This makes the Dutch healthcare system a rich source of data while stable, high quality care has been offered over a long period of time.

Since 2006, each person that lives or works in the Netherlands is obliged to have an individual private health insurance. Healthcare is no longer facilitated by the government, but regulations have been put in place for private insurance companies. These insurance companies are legally obliged to accept each applicant that wants to get a basic insurance contract (van de Ven & Schut, 2008). The content of these basic insurance contracts is legally established by the Dutch government. Next to the basic, mandatory insurance, people are able to upgrade their insurance with voluntary supplementary insurance (Roos & Schut, 2012). The idea for a model of national health insurance, based on competition in the private sector, was firstly mentioned by Enthoven (1978). The reform in the Dutch health system is unique in the way that it was the first country that implemented this idea. Insurers become buyers of care for their insured population. Next to this the hospitals and insurers are free to negotiate on prices and selectively contract a range of products. Insurers become competitors which in the end should result in benefits for the customer (van de Ven & Schut, 2008). As a result of the changes in the healthcare setting, the focused factory has gained extra attention in literature because of the need for lower costs, higher quality and better service. Especially the amount of ASCs is increasing (NZA, 2013). In 2006 the regulations were revised for the third time in order to improve the competition in healthcare (NZA, 2012). The increase of ASCs was made possible due to these revised regulations for starting a focused factory. The government was convinced that focus factories are creating a more dynamic healthcare market. The amount of FHUs, specialty hospitals and ASCs in the Netherlands is shown in table 2:

General Hospitals Academic Hospitals ASC (including private clinics)

Specialty Hospitals1

83 8 328 2/10

1_{The use of different definitions by different organizations makes it difficult to specify the exact number of}

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12 Table 2: Amount of focused factories in the Netherlands based on:

https://www.nvzziekenhuizen.nl/_library/27775/Rapportage%20Kengetallen%202013%20definitief.pdf

3.2 Research design

The purpose of this research is to gain insight into how different kinds of focus factories integrate into the healthcare supply chain. A distinction between focus factories is made based on the degree of focus, which results in three kinds of focus factories, FHU, SH and ASC. By using the different integration modes of De Vries and Huisman (2011), coordination and integration of processes, information flows and planning processes, a distinction can be made between types of integration. The case study approach will be used in order to answer the research question. The purpose of the research is to understand the dynamics between different healthcare operations/entities. This covers the definition of Eisenhardt (1989, p.534), who stated that a case study is a research strategy which focuses on understanding the dynamics present within single settings. Interviews will be used to collect qualitative data which has the advantage of additional clarification on interesting topics. The data collection will be executed in cooperation with other master thesis students writing their master thesis in the same field of focus factories and supply chain integration. An interview guide is developed in advance in which questions regarding this research topic are covered. By doing this the dataset is enlarged. A consequential advantage is that results are better generalizable.

3.3 Data gathering

As mentioned before the data is gathered in the Dutch healthcare system of focus factories in which eye care is the specialism this paper focuses on. Doing research in only one specialty of the total offer in healthcare treatments makes it easier to compare the different focused factories as they all offer the same kind of treatments. Next to this the main purpose of this research is not to give insight into one specific case, but to focus on a specific area in healthcare.

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3.4 Case selection

For the whole study on focus factories 98 organizations were contacted. From these 98 contacted organizations around 20 organizations were focused on eye care. This resulted in four eye care cases for this study and 10 cases for the whole focused factory study. Where Eisenhardt (1989) stated that a good case study research should vary between, depending on the value of each case, 4 to 10 cases, this is amount is just met. According to Eisenhardt & Graebner (2007) cases that contribute to theoretical insight should be carefully selected. Therefore, together with the other researchers a matrix is developed in order to divide the different cases and get a proper data collection.

The data is gathered in the field of eye care which is especially a product-focused treatment in terms of the type of focus mentioned by Bredenhof et al., (2010). Within healthcare this specialty is one of the largest specialties and has the highest amount of focused factories, which makes the specialty eye care most appropriate for research. The initial idea was that the eye care cases would cover all three configurations of focus (ASC, Specialty hospital and FHU). Unfortunately data collection was difficult so this research tried to cover each configuration at least once. In order to specify the cases regarding their configuration the ‘roadmap’ demonstrated in figure 1 is used. This roadmap is based on findings from literature stated in the theory section. During the data collection was found out that in the specialty of eye care overnight stays almost never occur. This resulted in the fact that no specialty hospital cases were found. Two FHUs and two ASCs cases are eventually used which can be seen as the two extremes regarding the degree of focus. Also the assumption that all eye care organizations would have a product type of focus was not correct. This will be explained later on.

Focused Factory

Focused hospital unit

Specialty Hospital

ASC Part of the hospital?

Yes No Require overnight stay? Yes No Other Yes No Hospital ownership?

Figure 1: Specification of configurations

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3.5 Data analysis

Karlsson (2009) mentioned that especially in case research attention should be paid to the reliability and validity of every case. In order to get reliable and valid results, different actions are considered. To ensure external validity multiple cases are used. Construct validity is ensured by establishing correct operational measures. The boundaries created in the theoretical background should help in achieving construct validity. Reliability is ensured by using a clear research protocol. This enables other researchers to repeat the work in the correct way so they get the same results. The gathered data from the interview is transcribed the same day in order to maximize recall and when data missing, filling this gap was much easier. The above mentioned actions allows to do a within- and cross case analysis. First a within-case analysis is performed in which each case is analyzed regarding the degree of focus and the type of focus. The four perspectives of Hyer et al., (2009) will be the basis of this within-case analysis and will show the uniqueness of each case. In the theoretical background these four perspectives are mentioned. Interview questions 3, 6, 7, 10, 16, 21, 27 and 28 are especially useful for this within case analysis. The cross case analysis will focus especially on the integrative practices of the different configurations of focused factories. Questions 14, 17, 19, 21, 29, 30, 31 will be used in order to perform this cross case analysis. The different cases will be compared on how processes, information flows and planning process practices are integrated with other supply chain partners based on the configuration of each case. The characteristics of the abovementioned integration modes of de Vries & Huisman (2011) will together with the four perspectives of Hyer et al, (2009) form the basis for this cross-case analysis. Concluding, the within case analysis will in particular focus on the describing the focused factory with attention given to the degree of focus. In the cross-case analysis the degree of integration in term of practices is given. In the discussion section the insight of these two analyses are critically discussed and reflected on regarding existing literature.

4. Results

4.1 Within-case analysis

Each case will be briefly described and categorized according to the type of focus factory by the three domains of Bredenhof et al. (2010). Next to this classification, the configuration of focus (FHU, specialty hospital and ASC) is used to make a distinction between cases. Three the four perspectives of Hyer et al. (2009) are used in order to highlight the design and operationalization of the focused factory. In order to create both a clear within and cross case analysis, which makes comparison between cases based on their degree of focus easier, the cases are named by their configuration (FHU or ASC) which is shown in table 3:

Case 1 Case 2 Case 3 Case 4

FHU 1 ASC 1 ASC 2 FHU 2

Table 3: Case names

Focused factory case FHU1:

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15 The FHU characterizes itself regarding the resource perspective with a high amount of people working in the focused factory (15 specialists and a total of around 70 employees), and dedicated resources which are too specific for other specialties in healthcare. Sometimes the X-ray is rent from another department. From a spatial perspective the organization has clear boundaries as they have a separate wing within the hospital. From a transformation perspective this FHU performs every thinkable treatment so will execute the full process a patient needs. While some patients are first treated by other organizations, in some cases just a part of the full process is performed by the FHU. Moreover, all patient groups are treated and specialists do not focus on a patient group but focus on a specific treatment. Finally, regarding the organizational perspective the management of performance and improvement is done by both the hospital and the FHU.

This FHU characterizes itself by not sharing resources, sometimes sharing specialists and a not very efficient way of managing patient flows. Regarding patient information flows the FHU uses the EPD system and the fax machine. Medical devises are not connected to the IT systems and planning is done mainly in the department, but is sometimes influenced by the general hospital and other departments. Focused factory case ASC1:

Case two is an independent operating healthcare organization with different locations across the Netherlands. We can assign the configuration ASC to this organization while it is not part of a general hospital and patients are not treated with an overnight stay. It should be noticed that this organization was founded due to long waiting times in a general hospital. Several specialists started to provide basis care and were able to offer a more efficient way of working compared to the general hospital. The organization is further characterized by its product focus and treats approximately 7500 patients annually.

The ASC characterizes itself regarding the resource perspective with a medium amount of people working in the focused factory (6 specialists and a total of around 19 employees), and dedicated resources which are sometimes shared internally in the organization. From a spatial perspective the organization has clear boundaries as they have their own facilities and all equipment is available at the location. Some offices of the ASC are located within a lager medical center. From the transformation perspective this ASC performs almost always the complete treatment process. However the organization does not provide every treatment like the FHU in the first case. Especially basic care is offered. It is a rare occasion when a patient needs to be transferred to a different location or organization because referrals are quite well-managed. Specialists in this ASC are treating patients based on the type of treatment they need and do not treat specific patient groups. Finally, regarding the organizational perspective the management of performance and improvement is done both at the different locations as by the complete organization.

This ASC is further characterized by sometimes sharing resources internally, sharing most specialists and using a central allocation organ regarding patient flows. An EPD system together with Zorgdomein are used in order to transfer patient information. Medical devices are not connected to the IT systems and planning is done internally where sometimes this planning is influenced when patients need to be referred.

Focused factory case ASC2:

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16 The ASC characterizes itself regarding the resource perspective with a medium amount of people working in the focused factory (5 specialists, 4 managers, 40 other employees like OK assistants, cleaning and reception personnel) and dedicated resources that are only used by the ASC which are never shared. From a spatial perspective the organization has very clear boundaries. It is located with one facility in the Netherlands and all equipment is available at this location. From the transformation perspective this ASC performs all steps in the treatment process. The whole process for every treatment can be performed within this ASC and in general every patient will be treated. The specialists focus on a specific treatment as a result of preference. Within this sub specialism a distinction is made between for example elderly and children. All specialists are able to perform multiple treatments. Finally, regarding the organizational perspective the management of performance and improvement is completely done by the ASC itself.

This ASC is further characterized by fully dedicated resources and specialists. Patient and information flows are managed by a customized CRM system that is able to integrate all external parties and medical devices used within the organization. Planning is arranged completely internally.

Focused factory case FHU2:

Case four is a focused factory located within the larger hospital. We can assign the configuration FHU to this organization as the hospital partly owns the focused factory and is involved in resource sharing and exchange of specialists. The organization is further characterized by its product-process focus and treats approximately 700 patients annually which make this focused factory the smallest case in this research.

The FHU characterized itself regarding the resource perspective with a low amount of people working in the focused factory (4 specialists working two days a week, and a total of around 14 employees who also do not work full time), and dedicated resources that are sometimes shared with the general hospital. From a spatial perspective the organization has clear boundaries as they have a separate building nearby the hospital. From a transformation perspective this FHU performs mostly all process steps of the treatment. Sometimes it is necessary to refer the patient to the academic hospital when complex cases need to be treated. Because the FHU is part of the academic hospital, no patient will be rejected. Most of the treatments are however non-insured or insured treatments with extra payment of the patient because of personal preference. Furthermore, the specialists focus on a specific treatment and not on a patient group. Finally, regarding the organizational perspective the management of performance and improvement is both done by the hospital and the FHU.

This FHU is further characterized by sometimes sharing resources and sharing all specialists. The patient flows are managed from a central desk which also provides the specialists with patient information. The EPD system together with Zorgdomein is used to transfer patient information. Medical devices are not connected to the IT systems and patient planning is done together with the general hospital.

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17 belongs to has different locations, whereas ASC2 has only one, where they treat all their patients. This means that people need to travel more to meet this organization. This also results in a difference in managing performance and improvements because with multiple locations different results on performance and improvements can occur. While ASC1 is especially focuses on basic care, ASC2 is offering the full range of eye care treatments. In table 3 the characteristics of the four cases discussed above are shown.

Case (FHU1) Case (ASC1) Case (ASC2) Case (FHU2)

Patients treated 30,000 to 40,000 7,500 31,000 700

Type of focus Product-process Product Product Product-Process

Resource perspective Amount of people working in the FF 15 specialists 55 other employees 6 specialists 13 other employees 5 specialists 4 managers 40 other employees 4 specialists (not full time) 14 other employees (not full time) Dedication of resources Dedicated, sometimes rent Dedicated, sometimes shared

Fully dedicated Dedicated sometimes shared Spatial perspective Clearance of boundaries Clear, separate wing Clear, multiple facilities

Clear, one facility Clear, separate building

Transformation perspective

Total of the process steps

All process steps, all treatments

Almost all process steps, especially basic care

All process steps, all treatments Almost all process steps, especially non-insured treatments Grouping into families Focus on treatments not on patient groups Focus on treatments not on patients groups Focus on both treatments and patient groups Focus on treatments not on patient groups Organizational perspective Performance and improvement management

FHU and hospital Organization and location

Completely by the ASC self

FHU and Hospital

Table 4: Characteristics of cases based on the four perspectives of Hyer et al., (2002)

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18 were ASC1 and FHU2 focus more on a specific treatment group. ASC2 has also the best ration between amount of patient treated versus the total amount of employees. The design of the focused factory is probably depending on the total amount of patients that are treated. In the discussion we will elaborate more on the findings of the within-case analysis.

4.2 Cross case analysis

Now we have a good overview of the different cases and the design of the focused factories, the cross case analysis will focus on the integrative practices of the different cases. This is done by using the three modes of integration of de Vries & Huisman (2011). These three modes of integration are; integration and coordination of processes, information flows and planning processes. These modes are divided into practices that cover these integration modes and show to what extent the organization integrates their activities. Except for the practice connection of medical devises these practices are derived from literature and are mentioned in the paper of de Vries & Huisman (2011). Where in the field of IT the EPD system is in most organizations implemented we noted the need for integrating medical devises. Each mode of integration will be explained based on quotes from the different cases. Every quote contains the configuration and the number of the case as is mentioned at the beginning of the result section. The different modes of integration and their corresponding practices are given in figure 2. In appendix 3 an overview is given of the modes of integration, the corresponding practices and the quotes of the interviewees in terms of a coding tree.

Integration and coordination of processes

Sharing resources

Sharing specialists

Patient flows

Integration and coordination of information flows

Patient information flows

Connection of medical devises with IT system

Integration and coordination of planning processes Planning with external parties Figure 2: Practices from modes of integration

Integration and coordination of processes Sharing resources

To maximize the utilization of resources, an organization can choose to share their resources with other parties. However, the results from the interview shows that in general physical assets are not shared with other parties.

FHU1: ‘The physical assets within the eye care department are so specific that they cannot be used by other departments, so sharing does not happen’.

ASC2: ‘All physical assets are dedicated to the organization and are not shared’. ‘In this way we can always guarantee the hygiene and quality of equipment’

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19 ASC1: ‘Another organization (from the same holding) sometimes uses the same waiting and operating rooms’

FHU2: ‘Most of the physical assets belong to the organization. Sometimes assets are shared with the general hospital who in this case rent (mostly) the OK room’.

Therefore we can conclude that physical assets are in general owned by the organizations self and are sporadically shared. There is no difference found between the configurations because both cases FHU1 and ASC2 do not share resources while ASC1 and FHU2 do sometimes share resources. Therefore there is no relationship found in the configuration of focus and sharing of resources.

Sharing specialists

Different results are found in case of sharing specialists. While in general physical assets are not shared, specialists are working more often within other companies.

ASC1: ‘In the medical world specialists almost always work for other hospitals as well. This is also the case in our holding’

FHU2: ‘All specialists are also working somewhere else. This can be in the general hospital or an ASC’. In the other organizations specialists are (almost) all full time employee of one organization. FHU1: ‘Some specialists work for other hospitals or ASCs, but most work for the FHU only’

ASC2: ‘Specialists are fully dedicated to the organization and do not work for other organizations’ This can be considered as part of the focus

The difference in sharing or not sharing specialists is possibly related to the amount of patients treated by the organizations. FHU1 and ASC2 have the highest number of treatments, around 30.000 each, which makes it much easier to employ specialists on a full time basis compared to FHU2 and ASC1 who have a significant lower amount of treatments. Therefore no relationship can be mentioned regarding the configuration of focus and sharing of specialists.

Patient flow

The integrative practices regarding the flow of patients can be divided into external and internal practices. Regarding external integration we look especially at the organizations or persons that are involved in referring patients. Patients can be self-referrals, referrals from opticians, referrals from other hospitals but most referrals are from the GP. In general the focus factories don’t need to refer patients to other organizations is stated in the interviews. However complex patients are often referred to especially the FHU, which is part of the larger (academic) hospitals. To smoothen the patient flows different ways of handling these patients are shown.

FHU1: ‘Patient flows are not really integrated or shared with external departments or parties. For external patient flows we also need the correct information which is send through fax’

FHU2: The EPD system is used in order to manage patient flows. Because of cooperation with other hospitals and GPs, Zorgdomein is used.

ASC1: ‘Contact is always through post and sometimes through Zorgdomein/Zorgmail. Email is forbidden due to safety of patients’.

ASC2 has in the development of their CRM system accounted for easy access for GPs in the planning process in order to optimize patient flows.

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20 all external parties their system and the equipment should be connected to the system. This system is fully integrated with all the external parties of the organization’

Internal integration is about managing the patient flow within the organization. When looking at the internal integration of the different configurations a difference is found between the FHU and the ASC. FHU1: Not very well managed patient flow. Patient arrives and is checked in afterwards they are send between different rooms for a while, resulting in many cross walking (people walking the same route multiple times)

FHU2: Patient flows are managed from a central desk were they check in. Both the patient is provided with information and the specialists. However, sometimes patients arrive but there is no information available so the process is delayed.

The ASCs characterize themselves by managing patient flows in a more efficient way. One makes use of a central allocation organ while the other ASC is able to trace the patient and the information about this patient from the first moment of arrival till the patient leaves the organization.

ASC1: Patient flows are managed by the central allocation organ.

ASC2: The organization strives for no or very little waiting time. Therefore the flow of information and patients need to be aligned and very clear communicated. This is done by the CRM system.

When talking about the integrative practices of patient flows, a distinction is made between internal and external integrative practices. The main difference between configurations is found in the efficiency of the practices. In general the ASCs show more efficient processes. This can be explained by the fact that ASCs are in general profit organizations. To distinguish from other healthcare organizations and to be profitable, both external as internal processes should be designed in the most efficient possible way. The findings above also show that integration of patient flows is closely related to the integration of information flows. These information flows are explained next.

Integration and coordination of information flows Patient information flow

The flow of information is one of the most important practices for integration in healthcare. The role of IT is important in this case as it is used as form of communication within the company as with external parties. IT systems are used to integrate information flows. A good example is the use of EPD systems for patient information flows. EPD systems are used in almost all organizations.

FHU1: ‘Information about the patient is transferred by EPD system EPIC which works fine’. Not much external contact however information from the referrer is done by fax.

ASC1: ‘An EPD system is used to scan all patients and link all information about this patient to the system’

FHU2: ‘The organization uses an EPD system and is able to log in to the academic hospitals EPD system. Because of the cooperation with another organization also the information system Zorgdomein is used’ There are however different types of systems that can be used. One of the ASCs has its own customized CRM system that distinguishes from the other IT systems in a way that it is able to connect all IT systems of external parties. The use of one system for all activities in the organization does exist.

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21 Specialists are in general satisfied with the EPD systems but mostly have other information systems running at the same time like planning systems, order systems etc. This makes tasks sometimes devious and much manually administrative tasks should be performed by the specialists. Different information systems complicate integration of information flows and the earlier mentioned processes. Meanwhile ASC2 is able to integrate all information flows within the company and with external parties, by using their CRM system. The degree of focus of an organization has not a very significant effect on the integration of information flows. There can be concluded that ASCs are a bit further in the development of these systems.

Connection of medical devises with the IT systems

Were we found that many specialists would like to see that it was possible to link the medical devises to the IT systems this was in most cases not possible. The idea behind this connection of medical devises is that data and results are directly implemented in the patient dossier which will significantly reduce the possibility of making mistakes in implementing data manually into the systems.

FHU1: ‘Connection of medical devises is not possible. It could save us time if this information was implemented in our systems’

ASC1:’ ideally all the information would automatically be linked together within the EPD. All diagnostic machines work together and information is also send to the EPD in the same formatting. FHU2: ‘We are not able to connect our devices to the IT systems; information is therefore implemented manually into the EPD system’.

One case was able to implement information from medical devises directly into the system.

ASC2: ‘Due to the CRM system we do not lose time for unnecessary tasks as filling out forms in the system. All information is immediately stored in the system, including all diagnostic information’ The EPD system was originally designed to transfer patient data in an easy and safe way with regard to privacy regulations. The next integration step could be the linkage of data from the medical devises like X-ray photos or results from scans. This is something for the future and practical feasibility is unknown.

Integration and coordination of planning processes Planning with external parties

In case of planning processes we see a difference between the FHU and the ASC. Where planning activities in the ASC are performed fully internally the FHU has to deal to some degree with the planning of the larger hospital.

ASC1: No external planning while ‘we treat patients from A-Z. Only if a patient is referred to a general hospital, but this does not happen on regular basis’

ASC2: ‘Planning is completely arranged internally by the CRM system’ the system shows exactly which facility is booked and when. If an external party calls they are immediately implemented in the system’ Especially in case FHU2 the main planning is performed by the academic hospital. Which means that the amount of patient that need to be treated is often unknown. This influences the internal planning of the FHU especially in terms of capacity planning.

FHU1: ‘Planning is mainly controlled within the department as most patients do not require treatments from other departments/organizations. However, sometimes an X-ray needs to be conducted and the management of the academic hospital is involved in planning processes’.

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22 The ASCs deal in general with only their internal planning. Very often these organizations need to refer patients to other hospitals so they will influence planning processes but this can be neglected. Therefore the configuration of focus has an influence of the integration and coordination of planning processes. The biggest difference is the influence of the hospital the FHUs are part of. So we can state that a FHU is to a higher degree integrating planning practices compared to the ASC.

4.3 Concluding on the within and cross case analysis

Concluding on the cross case analysis, in table 5 an overview is given of the answers from the interviewees regarding the integration practices of the different integration modes. It is striking that the FHUs are characterized by a product-process focus were the ASCs have a more product focus according to the questionnaire adapted from Bredenhof et al., (2010).

FHU1 FHU2 ASC1 ASC2

Type of focus Product-process Product-process Product Product

Sharing resources Never Sometimes Sometimes Never

Sharing specialists

Some All Most None

Patient flow Inefficient, cross-walking

Front office and back office

(planning)

Allocation organ CRM system

Information flow EPD (Epic), Fax EPD, Zorgdomein,

other

EPD system, scan function, Zorgdomein CRM system Connection of medical devises with IT systems No No No Yes Planning with external parties Mainly within department, sometimes with other departments, management Main planning by academic hospital, timeslots internally, purchasing hospital No external planning activities, sporadic referral to other hospital Completely arranged internally

Table 5: Characteristics of sample cases regarding integrative practices.

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23 developed a customized CRM system. Internally patient flows are managed often by a central desk in which the ASCs show often a more efficient way of working. The integrative practices of internal patient flows are closely related to the information flows. Both configurations show a certain degree of integration while they all use IT systems in order to transfer patient information. In most cases therefore the EPD system is used. This is however often used in combination with other systems whereby a lot of information need to be manually implemented in these different systems which higher the occurrence of mistakes. The different configurations of focus do not show especially a difference in the degree of integrative practices regarding patient flows and information flows but differ in the efficiency of the integrative practices in which case ASC2 has the most efficient way of working because all processes, patient flows and information flows are integrated in one system. Last, a clear difference is found between the configurations in the integration of planning processes with external parties. Were FHUs integrated to some extend their planning with the general hospital the ASCs are especially arranging their planning internally. A distinction in the degree of integration can be made between the FHUs in which FHU2 shows more integration with the general hospital because purchasing is managed by the general hospital and the amount of patient that need to be treated is determined by the general hospital.

Regarding the research question we can state that the configuration of the focused factory determines to some degree the integration in the supply chain. This is especially noticeable in the planning processes and to some degree in sharing of physical resources and specialists in which the FHUs show a higher degree of integration. FHUs are to a higher degree focused on external integration where ASCs are more focused on internal integration in order to create an efficient process. However, every organization organizes and manages processes, information flows and planning processes differently which makes it impossible to state that one of the configurations has a significant higher degree of supply chain integration compared to the other.

5. Discussion

The way the findings of this research are related to literature will be discussed in this paragraph. Overall, it is hard to compare the findings to existing literature while this research topic is not often studied. The findings of this research are explorative but are largely consistent with the expectations based on the literature review. The FHU shows more integrative practices while they are somehow related to the general hospital in terms of finances, planning or employment. The ASC can be seen as a more independent operating entity which shows to a lower extent these integrative practices. Both in literature as in practice (results of this study) the importance of integration is mentioned (Birou et al., 1998; de Vries & Huisman, 2011).

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24 and specialists are not, or to a lower degree, focusing. Based on literature and especially the research of Hyer et al., (2009) it was expected that the FHU was less focused compared to the ASC. The degree of focus is however in this research not necessary related to the configuration of focus. Almost all treatments were done in the different cases with the exception of very complex treatments which were mostly done by the academic hospitals. A larger sample size should be used to generalize this finding.

The integration and coordination of processes, especially in the form of patient flows, is closely related to the integration and coordination of information flows. This confirms with the study of Harland & Cardwell (2007). The role of IT is from major importance in order to manage the processes but also the flow of patients and information. Especially in healthcare privacy issues influence the way information flows can be organized. The different systems used by different organizations determine the possibilities to integrate information flows. The EPD system is used in order to transfer information especially about the patient. These systems lack in integrating with operational management systems (Khoumbati et al., 2006) which is stated multiple times during the interview. There is concluded that external integration occurs especially with regard to GPs or other parties involved in referring patients. However, in general we can state that focused factories are more internally focused which confirms with Meijboom et al., (2011) who stated that healthcare is facing a narrow view and concentrates mostly on their own activities. Especially the ASCs show that internal integration is from a major importance in order to work efficient.

Last, the clearest difference regarding integrative practices between the FHU and ASC is found in the planning processes. Where FHUs are an extension of the general hospital planning activities are in general integrated and coordinated in close collaboration. Planning is not only about patients but also covers the earlier mentioned practices of sharing resources and specialists (Antony, 1965). Hans et al., (2012) stated that planning and control lags behind manufacturing planning and control. This can be explained by Glouberman & Mintzberg’s (2001) four faces of healthcare that stated that every ‘group’ has their own, sometimes conflicting, objectives which is often a result of focus.

6. Conclusion

This research aimed to give insight in the Dutch focused factory healthcare ‘landscape’ and extent literature with practical cases of integrative practices from organizations with different degrees of focus. The degree of focus is approached by the three identified configurations of focus from which two configurations are approximated in the sample. The degree of integration is approached by the integration modes of de Vries and Huisman (2011).

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25 were almost all offering the complete range of eye care treatments. Regarding the degree of integration the different configurations of focus all agree on the importance of integration. The execution of integrative practices however differs per organization. The configuration of focus has to some extent influence on the integration. Especially the focused hospital is depending to a higher extent on the general hospitals and therefor shows more integrative practices. Results show that the focus on integration in the ASCs is more on internal practices instead of integration with external parties. The IT systems used within an organization determines to a high degree the possibilities for integration. Were most cases showed the same kind of IT system we found one benchmark case in this research that has developed a customized CRM system. This organization is therefor able to integrate all processes, information flows and planning. This organization is a precursor in creating efficiency in healthcare organizations.

Regarding the research question, how do different configurations of focus factories differ in the degree of supply chain integration, there can be concluded that the FHU shows a somewhat higher degree of external integration compared to the ASCs. This is because FHUs are most often working together with the general hospital and ASCs have a more internal focus in order to create an efficient operating organization.

There are however several limitations that have influenced this research. First of all targeted sample size was extensively higher than the sample size used in this study. During the research we experienced that focused hospital units where not very willing to participate in the study. This mainly had to do with capacity problems and reorganizations within organizations. The cases found were also quite different from each other whereby the generalizability of the conclusions can be discussed. Secondly, the FHU cases were both related to academic hospitals. This has resulted in insights that may not be generalizable for other general hospitals. Together with the relative small sample size of this study the conclusions are probably not feasible for the total eye care market. This opens opportunities for further research in which a larger sample size should be used in order to verify the findings. Thereby the study is conducted in only the Dutch healthcare market which could have led to different findings regarding other healthcare systems. However the study provides a glimpse of the different organizations in the market with their integrative practices. Another suggestion for further resource is found in the desire of especially the FHU of a more efficient and total integrated IT systems. While we found a benchmark case that was able to integrate everything, the opportunities and possibilities for the FHUs could be researched.

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The integration of the focused factory in healthcare supply chains ‘Focus on Focus’