Operations Strategy in Mental Healthcare

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Operations Strategy in Mental Healthcare

Towards a systematic approach of operations strategy formulation

Master Thesis, Dual Degree in Operations Management by

Kevin van Ruiten

Student number: S1923951 (RUG), 150646488 (NUBS) Email: c.n.van.ruiten@student.rug.nl

Supervisors:

Prof. Dr. J. de Vries (University of Groningen) Dr. G. Heron (Newcastle University)

Universities:

University of Groningen, Faculty of Economics and Business Nettelbosje 2, 9747 AE Groningen

University of Newcastle, Newcastle University Business School 5 Barrack Road, Newcastle upon Tyne, NE1 4SE

December 2016 Abstract

Increasing pressure on the Dutch healthcare sector forces organizations to operate more effective and efficient. The concept of operations strategy has proven to be successful for shaping long term capabilities and alignment of market requirements with operations resources in the manufacturing industry. This research identifies the applicability of operations strategy in the healthcare sector and defines important factors to use in the operations strategy formulation process. A hybridized model for operations strategy formulation is developed to test during a case study. Data from interviews, document analysis and observations showed the importance of knowledge and the organizational environment. Besides, supply network as decision area and quality as performance objective are critical elements during operations strategy formulation in a healthcare environment. Overall, operations strategy turned out to be a relevant concept in the healthcare sector, as long as sector-specific characteristics are taken into account and the focus is on adaption of existing frameworks instead of adoption.

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Acknowledgements

This masters’ thesis represents the last part in completion of the dual award programme in Operations Management at the University of Groningen and Newcastle University. I would like to take this opportunity to express my gratitude to a few people.

First of all, I would like to thank my supervisors, Prof. Dr. Jan de Vries from the University of Groningen and Dr. Graeme Heron from Newcastle University for their constructive feedback, helpful input and time dedicated to support me with this research. Additionally, I would like to thank Mr. Y. Tewelde for providing me access to the healthcare provider involved in this research. Furthermore, I want to thank all participants of this research, without their time it was not possible to perform this research.

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1 Introduction

Due to the ongoing increase in healthcare costs in the Netherlands this topic is gaining more attention on the political agenda. Total costs of healthcare in the Netherlands have shown an increase of 40.8% from €67.2 billion in 2005 to €94.6 billion in 2014 (CBS, 2016). The Netherlands Bureau for Economic Policy Analysis states that healthcare expenses rise due to improved, but more expensive care. Moreover, also the longer life expectations result in higher healthcare costs (van der Horst, van Erp, & de Jong, 2011). Because of the rising costs, the national government tried to intervene by using different mechanisms. Two major changes were the implementation of the regulated market forces in healthcare in 2006 and the implementation of the Diagnosis Treatment Combination (in Dutch: Diagnose Behandel Combinatie) in 2008. Enhanced by the market changes in 2006 and the ongoing increase in costs of healthcare the challenge for healthcare organizations is to operate in a more efficient way while maintaining or even improving the quality of care.

Quality becomes more important, not only in healthcare but also in other sectors quality can be seen as an order-winning factor. A concept that can support organizations in winning these orders is operations strategy (OS), which is often used intertwined with manufacturing strategy (MS) in literature. In essence, the meaning of OS according to Slack and Lewis (2011) is the reconciliation of market requirements with operational resources. As can be revealed from literature reviews of Anderson et al. (1989) and Dangayach & Deshmukh (2001), operations strategy has been widely researched in the manufacturing industry for many years. Numerous authors agree upon the conclusion that using operations strategy influences an organizations’ performance in a positive way (Ahmed, Montagno, & Firenze, 1996; Brown, Squire, & Blackmon, 2015; Ward, P. and Duray, 2000). However, other authors show doubts about the external validity and state that generalizability to other sectors or organizations should be treated with caution (Jagoda & Kiridena, 2015).

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important to know that during transferring knowledge from one to another organization or sector, the focus must be on adaption instead of adoption. This so called ‘localisation’ has proven to be successful with other management philosophies, for example the principles of lean which are applied in many other sectors beyond the automotive industry (Hines, Holweg, & Rich, 2004). To return to the healthcare sector, healthcare is often referred to as a hospital setting. Other subsectors, for example disabled care, elderly care and mental healthcare are often not discussed in detail. This fact, in relation with the points made by Dobrzykowski et al (2014) and Radnor and Noke (2013) result in opportunities for further research. Challenges for applying models and theories from the private sector to the public sector are mainly found in the complexity and the need for adaption instead of adoption.

OS in general consists of four perspectives. Besides operational resources and market requirements, Slack and Lewis (2011) propose two other perspectives on OS: top down and bottom up. Although the top-down perspective has been widely accepted in the manufacturing industry (Marucheck, Pannesi, & Anderson, 1990; Menda & Dilts, 1997), the bottom up perspective is also used and gained acceptance in this industry (Barnes, 2002). This bottom-up perspective states that OS formulation consists of more than simply formulation and implementation (Kim, Sting, & Loch, 2014). Bottom-up principles often emerge from lower management echelons and daily experiences. The acceptance and use of these principles in OS formulation in the manufacturing industry demonstrates opportunities to include these in the process of OS formulation in the healthcare sector. Though, sector-specific characteristics should be used in the process of adaption.

In the process of delivering mental care to patients the production and consumption of the product occurs at the same time. This process can be typed as a service according to the definition of Flitzsimmons and Flitzsimmons (2010) who state that a service is a “time-perishable, intangible experience performed for a customer acting in the role of co-producer” (p. 4). While OS in a manufacturing setting in its simplest form can be seen as the reconciliation process of market requirements and operational resources (Slack & Lewis, 2011), OS in a service setting includes an extra element as shown by Roth and Menor (2003) in their service strategy triad. Besides choosing the right target market and defining the service concept, organisations need to make service delivery system design choices.

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skills held by relatively few people and the number of stakeholders can make formulation of OS more difficult in a healthcare setting. This research includes sector specific characteristics and perspectives of OS to identify elements currently used in OS formulation. The goal of this research is to evaluate the applicability of OS in the healthcare sector and outline important factors to include in the process of operations strategy formulation in the healthcare sector. From a managerial perspective, this is relevant for managers working in the healthcare sector to formulate an organisations’ OS. The academic relevance can be found in the enrichment of OS formulation literature specified for the healthcare sector and personal service environment. To gather empirical information, a case study to test the applicability of OS and revealing important factors in the process of OS formulation has been performed at an organisation providing mental healthcare, this organisation is referred to as the healthcare provider during this research. The remainder of this paper is structured in five sections, starting with an overview of theory related to operations strategy and the OS formulation process in section two. The third section outlines the methodology of this research after which the findings of the case study are presented in section four. In the fifth section, the findings are discussed and the results are presented in the form of a conclusion in the last section

2 Theoretical background

In this section the concept of OS will be further discussed. Section 2.1 outlines the origins and basics of OS. In section 2.2 the differences between a product and service environment are discussed and the specific characteristics of the healthcare sector are outlined for a better understanding of this sector. Section 2.3 elaborates on the formulation process of OS and in section 2.4 a suitable approach will be chosen to test the process of OS formulation in a healthcare setting.

2.1 Operations strategy

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production capability and technology for achieving business and corporate goals” (p.41). Achieving these business and corporate goals often includes long term strategy, therefore a more comprehensive definition of OS is given by Slack & Lewis (2011) who defined OS as “the total pattern of decisions that shape the long-term capabilities of any kind of operations and their contribution to overall strategy, through the ongoing reconciliation of market requirements and operational resources” (p.36).

By knowing different definitions of OS that have been developed over time it is possible to investigate what those definitions have in common and what the key elements of OS are. Elements that can be found in these definitions are the business’ corporate goals, the environment of the organization, (long term) decision making and competitive advantage. The existence of common characteristics and elements is supported by Jagoda and Kiridena (2015) who state that there is a coherent body of knowledge that conceptualized the main constructs of OS. According to Jagoda and Kiridena (2015) these constructs are strategy content, process and context. During the process of working towards a systematic approach of OS formulation in a mental healthcare setting, these constructs need to be included. While the definitions of Skinner (1969), Wheelwright (1984) and Ahmed et al. (1996) mainly state what OS is, the definition of Slack and Lewis (2011) also includes how operations strategy can be performed. This is explained by the reconciliation process of market requirements and operational resources. Before the process of OS formulation is analysed, characteristics of the healthcare sector are outlined. This is of high importance regarding the focus of this research and choosing a suitable approach for OS formulation to use during the case study. Besides, simple adoption of strategies from manufacturing organizations to service organizations or the other way around may not be appropriate (Sengupta, Heiser, & Cook, 2006).

2.2 Product and service environment

An understanding of the disparities between a product and service environment supports the process of OS formulation for the healthcare sector. This leads to the first sub-question of this research that is formulated as follows:

S1: What are the specific characteristics that distinguish the healthcare sector from the manufacturing sector?

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heterogeneity and perishability as other main characteristics of services. Inseparability is referred to as the simultaneous delivery and consumption of the service (Gronroos, 1978). This means consumers can affect the performance of the service. Consequently, consumers can also influence the quality of the service which is in line with the earlier proposed definition of Flitzsimmons and Flitzsimmons (2010). Heterogeneity includes two elements. First, Zeithaml et al. (1985) state that there is a potential for variability in output of the service because people are involved in producing the service and peoples’ performance varies from day to day and during the day. This holds especially for labour-intensive services. Second, heterogeneity could exist because of the degree of customization and flexibility which is offered in the service (Onkvisit & Shaw, 1991). Heterogeneity therefore is less valid for a product related environment in which standardization and quality control is easier to implement. The fourth and last main characteristic of a service is perishability which in essence means that services cannot be stored (Thomas, 1978). Products, on the other hand, can be stored and often a certain time-span exists between production and consumption or use of the product.

The scope of this research, mental healthcare, can be typed as a service offered to patients. The service offered in a mental healthcare organization is intangible. Besides, due to the simultaneous delivery and consumption, the service is inseparable. Moreover, because of employee involvement in this process and offering patient-specific care, heterogeneity exists. Lastly, the offered service cannot be stored and therefore is perishable. Because of these characteristics, different problems could occur that need to be taken into account in the remaining part of this research. Especially heterogeneity is an important factor because this research is focusing on mental healthcare provision which is a labour intensive process. Based on a literature review, Zeithaml et al. (1985) outlined different problems around the four characteristics. Regarding intangibility, relevant concerns are the inability to store services, the difficulty of setting prices and communication of the service. For inseparability the main concern is about the customer who is involved in the service. Main concern for heterogeneity is the problem of standardization and quality control. Perishability results in the problem that services cannot be stored.

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and policy makers. This can be seen as a general division of healthcare stakeholders. However, because healthcare is organized differently, seen from a global perspective, a country-specific analysis is needed to define an organizations’ stakeholders. Besides the standard stakeholders like suppliers, health & safety service and labour unions, Hoek (2007) and Boot (2013) defined the stakeholders in the Dutch healthcare system. Hoek (2007) named all stakeholders while Boot (2013) visualized the governance and environment of the Dutch healthcare system. In the environment of healthcare organizations, the stakeholder categories of Atanasova et al. (2015) show different relations. Healthcare provider and healthcare consumer show a relation in the form of healthcare provision and consumption. Healthcare consumer and healthcare insurance organizations are related because of personal health insurance, and health insurance and healthcare providers are related in terms of procurement. The different stakeholders named by Hoek (2007) and Boot (2013) can be divided by using the general categories mentioned by Atanasova et al (2015). An overview of this stakeholders division over the general stakeholder categories can be found in Table 2.1.

Table 2.1. Stakeholders Dutch healthcare system

Stakeholder category Stakeholders

Healthcare providers - General practitioners, outpatient specialists and other healthcare providers

- Professionals

- Healthcare employees, e.g. physicians, nurses

Healthcare consumers - Clients

Healthcare insurance - Healthcare insurance companies

Policy makers - Government

- Municipalities - Political opinion - Public opinion

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importance to actively include stakeholders in this research because the healthcare provider is linked to their stakeholders, often in terms of rules and regulations.

2.3 Operations strategy formulation

Evaluating the applicability of OS in the healthcare sector and working towards a systematic approach of OS formulation requires an understanding about existing models for OS formulation. The second sub-question is therefore formulated as follows:

S2: What are existing models for operations strategy formulation?

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easy to understand, so that practitioners are able to use the model. An overview of steps taken in each model can be found in Appendix A and a smaller overview is given in Table 2.2. Table 2.2. Analysed models

Author Steps

Miltenburg (2005) Current situation à Desired situation à Manufacturing strategy Platts and Gregory (1990) Specification à OS formulation à Manufacturing system design Riis and Johansen (2003) Initiation à External trends and strategic challenges à Development of

manufacturing vision à Evaluation phase à Application and planning of next steps

Kim and Arnold (1996) Business strategy à Competitive priorities à Manufacturing objectives à Action plans à Business performance

Slack & Lewis (2011) Operational resources with market requirements

Understand markets à Performance objectives à Strategic operations decisions à Operations capabilities

Slack & Lewis (2011) Market positioning with operational resources

Understand resources à Identify performance benefits à Operations decisions à Market positioning

Hill (1989) Corporate objectives à Marketing strategy à Order winners à Process choice à Infrastructure

By knowing the constructs of OS as defined by Jagoda and Kiridena (2015) and the elements of six individual frameworks it is possible to define steps that the frameworks have in common in specific phases of OS formulation. Identifying these reoccurring themes is important for this research to make it possible to choose the best suitable framework, or combination of frameworks to work with and further develop to use in a healthcare setting.

Starting phase

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approach is to use the current business- or corporate strategy as a starting point in the formulation process.

Middle phase

The middle phase of the analysed models indicates more differences compared to the starting phase. Defining the expected outcomes and setting objectives is often the first part of the middle phase in OS formulation models. Miltenburg (2005) defines this by asking the question where the organization wants to be, and includes a competitor- and market analysis to define order qualifiers and order winning factors. Kim and Arnold (1996) use the definition of expected achievements and formulation of manufacturing objectives as first step in het middle phase. Platts and Gregory (1990) include this already in their first stage of the model in the form of identifying opportunities and threats. After defining the desired situation, the framework of Platts and Gregory (1990) directly moves towards OS generation and accomplishing performance audits. Riis and Johansen (2003) first define external trends and strategic challenges for the organization before a manufacturing vision can be developed. Slack and Lewis (2011) start with the identification of performance benefits in the middle phase after which operations decisions are made to formulate OS. Lastly, Hill (1989) first focuses on the marketing strategy and defines the order winners for the organization before a choice regarding the manufacturing mode is made. The conclusion can be made that this middle phase shows different options, partly because some frameworks consists of more stages than other frameworks. However, there are some reoccurring themes that are executed in the middle phase of OS formulation models. Most models include a step of defining objectives, expected outcomes, order qualifiers and order winners in the beginning of the middle stage. After that the OS itself is often formulated by means of choosing the manufacturing mode, making strategic manufacturing decisions and guiding the manufacturing process.

Final phase

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include a step which can be compared with an implementation plan and call this action plans that need to be implemented in the organization. The last phase of Hill’s framework (1989) consists of two steps. First step is to provide the manufacturing mode. The second and last is a supporting step in the form of infrastructural design that includes all non-process related aspects of the production organization. Shared elements in the final phase of the analysed frameworks are the implementation of the designed system and the attention for non-process related aspects. Because of the explorative character of this study, an important step is to have a possibility for feedback in the OS formulation process.

2.4 Model choice

In this section, the earlier described healthcare characteristics from section 2.2 are compared to the analysed models in section 2.3. By comparing the models and characteristics, the most suitable model or combination of models can be chosen to apply in a healthcare environment. The most important findings from analysing the healthcare environment are that the healthcare sector is a typical service environment and that the external environment is of more concern for organizations operating in a healthcare setting compared to organizations active in a manufacturing setting. Stakeholders in the external environment need to be incorporated in OS formulation to align or reconcile all perspectives. The exploratory character of this study results in the fact that a model which is not too specific will be more useful for adaption than a model which has a strong focus towards a specific type of manufacturing organization. However, a model that lacks specified steps and can be interpreted in many ways is neither a good option to use in developing a systematic approach for OS formulation.

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work with. Slack and Lewis (2011) do not have this feedback option but instead of feedback options they work with perspectives. One of the perspectives on operation strategy they propose is the bottom up perspective which consists of including operational experiences and thus can be seen as a feedback mechanism over time.

Taking the different assessment criteria in consideration, the conclusion can be made that the model of Riis and Johansen (2003) initially is the best model to use. The main reasons are the guidance in the OS formulation process, integration of the external environment which is important concerning the stakeholders of a healthcare organization and the existence of a feedback- and learning-cycle. Whereas the model of Slack and Lewis (2011) does not include pre-specified steps and has less integration of the external environment, this model and given information can be useful as background information to make adaptions in specific steps in the model of Riis and Johansen (2003). The five stages of the model developed by Riis and Johansen (2003) and the including steps of each stage are formulated in Table 2.3.

Table 2.3: Overview model Riis and Johansen (2003)

1: Initiation 2: External trends and strategic challenges 3: Development of a manufacturing vision 4: Evaluation of the manufacturing vision 5: Application and planning the next

step - Present situation of the company - Initiation - Scope of project - Involvement in project - Three spheres 1. Production task of the company 2. Close surroundings of the company 3. World society - Future conditions and challenges - Awareness of the need to change - Strategic issues - Participation - No single procedure - Inspired by existing manufacturing philosophies - Adopt ideas of Best

Practice Companies - Collect ideas among managers and employees - Evaluating strategic goals and organisational acceptance - Visualization - Different departments will evaluate the manufacturing vision - Identification of advantages and disadvantages - Organisational momentum of change - Strategic role of manufacturing - Detailed manufacturing systems design and implementation - Basic for coordinated detailed development and design of the production system

Although the model of Riis and Johansen (2003) is useful in terms of pre-specified steps, integration of the external environment and included feedback cycle, the third step lacks a specified procedure as can be seen in Table 2.3. Though, developing the manufacturing vision is one of the most important elements of the model. In this part, the operations need to meet the required performance by making manufacturing decisions. In literature this is often referred to as internal alignment (Gonzalez-Benito & Lannelongue, 2014) which can be seen as the core of OS formulation.

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resources. Market requirements consist of: quality, speed, dependability, flexibility and costs. Operations resources consists of: capacity, supply network, process technology and development & organization. Because the Dutch healthcare system cannot be defined as a (free) market, in the remainder of this research market requirements is replaced by stakeholder requirements which gives a better content to the elements in a healthcare setting. Besides market requirements, Slack and Lewis (2011) use operational resources, this term is replaced by internal capabilities which is more applicable in a healthcare environment. Currently, Riis and Johansen (2003) mention no single procedure at the third step of their model, development of the manufacturing vision. The reconciliation process of Slack and Lewis (2011) could be useful to incorporate in the third phase of Riis and Johansen (2003). By doing this, a good understanding of the current business strategy can be obtained after which the external environment of healthcare organizations can be incorporated. Third step then consists of formulating operations strategy by using the OS matrix of Slack and Lewis (2011). In the fourth phase this strategy can be evaluated and, if necessary, adjusted to the specific environment. Lastly the strategy can be implemented by using a detailed manufacturing system design. By knowing the characteristics of healthcare organizations and the different models of OS formulation the conclusion can be made that by making a combination between the model of Riis and Johansen (2003) and the reconciliation process of Slack and Lewis (2011) the advantages of two models will be combined in one. Main advantages of the model of Riis and Johansen (2003) are the understanding of the current strategy, incorporation of the external environment, a feedback cycle and development of a detailed manufacturing plan. The weakness of this model, actual development of the operations strategy, can be replaced by the reconciliation process of Slack and Lewis (2011). The OS matrix can be used to position the organization while taking into account stakeholder requirements, internal capabilities and findings of the first two steps. An overview of this hybridized model can be found in Figure 2.1. and a larger overview is provided in Appendix B.

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Figure 2.1 shows that the third phase in the model of Riis and Johansen (2003) is replaced by the operations strategy matrix of Slack and Lewis (2011). The purpose of this replacement is that the operations strategy matrix gives organizations more guidance in positioning their operations strategy. Specific steps that need to be taken to formulate OS with the hybridized model are formulated in Appendix C.

The combination of the models can be supported from both a practical and theoretical point of view. From a practical point of view there are multiple arguments supporting this combination. First, the healthcare sector is a sector with specific characteristics and shows a big difference with the manufacturing sector. To deal with these differences, adaption of models is needed in a way that these models are useful in their specific environment. Second, both models show advantages and disadvantages. Advantages of the model of Riis and Johansen (2003) are the analysis of the current strategy, the stepwise approach and the included feedback cycle. Main disadvantage is located in the third step of the model, which is the development of the manufacturing vision. This step lacks a guidance in forming the core in the OS formulation process and therefore is less practical to use from a managerial perspective. On the other hand, using the OS matrix of Slack and Lewis (2011) gives more support for managers to position their organisation. From a theoretical point of view, the main reason to combine the models of Slack and Lewis (2011) and Riis and Johansen (2003) is mentioned by Löfving et al. (2014) who agreed that the description of the model in the third step is vague in the current situation. As Löfving et al. (2014) state: “to get a deeper insight into this framework, more descriptions and instructions are needed” (p. 18). Besides, different industries can learn from each other as long as the focus is on adaption instead of adoption (Barbosa & Azevedo, 2015; Dobrzykowski et al., 2014).

The practical and theoretical relevance for developing the hybridized model gives a solid foundation to use this model in practice. The next step to work towards the goal of this research, identifying the applicability of OS and form an outline for OS formulation in mental healthcare, is to test the hybridized model on usability. A first question that emerges in this process is to define the current operations strategy of a mental healthcare provider. Therefore, a third sub-question is developed as follows:

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To find an answer on this sub-question, the hybridized model is used to make an analysis of the healthcare provider. The research focus for this process is on the first three stages of the hybridized model. Evaluation and implementation, stages four and five, can be used after development of the manufacturing strategy in stage three. For evaluation and implementation in the last stages, it is important to define specific indicators and factors which are applicable in terms of stakeholder requirements and internal capabilities in the healthcare sector. To establish these factors and discover if the current elements used by Slack and Lewis (2011) are usable, a fourth sub-question is developed:

S4: What are the important factors, with respect to the hybridized model, to include in the process of operations strategy formulation in mental healthcare?

Sub-question four is developed to define the important factors that emerge during the use of the hybridized model. The key factors emerging in this theoretical background were the differences in product and service characteristics resulting in the importance of intangibility and heterogeneity. Moreover, stakeholders turned out to be important in the external environment of healthcare organizations. Furthermore, OS formulation can often be divided in phases, compared with the healthcare characteristics leading to the development of the hybridized model. The remainder of this paper is aimed at finding an answer for the research goals, commencing with that adoption of a suitable methodology.

3 Methodology

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of the Netherlands was chosen to perform this research. Then, a specific client group and departments of the organization were selected to conduct the research. The first reason for selecting this specific client group was to allow the researcher to specify the research in the great variety of service offerings the healthcare provider offers to clients. The second reason was the availability of departments to participate in this case study, both in terms of time and geographical location.

3.1 Research design

To guide this research, a model was developed which can be found in Figure 3.1. In the first stage, a literature review was performed to form a comprehensive body of knowledge. This stage has revealed relevant information about the characteristics of the personal service environment compared to the manufacturing environment where the concept of OS is widely applied. Besides, existing models of OS formulation were reviewed to form a hybridized model that was applied in a personal service environment. The second stage of this research was formed by an empirical stage in which relevant qualitative data was gathered. This data was used to answer sub-questions three and four. The main focus of these questions can be found in discovering how OS is used in practice and in finding the most important factors for OS formulation in a personal service environment, both seen from the perspective of the hybridized model. The third and last stage of this study was formed by a design stage which included two parts as can be seen in Figure 3.1. The information gathered from the empirical stage was evaluated in terms of stakeholder requirements and internal capabilities. After that, a final step was made towards achieving the goals of this research. This was done by analysing the reconciliation process of stakeholder requirements and internal capabilities. With the outcomes an attempt was made to accomplish the earlier mentioned goals.

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3.2 Data collection

Data collection was performed in the form of informal conversations, interviews, document analysis and observations. In first instance, informal conversational interviews were held to get a better understanding of the organisation, current affairs and the environment the healthcare provider is operating in. This was mainly done before and in the beginning of this research which has helped to find and align the managerial and theoretical relevance of this research. Interviews were held in the empirical stage of this research. In order to support this process and increase reliability, interview protocols were used. Developing interview protocols can be done by making use of different formats. Gall et al. (2003) divided these formats in informal conversational interviews, general interview guide approach and a standardized open-ended interview. First approach is based on spontaneous generation of questions whereas by using a general interview guide approach there is still freedom in asking the questions. The standardized open-ended interview ensures that employees are always asked the same questions. For the interviews a standardized open-ended interview format was used to gain more data regarding operations strategy in mental healthcare. This type of interview has the advantage over the other mentioned formats to enable the interviewees to expand on things they consider as important (Meredith, 1998).

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Table 3.1: Interviewee characteristics

Interviewee Duration (min. : sec.) Position Experience

#1 47:17 Clinical psychologist Psychotherapist Site manager 1 year #2 40:23 Clinical psychologist Psychotherapist Site manager 42 years #3 49:06 Clinical psychologist Psychotherapist Site manager 30 years #4 39:30 Manager 6 years #5 42:32 Management secretary Team leader 8 years

#6 34:06 Team leader 35 years

#7 46:01 Clinical psychologist Team leader 12,5 years #8 48:51 Clinical psychologist Behavioural therapist 20 years #9 31:12 Psychiatrist Manager Researcher 18 years #10 38:14 Clinical psychologist Psychotherapist 19 years

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3.3 Data analysis

Primary qualitative data was collected by using semi-structured interviews. All interviewees gave the researcher permission to record the interviews. These tape-records provide a better starting-point for analysis compared to, for example, detailed note taking. For the analysis, the approach of Miles and Huberman (1994) was used. This approach consists of three stages: data reduction, data display and conclusion drawing. Coding was used in data reduction because as Voss et al. (2002) mentioned: “Central to effective case research is the coding of the observations and data collected in the field” (p. 212). The purpose of this process was to reduce data into categories. The analysis started with transcribing the tape-recordings. Interviewees were offered the transcripts afterwards to allow them to make corrections and give their approval that everything was written down in line with what they mean. Open coding, as proposed by Strauss and Corbin (1998), was used to identify concepts and corresponding properties. This was done by using line-by-line analysis, although this is the most time-consuming method, it provides the best understanding to discover concepts, categories and uncover relationships in the beginning of a research project (Strauss & Corbin, 1998). Because the interviews were held in Dutch, a conversion was needed at a specific point during this research. The choice was made to perform the coding process in English. An overview of the codes, their emergence (groundedness) and definition of codes is provided in Appendix F. The second step of the open coding process of Strauss and Corbin (1998) was used to group the identified concepts in categories. These categories were mainly formed based on findings from the literature stage. Examples are the different stakeholder requirements, internal capabilities and organizational environment. A complete overview of these groups and corresponding concepts is provided in Appendix G. Interviews were analysed simultaneously to include additional emerging concepts during the analysis. Further analysis was based on identification of different indicators pointing to a specific concept and categories that can be related to a central concept. After this coding process the main topics regarding the phases of the hybridized model and the extent to which they are used were established. Atlas.ti was used as supportive software for this analysis. Findings retrieved from this data reduction were visualized and expressed in the form of tables, diagrams and using interview quotes. Based on these findings, conclusions are formed in the next sections of this paper.

3.4 Research quality

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internal validity, external validity and reliability. To ensure construct validity during this research, multiple information sources were used. These sources consist of interviews, document analysis, observations, informal conversations and literature. As explained in the paragraph about data collection, also within the interviews a variety of interviewees was chosen to obtain different views from the healthcare provider. Besides, document analysis also consists of multiple sources of documents. The use of these different methods to study the same phenomenon is an underlying principle of data collection in case research (Voss et al., 2002). Through this triangulation of interviews, document analysis, observations and informal conversations, the validity of this study was further increased. Internal validity was ensured by using tape-recordings of the interviews and using pattern matching for the interviews. By the use of tape recordings, it was possible to create high-quality transcripts that were used as starting point for the analysis and by using pattern matching it was possible to compare theory with practice or intended strategy with emergent and realised strategy. External validity was partly ensured by verifying findings from literature with practice. However, because the use of a single case study external validity could form potential risks. This was taken into account for generalization of research outcomes. Reliability was ensured by using an interview protocol for all interviews and providing the possibility for interviewees to review and revise the interview transcripts. This opportunity ensured that the essence and meaning of the interviewees was clearly transcribed and could be used for analysis. Furthermore, using an interview protocol prevents a study of observation bias as much as possible (Emans, 2004).

Because both Newcastle University and the University of Groningen were involved in this research, ethical protocols of these universities were taken into account. For data collection this resulted in confidentiality between the researcher and interviewees. Transcripts were therefore not provided in an appendix and answers were anonymized. Interviews were held entirely on voluntary participation and interviewees were offered the possibility to stop with the interviews at any time. Furthermore, based on ethical reasons, patients and/or clients were not involved in this research.

4 Findings

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document analysis, observations and informal conversations held with employees of the healthcare provider. The healthcare provider currently employs around 4,500 people in total and has a capacity of 1400 beds. Annually, around 29,000 clients use care provided by the healthcare provider. Due to time restrictions, the focus of this research is limited to the first four stages of the hybridized model which is visualized in Figure 4.1. The first part of this section, corporate goals and environment, will discuss stages one and two of the hybridized model. The second part will elaborate on the stakeholder requirements where after the internal capabilities from the third stage of the hybridized model will be outlined. The fourth section positions the healthcare provider in the operations strategy matrix to identify critical areas. This can be seen as a guide to evaluate the reconciliation process of stakeholder requirements with internal capabilities in the last part of the findings. Also the corporate goals and organizational environment are taken into account in this section.

Figure 4.1: Research focus of hybridized model

4.1 Corporate goals and environment

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The environment for organizations providing healthcare as well as citizens receiving healthcare is continually changing. Analysing this environment is done by using the three spheres as proposed in the hybridized model. The first sphere is closest to the healthcare provider and can be seen as the service delivery task of the company. Most important in this sphere is the primary stakeholder that gives the organization the right of existence. Though, defining the primary stakeholder of a mental healthcare organization is not straightforward. During the interviews, multiple primary stakeholders were mentioned which are outlined in Table 4.1. It is clear that from an employees’ viewpoint the primary stakeholder of the organization is the client, sometimes also referred to as patient. All interviewees identified this stakeholder in first instance. Besides, general practitioners are mentioned as primary stakeholder by half of the interviewees. Health insurance companies are mentioned only by three interviewees as a primary stakeholder of the organization.

Table 4.1: Identified primary stakeholders of the healthcare provider

Primary stakeholder Mentioned Explanation

Clients 10/10 These are the ‘customers’ of the healthcare provider, also referred to as patients.

General practitioners 5/10 The general practitioner is a medical doctor who treats illnesses and provides care. He or she can refer patients to the case company or other organizations operating in the same sector.

Health insurance companies 3/10 Health insurance companies are those companies who are active in the healthcare purchasing market between healthcare providers and healthcare insurer, and between healthcare insurer and client.

Fellow institutions 2/10 Are organizations active in the same market offering, for example, a specific discipline of healthcare.

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Table 4.2: Identified secondary stakeholders healthcare provider

Secondary Stakeholder Mentioned Explanation

Health insurance companies 10/10 Health insurance companies are those companies who are active in the healthcare purchasing market between healthcare providers and healthcare insurer, and between healthcare insurer and client.

General practitioners 7/10 The general practitioner is a medical doctor who treats illnesses and provides care. He or she can refer patients to the healthcare provider or other organizations operating in the same sector.

Local governments 6/10 This is an administrative body in a small geographic region, for example a town or state.

Hospitals 4/10 Is a health care institution providing patient treatment on all occurring problems.

Family members 3/10 These are the family members of the client that comes to the healthcare provider.

Fellow institutions 3/10 Are institutions active in the same market offering for example specialized healthcare.

GGZ Nederland 3/10 Is an overarching mental healthcare organization in the Netherlands.

Professional associations 3/10 These are organizations that strengthen and develop the interest and opinions of certain professions.

Independently established organizations

2/10 These are organizations acting in the same sector as the healthcare provider on an individual basis.

Police 2/10 Is an organization to enforce the law.

NOVO 2/10 Is an organization that is active in the healthcare sector in the Netherlands.

Compared to the primary stakeholders of the healthcare provider, the secondary stakeholder analysis revealed that health insurance companies are seen as the most important secondary stakeholder. At the same time, employees see health insurance companies as a stakeholder that is only imposing rules and regulations as can be seen in the following quote:

“They impose requirements on providing evidence-based care and requirements on the administrative process which is a huge limitation for us.” (#1)

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a good understanding of the external environment and the differences between stakeholders helps to separate these two opposites.

When combining the quote of interviewee #1 with other interviewees, the analysis revealed that there are different perceptions regarding primary and secondary stakeholders. Although the findings of this research are limited to the perception from the healthcare provider in relation to the stakeholders and not the perception of stakeholders among themselves, the findings show disparities. These differences can be explained in terms of management levels. Upper management echelons pay more attention to stakeholders that impose rules and regulations. Lower management echelons are aware of the presence of these stakeholders but focus more on primary stakeholders. Middle management echelons are positioned in between these two opposite views and in general need to incorporate all important requirements of stakeholders as defined by upper and lower management echelons.

Besides primary and secondary stakeholders, an important group in the second sphere of the external environment are competitors who offer the same service(s). To stay ahead of competitors, in first instance good order qualifiers are needed to compete for the same clients as competitors. Secondly, order winners are needed to create a situation in which clients and referring parties choose for a treatment at the healthcare provider instead of competitors. An indication of order qualifiers and order winners for the mental healthcare sector, as indicated by employees, is given in Table 4.3. This table shows that delivering good care and keep waiting times within prescribed limits are qualifiers while the healthcare provider can win clients by offering a broad range of services and having short communication lines between departments and different disciplines. Above all, delivering care that exactly matches requirements of the clients can win even more orders.

Table 4.3: Order qualifiers & Order winners

Order qualifiers Order winners

Waiting times are within limits, these are visible for general practitioners and other referring parties

Delivering high quality care that exactly matches, and is the best method to solve or reduce the complaints of clients

Delivering good care Waiting times are as low as possible

Broad range of service offerings by the case company Short lines of communication between departments of different disciplines

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manufacturing industry. Due to the design of the Dutch healthcare system which is relatively regulated, these concepts have less influence in the healthcare sector. However, demography has influences on healthcare in general. Examples are the rising life expectations as mentioned in the introduction. Over a longer period of time, governments can have the most impact on the healthcare provider by imposing new rules and regulations that affect the structure of the Dutch healthcare system. Organizations operating in this industry, also the healthcare provider, need to be agile to a certain extent to be able to cope with these changes.

4.2 Stakeholder requirements

A profound analysis of the external environment supports the definition of primary and secondary stakeholder requirements. This will be done according the performance objectives defined by Slack and Lewis (2011): quality, speed, dependability, flexibility and costs. In terms of quality, the goal of the healthcare provider is to improve the standard of living of clients. To achieve this, the focus is narrowed to customer engagement, availability and reliability. During the interviews, employees indicated elements relating to the quality of service. These elements are visualized in Figure 4.2. The arrow thickness relatively indicates by how many interviewees a specific element is mentioned as part of service quality. For example, delivering good care is mentioned by eight of the ten interviewees and motivation, the other extreme, is only mentioned once as element of service quality. As can be seen in the figure below, delivering good care, client treatment and customer focus are mentioned as the main influencers of service quality. In the third part of the findings, during the process of reconciliation, these elements of service quality will be further investigated and compared to the internal capabilities of the healthcare provider.

Figure 4.2: Elements of service quality

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maximum time between the initial contact till the first meeting is set at four weeks. The time between the first meeting and the start of the treatment is set at ten weeks. It is impossible to define a specific amount of time that is required for all clients because of the variety in personal preferences. However, clients appreciate to have a point of contact at the healthcare provider as soon as possible after referral.

Whereas dependability is widely applicable in manufacturing organizations, this is more difficult to apply in a mental healthcare organization. Due to the high variability in clients and the service characteristics mentioned in the theoretical background it is difficult to specify the total time needed for a treatment. An example is the progress or decline a client shows during their treatment which deviates from standardized care paths and guidelines. Requirements regarding dependability differ for specific client groups and complaints. Some clients expect the shortest possible treatment while others experience treatment more as a weekly or monthly conversation which can go on for a long time. In order to align treatment to progress or decline of the client, clients expect flexibility. Clients expect the right treatment for the complaints they have under all circumstances. Flexibility can consist of multiple forms, examples are volume-flexibility, product-flexibility and organizational flexibility. In this case, volume-flexibility can be replaced by capacity and organizational flexibility is more applicable in the form of agility. The focus here is therefore on product-flexibility, the extent to which an employee is able and allowed to offer a flexible service for the client. Primary stakeholders are not directly imposing requirements regarding flexibility, however, they expect and trust the healthcare provider to be flexible in terms of providing the best suitable care.

Concerning costs, there are two stakeholders from the primary and secondary stakeholder analysis that have requirements worth mentioning. The client wants affordable care, either insured or not insured by their health insurance company. Main requirement of these health insurance companies is value for money which is essentially in line with the requirements of clients. The healthcare provider is aware of the fact that the relation with insurance companies is under higher pressure each year. This indicates once more the relevance of this research to find applicable methods to use in the healthcare sector to improve overall productivity and efficiency of healthcare organizations.

4.3 Internal capabilities

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these client groups. A division is made between younger people, adolescents, elderly people and a branch specialized in providing forensic care. The scope of this research project is narrowed to the branch that provides care to adolescents. Within this group a large variety of disciplines are offered to people with psychological or psychiatric disorders. This wide range of service-offerings can be seen as one of the strengths of the healthcare provider. Short lines of communication with different disciplines improve the effectivity and quality of care provided to the clients. The internal capabilities are analysed by using the decision areas initiated by Slack and Lewis (2011). These are: capacity, supply network, technology and development & organization. Because these terms originate from the manufacturing industry it is briefly explained how they should be interpreted in a healthcare environment. Capacity should be seen as the total amount of care the healthcare provider can provide to clients in each discipline while operating within limits of contracts with health insurance companies. Also the planning systems of the healthcare provider belong to capacity. Supply network can be seen as the way in which the service is delivered to primary stakeholders. Because this term originates from the manufacturing industry, supply network is replaced by service provision. This is more applicable in a healthcare environment and therefore used in the remainder of this research. Technology should be interpreted as systems and processes that directly or indirectly influence the primary process of the healthcare provider. Development and organisation contains the complete set of strategic, tactical and operational decisions governing the organization. Capacity of each of the care groups is mainly determined in the contracts with health insurance companies. These contracts indicate a maximum amount of hours or diagnosis treatment combinations that are declarable. Care which is provided outside terms agreed upon in contracts with health insurance companies is called overproduction. In first instance, overproduction is not declarable which means no money is received for care delivered to clients. Because the Dutch healthcare system is designed in this way, capacity of the healthcare provider is limited to a certain extent. Within the ranges of available capacity, the main steering instrument is the mix of employees. There is a large difference in costs, a psychiatrist for example is more expensive than a behavioural therapist or psychotherapist. With these functional areas, the healthcare provider needs to ensure availability while operating within the capacity limits decided upon in contracts with health insurance companies.

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healthcare provider, different forms of delivering therapy to the client are offered. There is a strong focus on providing outpatient care and teams are acting locally in terms of geographical coverage. Few examples of the different forms of service offerings provided by the healthcare provider are: outpatient care, treatment provided via video-calling, face-to-face treatment, following online modules or a combination of these which is called blended-treatment. To support all these processes, a third decision area is used which is technology. Developments in technology follow each other in quick succession. However, compared to the manufacturing industry where technology often is used actively in the primary process, the healthcare provider uses technology more to support primary processes. Examples are software developed to provide online care and online modules, but also software that allows employees to perform their administrative work more efficiently. An element that can complement technology as it is used in a manufacturing setting in the primary process, is knowledge. Knowledge is one of the most important elements in the service offering of the healthcare provider, a considerable part of this service offering and success of treatment is based on knowledge possessed by employees. Professionalism is therefore an important element of the internal capabilities that influences the primary process of the healthcare provider. It is significant to mention the context of this healthcare provider once again in this paragraph. The healthcare provider is focusing on providing mental healthcare. Analysing a hospital setting and their use of technology can show different outcomes.

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4.4 Positioning manufacturing vision

After analysing the corporate goals and environment, stakeholder requirements and internal capabilities it is possible to position the healthcare provider in the operations strategy matrix of Slack and Lewis (2011). This gives an overview of the OS of the healthcare provider and serves as guidance in the outline of the findings concerning the reconciliation process. The OS matrix is visualized in Figure 4.3, each square in the four-by-five matrix is the intersection of a performance objective on the vertical axis and decision area on the horizontal axis. By using these intersections, it is possible for a healthcare provider to position the organization in terms of operations strategy. Especially the decision area service provision and performance objective

quality turned out to be critical for this healthcare provider as can be seen in the filled

intersections.

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4.5 Reconciliation process

This part of the findings will analyse the reconciliation process between stakeholder requirements and internal capabilities in more detail. Findings are also related to the corporate goals and the external environment as described in the first part of this section. The second part will present the findings based on the performance objectives and the third part outlines findings concerning the decision areas of the operations strategy matrix. Findings regarding each filled intersection in the OS matrix (Figure 4.3) are presented in detail in the paragraphs about performance objectives and decision areas.

Corporate goals and external environment

The goals set by the healthcare provider are clear and include elements as client engagement, availability, reliability and improving wellbeing and the standard of living of the client. Although these are clear goals, employees often are not fully aware of these goals and the direction the company is going to. Interviewees mention they want to deliver the best possible care to the client but cannot fully explain how they want to do this as can be seen in the quote below.

“We want to deliver the best possible care, good psychological care. We do that with highly educated and officially registered employees. That is what we stand for.” (#2)

Other interviewees indicate that they are not familiar with the mission and vision of the organization and only three interviewees mentioned accessibility and reliability as elements of the mission and vision. This shows that improvements can be made concerning awareness of the long-term vision and mission. Looking at the organization in terms of structure and culture, the organization has a classified hierarchical control system which consists of five managerial layers. In their annual report and strategic documents, the organization state that their intention is to incorporate employees’ conceptions in decision making. The idea of this intention is that employees act on the operational level and can decide if ideas are meaningful and in the best interest of the client. All interviewees indicate this is desirable, however, they also indicate they don’t feel the organization really incorporates their ideas and suggestions.

“From the mission, the intention is to focus on the bottom-up principle, so, teams and professionals in the lead, that is mentioned as important. I think in reality a lot of decisions

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The quote on the previous page indicates a lot about the organizational culture. Nine out of ten interviewees experience the organization as an organization which is controlled top-down and six out of ten interviewees have the feeling that decisions are made centrally. On the other side, there is a sense of understanding: external rules and regulations imposed by secondary stakeholders and the size of the case company are often named as reasons influencing this organizational culture. Nevertheless, there is some friction between the desired- and perceived situation concerning the organizational culture. This friction could eventually result in a lack of support under employees. An example is given by one of the employees who indicates that employees don’t feel the connection between ideas they initiate from bottom up and the corresponding decisions made in higher management echelons. Therefore, it is important to have a good and clear balance between top-down and bottom-up decision making. The remainder of this part will more focus on stakeholder requirements in terms of performance objectives and internal capabilities in terms of decision areas.

Performance objectives

As indicated in the stakeholder requirements and Figure 4.2, service quality is mainly influenced by client treatment, customer focus and delivering good care. These three indicators are not measurable or specific in general. From the interviews a relationship between inputs and outputs of quality of service was found, this relationship is visualized in Figure 4.4. As can be seen, for each of the three elements more specific characteristics are defined. Eventually, quality of the service influences patient satisfaction which is visible in the routine outcome measurement score (ROM). Employees specify this ROM-score as a control instrument, the outcomes of this score can be used to further improve the indicators of client treatment, customer focus and delivering good care. These indicators are: customer engagement and employee-client relationship to improve client treatment, information sharing and having the client in the lead for customer focus and using guidelines, care paths and evidence based care to improve the delivery of good care.

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While this relationship emerges from the interviews with employees of the healthcare provider, they also indicate the organization is currently using four objectives which are: customer satisfaction, effectivity and quality of care, business wise working and innovation (CEBI). The indicators as proposed in Figure 4.4 can also be found in the CEBI-principles initiated by the healthcare provider. However, the other way around, some elements of the CEBI-principles are not mentioned by employees of the healthcare provider. Examples of these are different prevention protocols used to maintain quality of care as indicated in documents. This can mean different things: employees can be aware of these protocols but do not consider them as influencers of service quality, or the CEBI-principles are formulated with a broader scope and interviewees involved in this research do not work with those protocols on daily basis and therefore did not mention them.

Besides service quality there are more factors influencing patient satisfaction, speed is one of these factors and as described in the stakeholder requirements, can be defined in multiple ways. External rules and regulations indicate maximum waiting times, the indicator of speed. The healthcare provider needs to manage these waiting times. This is partially done by a central planning system while other departments have some freedom in this process. Interviewees stress the importance of keeping waiting times within a certain range:

“If general practitioners know our organization has short waiting times, patients are referred to us. This continues till the waiting time is around twelve weeks, that is the turning point when the amount of patients referred to the organization is decreasing. When this takes too long your organization obtains a negative image and eventually will get out of business.” (#3)

This is in line with the importance the healthcare provider gives to accessibility and the importance in general for the healthcare sector to be accessible for clients within an acceptable period of time. The healthcare provider uses different measures to keep waiting times within an acceptable range. An example is to plan the intake as early as possible and then have a relative long waiting time till the first treatment, compared to having the first treatment right after a long waiting period for the intake. Another measure taken to minimize waiting times is to look at the specific knowledge of employees and sometimes assign a second- or third-best employee in their discipline to a specific client. This is done to be more flexible and keep an acceptable rate of patient flow.

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offerings in specific groups to form specialized departments and disciplines. However, for some psychological complaints it is still difficult to determine a maximum treatment time in advance. For other complaints it is easier and the healthcare provider is actively using care paths for these disciplines. While some of these care paths are still under development, it is interesting to see that a few employees feel the urgency of thinking more in time frames for specific treatments.

“…that we force ourselves to think more in timeframes, I think that will help us to provide more effective treatment. If you perform a psychotherapy with an open end you can see that on average it takes longer compared to a therapy with agreed moments of evaluation. So, for

your own thinking it is important to say: this therapy takes so long, then we evaluate.” (#9)

As indicated by the quote above, this thinking in timeframes will improve the effectivity of the provided care compared to an open treatment in which clients receive a treatment without setting goals in a specified period of time. Although dependability is difficult to apply in a healthcare environment, the healthcare provider involved in this research showed initiatives to apply this concept which is in line with their corporate goals. An example is expanding the use of care paths to get more grip on total treatment times.

Flexibility in mental healthcare is applicable to a certain extent. Especially when focusing on product-flexibility it is important to understand to which extent flexibility is possible. This is mainly limited by requirements imposed by health insurance companies. Examples of these requirements are the type of care provided to a client, who is allowed to be head practitioner and the type of data that need to be registered in order to receive a compensation when closing a DBC. Therefore, concerning flexibility, it is important to define limits and possibilities in certain areas. One of the important tools to define these are the guidelines. Formally, guidelines provide the direction during preparation of the treatment plan. Within these guidelines employees act and make choices based on internal professionalism. Here, some freedom is required by the employees which should be possible because employees are all qualified for their profession and possess the right knowledge and skills. There is also a possibility to deviate from the prescribed guidelines as long as there is a good reason for this. Interviewees indicate that it is important to have this flexibility because during treatment, they work with people who also change due to all kind of circumstances. Providing mental healthcare is often not a linear process.

Operations Strategy in Mental Healthcare