1 health care leadership institute: leadership development program linking satisfaction and...

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Health Care Leadership Institute: Leadership Development Program

Linking Satisfaction and Performance

Michael D. JohnsonD. Maynard Phelps Professor of Business Administration

University of Michigan Business School

January 23, 2004

© 2004 by Michael D. Johnson

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Linking Stakeholder Satisfaction and Performance at UMHS

What business model links the various stakeholders within UMHS?

How should stakeholder satisfaction be measured and linked to performance?

How is stakeholder satisfaction measured and linked to performance?

What are the strengths and weakness of the current systems and how could they be improved?


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Volvo’s Business (Profit) Model(from Flodin, Nelson and Gustafsson 1997)

ImprovedProfitability

CostReductions

ImprovedProductivity

ImprovedInternal Quality

ImprovedExternal Quality

CustomerSatisfaction

CustomerLoyalty


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Sear’s Employee-Customer-Profit Chain

Attitudeabout the job

Attitudeabout the company

Service(Helpfulness)

Merchandise(Value)

Employeebehavior

Customerrecommendations

CustomerImpression

Employeeretention

Customerretention

ROA,margins,revenuegrowth

5 unit increase in employee attitudes

1.3 unit increase in customer impression

0.5% increase in revenue growth

Source: Rucci, Kirn & Quinn, Harvard Business Review Jan. - Feb. 1998


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The UMHS was created to leverage the potential synergies across the three elements of the system: Medical School, University Hospital, M-Care

Medical School (*)

UniversityHospital

M-Care

Demand for care givers

Supply of labor force

Research & Technology Development

Support to Customers andCommunity

Customers

Reputation

Possibility of training through patient flow

(*) Medical School: Includes Medical School, Nursery School, Pharmacy School, etc.


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A major part of the “business model” at UMHS looks something like this…

FacultySatisfactionand Loyalty

StaffSatisfactionand Loyalty

PatientSatisfactionand Loyalty

BusinessPerformance

(E.g., percent of patient care, word-

of-mouth, etc.)

Keep in mind that there are drivers and consequences of satisfaction for each stakeholder!


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For any given stakeholder…

The Purpose of a Satisfaction Measurement System is to: Help operationalize your “business model”. Set priorities for quality improvement. Optimize your investments by linking quality

improvements to performance outcomes.


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Building a System

IDENTIFYINGTHE PURPOSE

(STRATEGYAND PLANNING)

BUILDING THE“LENS” OF THE

CUSTOMER(QUALITATIVERESEARCH)

BUILDING THE QUALITY-

SATISFACTION-LOYALTY SURVEY

FROM DATA TOINFORMATION

(DATA ANALYSIS)

FROM INFORMATIONTO DECISIONS

(PRIORITY SETTING)


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Reference


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CompetitiveAdvantage

CompetitiveVulnerability

Reallocate

Resources?

Don’t Care

(But Watch)

Opportunity

(Move First)

Basics


CompetitorAdvantage

ReallocateResources?

Don’t Copy(But Watch)

Opportunity

(Move First)

Basics

YourCompetitor’s

Offering

Your Company’s

Offering

YourCustomers’

Needs

Your measurement systems should

provide information on 3Cs: Your

Company, Customers, and

Competitors(Gustafsson and Johnson 2003)


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Customers’Needs

Siemens Competition

CompetitiveDisadvantage

Commodities

Opportunities… unmet needs

that neither serve…opportunity to innovate

Potentials… unique things

we have… are we ahead of

the market?

Irrelevanciesthat both

have

Threats… unique things competitors

have … are they ahead of the market?

This Venn Diagram Differs by Segment

(e.g. Visionaries, Early Adopters, Early Majority, Late Majority and Laggards)

and by Competitor.

Application of the Framework


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Whose “lens” should you adopt?

PeoplePeople

ProductsProducts

OperationsOperations

Lens of theOrganization

Lens of theOrganization

ConvenienceConvenience

SafetySafety

CleanlinessCleanliness

Lens of theCustomer

Lens of theCustomer


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Using Critical Incidents to Build the Lens of the Customer

Have customers list “likes” and “dislikes” regarding their interactions with a product, service or company.

Group likes and dislikes into individual attributes or satisfaction survey variables.

Group satisfaction survey variables into key underlying customer benefits or consequences.

Assess reliability and comprehensiveness of the revealed customer requirements.


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The End Product is a Lens of the Customer!

ServiceService

ProductsProducts

StoreLayout

StoreLayout

PricesPrices



CustomerLoyalty

CustomerLoyalty

CleanlinessCleanliness

ConvenienceConvenienceSafetySafety

MotoristServices

MotoristServices

SeparateTake Out

SeparateTake Out

Brand(Reputation)

Brand(Reputation)

Strength ofRelationship

Strength ofRelationship


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Using the Lens of the Customer to Drive Survey Design and Analysis

Your “lens” provides a blueprint for survey design. Your survey must have sensitive and reliable

dependent measures in order to determine what is important to customers or other stakeholders.

It is inherently difficult for survey respondents to identify directly what is important to them.

Statistical analysis (regression analysis and causal modeling) yield more objective measures of importance or impact.


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The Output of Data Analysis:An Impact-Performance Chart(Source: Viking Tire Company (B) Case)

Performance

Shipping & Delivery

Tire ProductSales Department &

Local RepPricing

Discounts & Payments

Complaint HandlingPromotional Activities

Sales Activities & Support50

55

60

65

70

75

80

85

0 0.1 0.2 0.3 0.4 0.5

Benefit Impact

Be

ne

fit

Pe

rfo

rma

nc

e


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Priority Setting

Determine the importance of various drivers on satisfaction.

Determine performance benchmarks - absolute or relative to direct competitors.

Focus improvement efforts (costs) where benefits are greatest – where the impact on satisfaction is high and the firm is performing poorly.


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A Strategic Satisfaction Matrix

Low Impact &Strong Performance:

Maintain or reduceinvestment or alter

target market

Low Impact &Weak Performance:

Inconsequential -Do not waste resources

High Impact &Weak Performance:

Focus improvements here - Competitive vulnerability

High Impact &Strong Performance:

Maintain or improve performance - Competitive

advantage


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Linking Satisfaction Models to Financial Performance

Management ultimately wants specific estimates of the payoff to investments in quality, satisfaction, and loyalty.

The level of analysis one can perform is highly dependent on how detailed the accounting data is: By customer or stakeholder? By account? By facility?


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Sales Satisfaction Model for Volvo Dealers(Source: Gustafsson and Johnson 2003)

Personnel8.99

Models8.50

Information8.48

Delivery8.68

Car Satis-faction9.26

Stated salessatisfaction

8.73

Profit newcar

Stated salesloyalty8.76 Insurance

Financing

VolvoCard

Workshoployalty

0.168

0.314

0.087

0.035

0.094

0.492

0.4100.023

-0.055

0.115

0.072


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Estimated Return on Quality (ROQ) Improvements(Not including the car!)

Personnel 266.1Models 54.8Information 19.5Delivery 62.3

Total 402.7

Benefit Area ROQ in SEK


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Summary

Your stakeholder satisfaction and loyalty measurement systems should help you to: Operationalize (your business model) Prioritize (your quality improvements) Optimize (your investments)

This requires a system that: Reflects the lens of the customer/stakeholder Is sensitive and reliable Identifies both performance and impact Provides sufficient detail for implementation


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Stakeholder Satisfaction and Loyalty at UMHS


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Overview of Coverage

Faculty Surveys

Staff Surveys

Patient Surveys

Inpatient Emergency Clinics Out-patient Surgery


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Let’s take a look at two different patient satisfaction surveys…

Press Ganey Inpatient Survey Ten areas are evaluated (e.g., admission, room, meals,

nurses, physician). Scales range from 1 = very poor to 5 = very good. Includes overall assessments.

Office Visit Satisfaction Survey Visit rated on 16 attributes (e.g., length of time between

making appointment and day of visit, thoroughness of exam/treatment).

Facilities rated separately. Scales range from 1 = poor to 5 = excellent. Includes overall assessments of the service provider,

satisfaction with the visit, likelihood of returning, etc.


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Breakout assignment:

Evaluate both the Inpatient Survey and Office Visit Satisfaction Survey using the following questions:

1. What is the purpose of the survey and how well does the it meet that purpose?

2. Is the survey developed from the lens of the customer or lens of the organization?

3. What is the quality of the survey measurement and level of detail?

4. What is the quality of the analysis?

5. How well does the system allow you to set priorities for quality improvement?


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A Note on the Press Ganey Priority Setting Process

1. Rank order performance scores by question (from high to low)

2. Calculate correlation with dependent variable (patient satisfaction) and rank order (from low to high)

3. Sum the two rank orders

4. Rank order the sum of the ranks


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Analysis of Office Visit Satisfaction Survey

Random sample of 502 OVSS respondents Factor analysis suggests three primary drivers of satisfaction:

Scheduling & Check-in Provider quality Facilities quality

Three overall evaluations questions similar to the ACSI (American Customer Satisfaction Index) used to create a satisfaction index.

Patient loyalty measured using: Likelihood to recommend Likelihood to reschedule


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Office Visit Satisfaction and Loyalty Model

Scheduling &Check-in

(78)

Provider(87)

Facilities(84)

Office VisitSatisfaction

(84)

PatientLoyalty

(94)

0.295

0.433

0.130

0.615


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Satisfaction Drivers

Impact-Performance Chart

Facilities

Scheduling &Check-in

Provider

76

78

80

82

84

86

88

0.00 0.10 0.20 0.30 0.40 0.50

Impact

Per

form

ance


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Description Relative Impact Performance

Time between appointment and visit 9% 72.25

Ability to schedule appointment 19% 77.92

Time on hold when making appointment 0% 70.08

Courtesy of person on the phone 3% 83.35

Helpfulness of check-in staff 8% 86.17

Promptness of check-in staff 14% 86.29

Courtesy of medical assistant 14% 85.84

Time at office/clinic until provider is seen 34% 69.25

Scheduling & Check-in


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Provider


Personal interest in medical problem 10% 87.37

Ability to answer questions 0% 88.59

Thoroughness of exam/treatment 21% 87.96

Provider's case knowledge 14% 84.37

Explanation of procedures and tests 3% 85.26

Adequacy of information/education received 4% 85.45

Time spent with provider 18% 84.08

Provider is courteous and respectful 20% 91.27

How well the pain was managed 10% 85.25


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Facilities


Cleanliness of restrooms 11% 81.76

Cleanliness of exam room 54% 87.50

Clarity of direction to the office 14% 84.60

Ease of parking 21% 76.72


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UMH Patient Satisfaction vs. ACSI Benchmarks

88

84

82

73

63

61

50 55 60 65 70 75 80 85 90

Amazon.com

UMH Survey

Federal Express

Hospitals (Overall)

IRS (Individual Tax Filers)

McDonalds

UMH Survey Satisfaction vs. ACSI Scores


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Sensitivity of the Measures?

0

10

20

30

40

50

60

70

Explanation ofMedical

Proceduresand Tests

Cleanliness ofthe Exam

Room

OverallSatisfactionw ith the Visit

Perc

en

t R

esp

on

ses

Excellent

Very Good

Good

Fair

Poor


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Sensitivity of the Measures?

Would Schedule Next Appointment with Provider

0102030405060708090

DefinitelyWould

ProbablyWould

Unsure ProbablyNot

DefinitelyNot

Per

cen

t R

esp

on

ses


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Conclusions and Implications

Your satisfaction measurement systems should: Have a clear purpose (e.g., policy deployment,

quality improvement) Reflect the lens of the customer Provide detailed, sensitive and reliable data Provide explicit impact and performance

information Be linked to meaningful business performance

metrics


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Conclusions and Implications

My own impression is that the current array of stakeholder satisfaction measurement systems at UMHS: Provides good coverage and detail Vary with respect to quality of data and analysis

Be careful not to base organizational strategies and goals on weak data and analysis.

Ultimately, the various systems should be linked via a “business model”.

1 health care leadership institute: leadership development program linking satisfaction and...

Documents

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