Analysis of Strategic and Operations Management in London Hospitals

This report provides a comprehensive analysis of strategic and operations management within the context of hospitals, specifically focusing on London-based teaching hospitals. It begins by exploring various theories for managing different process types, emphasizing the importance of process management and how it can be effectively implemented. The report then delves into the application of Economic Order Quantity (EOQ) to optimize inventory management within hospitals, highlighting the associated assumptions and advantages. Furthermore, the report discusses the implementation of Total Quality Management (TQM) in hospitals to enhance patient satisfaction and improve overall operational efficiency. It covers the significance of TQM in addressing patient concerns and its role in maintaining the hospital's financial standing, based on patient ratings. The report provides insights into how hospitals can strategically manage their operations to meet objectives, manage waste, and improve service quality. The report also discusses the application of information systems, management theory, vertical integration, customer involvement, and resource flexibility in the context of hospital operations. Finally, the report also provides insights into the advantages of implementing the EOQ model in a hospital and the software used in its calculation.

STRATEGIC AND
OPERATIONS MANAGEMENT
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Table of Contents
INTRODUCTION...........................................................................................................................3
1. Theories to manage the process types ........................................................................................3
Importance of process management and how it can be done......................................................3
2. Economic order Quantity.............................................................................................................6
3. Implement of Total Management Quality for hospitals...............................................................8
CONCLUSION ............................................................................................................................10
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INTRODUCTION
In order to ensure that an organization goals and objectives are met, it is necessary to
manage its operations strategically. Taking a broader view one can say that while planning for
operations management involves supervising in context of production, manufacturing or the
provision of services (Hill, Jones and Schilling, 2014). Apart from managing above functions,
managing of waste is also important through which any hospital can increase its profitability.
The concern industry while managing waste needs to identify what waste is and where it exists.
If hospitals are producing any medicines the waste can arise from over production, inappropriate
processing or transporting them from the place of production to place of use. Waste can also
occur in terms of wasting patient and doctor's time, if proper management of consulting
according to patient availability is not done. So depending upon various hospitals way of
functioning, source of waste and its related waste management should be planned.
In the present context of report discussion is done on the operations management of
various hospitals in London which are acting as teaching hospitals along with the provision of
general beds, wards and operation theatres along with providing air ambulance with tertiary
services for the city which involves providing facilities in the nature of advanced medical
investigation. Therefore in order to ensure proper management of its large scale operations it is
very necessary that its operations regarding its services and waste management should be
planned properly and in a strategic way.
1. Theories to manage the process types
Importance of process management and how it can be done
It is essential to deal with the volume and variety issues in a hospital, so that different
requirements can be met at the correct time. Further it is necessary to manage cost with revenue
so that the highest operating profit can be achieved(Aaker, 2008).Additionally with the
increased competition it is important to maintain the service quality and patient satisfaction
which can only be achieved by proper resource management of various processes carried out by
the hospital which includes managing its personnel, equipment, beds and the concerned specialist
time. Referring to managing services in operation theatre, various approaches for measuring
process orientation are:
Information system approach
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In order to manage work of the hospital regarding information of its various departments,
help of information system is taken which can manage the care, coordination and supply activity
and logistics. By maintaining the record of various supplies, in the information system, designed
for hospitals, the authorities are aware of the deficiency of each department and each process,
like for example where and when there is the requirement of equipments for diagnosis, treatment
in the hospital and services provided in the form of specialized doctors can be checked and
controlled by information system. When considering about the logistics special care should be
given in maintaining the cost efficiency of different materials needed by the hospital like
medicines, devices etc. (Hitt, Ireland and Hoskisson, 2012).
Application of management and organizational theory
With the help of management and organizational theory hospital can assess about the
application of six organizational instruments which are connected with process management and
of decentralization. Process management consist of managing the process flow, vertical
integration, resource flexibility, customer involvement and capital intensity. In context of Royal
Hospital major consideration should be given to the process flow, job shop process and batch
flow process(Ward and Peppard, 2016)
Process flow
In process flow consideration is given while deciding the construction of hospital which
involves high degree of job customization. Next is the job shop process which involves creation
of emergency rooms, general wards, testing and teaching laboratory as well as examining
teaching rooms which provides flexibility to carry out various operations smoothly and to
determine the demand of each independently and without any confusion(Slack, 2015) Next is the
batch flow process which specifies about the materials that are to be ordered in batch size
depending upon their frequency of requirement and finally managing the line process which
involves seeing the requirement that which materials are needed from the very beginning of
entering the hospital. This also involves managing the continuous flow process which needs to
be operative irrespective of the operations carried out in the hospital like generation of proper
electricity, maintaining cleanliness in very part of the hospital(de, Wood and Gelade, 2010)
Vertical integration:
In vertical integration general hospital has to make sure that those medicines which it is
not producing in house are to be outsourced from other suppliers. In involves make and buy
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decision which signifies more vertical integration in case of make and more outsourcing in case
of buy. In hospital context it can refer to having its own manufacturing plant of producing
materials like syringe, and some copyright medicines. If the hospital adopts more vertical
integration it can help it to cover the global markets by selling its copyright drugs and medicines
all over the world. Adopting vertical integration can also helps the hospital to invent latest
method of producing a particular medicine which can further leads to saving in cost of
production(Vego, Kučar-Dragičević and Koprivanac, 2008) while adopting outsourcing
regarding the purchase of various kinds of medicines and equipment, the hospital can concentrate
on its major activities like provision of up to date services regarding teaching of medical
students, regarding this the hospital needs to take actions regarding maintenance of up to date
library, scheduling the time of doctors so that they can concentrate on the lectures as well as the
time of treating their patients.
Customer Involvement:
Process management can also be done by the involvement of patients by keeping an
option to the patients regarding the provision of the services at their homes. In order to properly
manage this service the hospital can take the help of patients feedback regarding the
professionals which are treating them at their homes.
Resource flexibility:
Next come the part of having resource flexibility which involves product and volume
flexibility. In product flexibility an organization should determine the products with lower life
cycle and which require continuous up-gradation to maintain their efficiency. Therefore Royal
Hospital should make records of expiry dates of medicines and if there is any upgraded version
of them is available in the market. Under work force flexibility consideration should be given in
managing the rotational shift of employees so that availability for 24 hours can be maintained
which is necessary in case of a hospital. Apart from this whether the present workforce is
competent and the process needs to be adopted in recruitment process. For this concerned
hospital needs to manage its cost on recruitment cost as per the the budget decided for the same.
Capital outlay:
Other important decision is to be taken is of capital outlay that is the extent to which
money is to be invested on each process so that equipment, professional services and personnel
can be assigned depending upon the assigned benchmark. This helps in assessing and
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maintaining flow as per the requirement. Capital outlay can be depended on the degree of
availability of automation of machines and their requirement by the present hospital(Büyüközkan
and Çifçi, 2012).
Managing all these above mentioned points will help the hospital in maintaining the
quantity of materials in its various departments.
2. Economic order Quantity
It is necessary to maintain the levels of inventory in hospital so that working in its
operations can be carried out in a smooth manner. To maintain the level of stocks along with cost
effectiveness EOQ can be an approach adopted which focusses on minimising the ordering and
carrying cost as per the annual requirement of inventory which can help the hospital to achieve
cost efficiency(Brandao de Souza, 2009). Royal Hospital can apply this in managing the
inventory requirement in its pharmacy where demand of particular medicines are constant and its
annual requirement can be easily identified. . Further EOQ helps in reducing the time between
demand and supply of materials which is also the outcome of proper inventory and control. Some
assumptions has to be made by the hospitals authorities while deciding the economic order
quantity which are:
 Ordering cost remains constant
 The requirement of particular medicines are known and it is evenly spread throughout the
year.
 The purchase price of material is constant.
 No delays are observed in the delivery cycles and they are delivered in the batch size that
was being ordered.
The bottlenecks identified in the above points will help in solving the problems in the
implementation of this model.
EOQ can help the hospital to plan its cash flow blockage in inventory balance.
The major cost involved in EOQ are ordering cost which is incurred every time an order is
placed and the cost to store ordered quantity and purchase price of each unit(Guerriero and
Guido, 2011)
It is expressed in numerical form in terms of:
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Where Q is expressed as EOQ
D= is the annual requirements
S=Ordering cost per order
H=carrying cost per unit.
For example for estimating economic order quantity with reference to the requirements of beds,
considering all assumptions regarding EOQ holds good, the annual demand of beds are
considered as 50, purchase price of each bed is 20 pounds, ordering cost per order is 5 pound and
carrying cost is 5 pound per unit per annum, then by application of EOQ:
=2*50*5 divide by 5=100 and by taking root of 100 we get 10. Therefore Economic order
quantity is 10, which shows that the order size at a particular time should be 10 beds minimizing
the hospital overall cost.
Referring it to hospitals for managing inventory, it can maintain its inventory which is
used by the hospital in providing its integral services like infection control, cancer care,
insomnia, irritable bowel , musculoskeletal medicine etc. For maintaining inventory of medicines
under this service and other goods, the hospital needs to evaluate its present demand as per the
frequency of cases(Yang and Lin, 2009) Then it has to consider whether there is a requirement of
additional warehouse to match the supply with the demand or not. If yes then the carrying cost
will accordingly be increased. The specific advantages that accrue by implementing this model in
the hospital:
The EOQ determination will help in determining the safety level along with the
specification of minimum and maximum re order quantities as EOQ specifies that quantity on
which the ordering of the inventory should take place. There are various software available for
calculation of the same, which further solves the problem of its complex mathematical
calculations(Haux, Winter, Ammenwerthand and Brigl, 2013.)
As this model require assessing the demand, therefore continuous monitoring of the inventory is
done solving the problem of its emergency requirement. As this model solves the two main
problem of how much inventory is to be ordered and when it is to be ordered.
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3. Implement of Total Management Quality for hospitals
The progress of any hospital is judged on the basis of satisfaction level of its patients.
Hospitals funding system also depends upon the ratings given by its patients. Due to lower
ratings its funding management can be affected which is not a good sign for managing the
hospital according to future requirements(Subramanian and Ramanathan, 2012) Therefore
managing the quality of work from the lower to the highest level is important to maintain the
efficiency all throughout and reduce the patients complains. In a hospital level applying TQM
will help them to solve the major problems that are being faced by the patients in terms of its
services. In order to find out this problem various survey can be conducted in which the present
and the past patients can be asked to share their services regarding the hospital services.
Further as the aim of total quality management is to adhere to the performance targets
fixed by the hospital standards board, it helps them to achieve the benchmarking assigned for
each process or department(Kumar, Ozdamar and Ning Zhang, 2008).
TQM can be implemented in any field of Royal various hospital including accounting,
administration like maintaining the cleanliness and safety of the hospital, providing various
services like consulting, operations, management of materials, research and development
conducted for various field of interest like development of any drug or invention of any method
of doing a particular task, ways of providing education to the future medical students which can
lead to enhancement of hospital brand image and helps to identify the bottlenecks in its further
success(Hill, Jones and Schilling, 2014).
Impact of TQM
The main negative impact of TQM is that it involves specific training to be given to the
employees involved it its implementation, therefore they need to be taken away from their actual
workplace which can lead to short term increase of cost. Also TQM involves continuous series of
changes it can sometimes be resisted by those employees who prefer the current system and feel
that they loose their jobs because of it(Hitt, Ireland and Hoskisson, 2012).
A study in TQM suggests that small hospitals and healthcare institutes are more
successful in implementing it as compared to the larger ones as the smaller system are generally
easy and more simpler to amend. So Royal various hospital should conduct the study for various
TQM procedures adopted by various small scale hospitals in order to know the major success
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points in them. Further with time when applying TQM over a consistent period of time benefits
like:
 Cost Reduction: While applying TQM consistently, personnel become aware of the
quality standards to be achieved therefore it minimizes their cost in the form of waste
reduction and amount spent on rework. This savings generally flow directly without
incurring any additional costs therefore it ultimately leads to an increment. Like Royal
Hospital while following TQM in research and development work, if the particular
researcher knows that developing a particular medicine requires this quality standard to
be meet, after initial trials the researcher will gain expertise which leads to minimization
of waste.
 Customer satisfaction: As more time is devoted in providing initial services to patients,
adhering to the specified quality requirements, therefore it will reduce the resources
which is diverted in solving patient complaints which ultimately increased the positive
ratings given by the patients and therefore the funding given by the government can be
maintained. Patients satisfaction leads to their loyalty towards the healthcare institute
that compel them to consult it every time they come up with any medical issue. They also
gives suggestions to other people to consult the concern hospital in case they come up
with any healthcare issues
 Defect Reduction:TQM believes in improving quality in process rather than inspecting
the quality in process, therefore time required to fix errors is reduced. For that it requires
employing quality management team in the hospital(Slack, 2015).
 Morale: Working for the hospital and serving patients with the best quality in service,
morale of the persons working for them increases and it motivates them to perform even
more in a better way. This indirectly reduces the employee turnover, which ultimately
leads to the reduction in cost of hiring and training new recruits(Vego, Kučar-Dragičević
and Koprivanac, 2008).
 Increases the efficiency of the present workforce: As the present nurses, ward boys are
habitual of doing the work in keeping in mind the various quality standards they become
perfectionist in the discharge of their duties like serving people, maintaining the
requirements of different equipments and medicines in operation theatre and check on
proper intervals whether it is working properly or not. Further they know how to handle
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the patients which are operated so that the petty issues can be solved in the initial level
and are not been disrupted in the discharge of important duties.
CONCLUSION
With the present report it can be concluded that managing operations strategically in
healthcare industry is also equally important as managing operations in any other industry. With
the growing number of patients and the health issues faced by them it furthermore becomes
important to deal with each and every patient in a proper way that leads to their maximum
satisfaction(Brandao de Souza, 2009) Therefore in the present context of Royal various hospital
inferences can be drawn that in order to manage its large scale healthcare services ranging from
women health to stress management and providing the specialist advice in the field of pharmacy,
the hospital needs to manage its team of team of professionals and the requirement of drugs and
medicines in the discharge of these services. Therefore the importance of EOQ and Total Quality
Management is shown in this context.
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