Introduction
The Arnold Palmer hospital is a unique hospital that provides family health care specializing in women and children. Right from its inception, the Arnold Palmer hospital has experienced growth in a robust way. It is based in Orlando but serves clientele from all the fifty states of the U.S. It originally had a capacity for six thousand, five hundred births per year (Arnold Palmer Hospital, 2011).
Within no time it approached and passed the ten thousand births mark. It is named after its original donor, a famous golfer Arnold Palmer who insisted that it must be a top quality hospital (Evans, 1996). Today, Arnold Palmer Hospital (APH) is one of the largest and most respected hospitals. Every year, it sees tens of thousands of babies born in its facilities and treats women and children.
This essay aims at identifying sound operation management strategies and issues which give an organization its competitive advantage. A case study of Arnold Palmer Hospitals will be done and recommendations done for the best operations management strategies it should assume if it is to expand profitably (Taha, 1996).
Total quality management (TQM)
According to Dr Vincent Giusti a pediatric hematologist in the hospital, the hospital treats the whole child and not just the illness. He says that each patient is addressed by a team of specialists so as to analyze the medical and psychological condition and treatment.
Treatment goes beyond the patient and is thus extended with counseling and support of the family to eliminate fears or concerns. This is accompanied by follow up monitoring after treatment is complete (Galloway, 2009).
This kind of treatment is a proof that the hospital emphasizes on total quality management. TQM stresses on commitment by management to create continuing drive for the entire organization towards excellence in every aspect of processes or products and services which give value to the customer.
It starts with customer value proposition and the organizing of activities to contribute to the core values while continuously trying to improve on quality. The concept of TQM also involves six sigma where the program aims to reduce defects, lower costs and also give customer satisfaction (Chandra, Everson & Grabis, 2005). This is evident in the way the hospital addresses the whole patient rather than focusing on the illness alone.
Six sigma is also viewed as 3.4 defects per million opportunities abbreviated as DPMO which the process uses as the standard metric. It therefore requires high and continuous training and requires a lot of commitment from top level management.
Employee empowerment is also a major aspect and is done through building communication networks (Evans, 1996), developing open and supportive supervisors, and creating formal team structures.
The hospital uses internal benchmarking and this enables it to select the best practices that they use as their standard for performance. There are few such hospitals in the United States and this means that they are able to determine the benchmark and lead the lot. They only recruit the best of staff for customer service and they ensure their system is able to respond swiftly to customer complaints (Rainbird, 2004).
Once a case is started on a patient, they ensure follow up as quickly as possible to ensure that there are no customers who develop problems when already being attended to. In a hospital situation, expectant women who have already been admitted but not been attended to, perhaps because labour is not yet, could be viewed as the hospital’s work in progress. The hospital reduces this by admitting closer-to-birth cases.
This could be viewed in the perspective of a company trying to reduce work in progress which is a method applied in inventory management called Just In Time (JIT) (Evans, 1996). The flow of maternity patients is as follows
- expectant woman enters APH’s check in desk
- If birth is imminent she is admitted directly, if not and no complications she goes to step 6.
- baby not born, mother goes to pre-register
- Pregnant woman is taken to labor and delivery triage. If ready to deliver she goes to delivery room. If not she goes to step 5.
- Expectant but not ready to deliver; she is advised to come back at a later date or take a walk and come back to labor and delivery triage at a specific time.
- Baby born, no complications- taken to 40-44 hours of mother-baby care unit.
- if there are complications- mother taken to operating room
- Mother and baby discharged at discharge exit when ready.
Note: the numbers represent the steps outlined above.
In this setup, the hospital could do better if all mothers pre-register (if possible) at the 30th week of pregnancy and produce the registration card at the time of admission. This would help to speed up the admission process and reduce suffering for the patient. Since the process of treatment takes place at different floors I would suggest the hospital align the flow in a manner that will minimize movement and encourage efficiency.
For instance, patients who require cesarean delivery may bypass other steps to go to step seven which will happen at the topmost floor to avoid interruptions by movement.
In such a busy hospital, TQM is not sufficient to maintain a competitive advantage owing to the large number of patients or it would create a bottle neck (Hillier & Liebermann, 2001). The hospital therefore emphasizes on other strategies of operations management to ensure efficiency.
Production process strategy
Naturally, this is the process any hospital would use in the production. In other words, since there are no tangible products that are being rolled out, the strategy would be process focused as opposed to product focused or repetitive (Evans, 1996).
A job shop flow is often the case and the strategy is characterized by a small quantity of products with a large variety (Taha, 1996). There are highly skilled operators and each job requires lots of instructions. There is by virtue of the nature of product, high levels of work in progress as units move very slowly within the plant.
Fixed costs are low but variable costs are very high (Cornacchia, 1987) and the total cost is only known after completion of the job. In the case of Arnold Palmer’s hospital, there is an apparent effort to reduce the limitations of the flow. It allows the pre-registration of mothers before the days close to labor.
However there have not been efforts to sensitize people to do that, consequently there are very few people coming to register at the time of admission.
Capacity strategies
The Arnold Palmer hospital uses both size and efficiency to its advantage. With the continuing demand, the hospital has been expanding without compromising its quality. True to their original mission of being a high quality hospital, it has kept its word since its inception.
It cannot be said here that it is because of lack of standard competitors that have made it remain as a top priority for the people across the country (Galloway, 2009); the Walt Disney introduced its services in Florida too and is also a quality hospital. The bed capacity ensures that there is always room for more and more admissions while the quality services keeps them flowing in.
Just in 2006 the Winnie Palmer hospital was launched and it could be considered as an expansion of the Arnold Palmer Hospital (Lacey & Steele, 2006). It means that Arnold Palmer Hospital would be able to increase its services. The hospital has been successful in using a straddle strategy and so been able to match capacity to demand.
Location strategy
Even when Arnold Palmer hospital does not have a countrywide presence, it is still able to fetch customers from all across the United States. Florida is a state that attracts many visitors and is therefore an ideal place for people coming from far since there are enough boarding facilities that can be utilized.
It would be advisable to use factor rating method to find the best location so that the management is able to accommodate several factors which they would consider relevant to the location. It will also allow for allocation of weights to different factors depending on how important each factor is (Koshner, 1997).
Layout strategy
The main aim of a layout strategy is to come up with an economic layout that gives the firm a competitive advantage (Hillier & Liebermann, 2001). A good layout should therefore put into consideration higher utilization of space, better and efficient flow of information, materials and people and that ensures improved workers morale and customer interaction.
It should also be flexible to accommodate changing requirements (Hillier & Liebermann, 2001). In the case of a hospital, some major considerations that are necessary to factor in are the movement of personnel and patients. It is usual in a hospital that certain equipment will be shared among many departments.
In order to enhance time saving and minimize inconveniences that come about due to movement, the location of such equipment should be such that those using them will not create bottlenecks at that point. It will also alleviate suffering since the clients in this case are patients.
As this image indicates, the hospital has three round towers that enable concentration of facilities and minimizes movement. Movement up and down the towers is facilitated by elevators. Movement of materials becomes easy and time and cost is minimized (Krajanowski, 1997).
The only things the hospital would need to realign are the floors allocated to each hospital function. It would work better if emergency services like cesarean operations be done at a floor where movement up and down the elevators will not be interruptive.
In conclusion, the Arnold Palmer Hospital has used multiple operations management strategies to keep it at competitive edge. Other than being a non-profit firm, the hospital is able to control costs and maximize efficiency through good layout, location, good capacity management, and efficient processes.
Operations Management Issues to Factor when Considering an Expansion
Expansion of a firm can be looked at from two perspectives; across borders and within the country or even just within the premises (Groover, 1989). Expansion does not always translate to higher profitability.
It is upon the managers of a firm to do an accurate cost-benefit analysis when considering an expansion else money goes down the drain. Implications on cash flow, impact on quality, supply chain, maintenance and available human resources are some of the key factors to consider. Some of the important issues to consider are:
Demand for services
Accurate forecasts on demand will help to determine the magnitude in which expansion will take place. A precision study should be prepared which looks at such issues as population structure, population size, buying power of that population and other factors that would affect demand (Mark, Aquilano & Chase 1999).
Demand is the most important factor because without demand for products or services, expansion would be economically meaningless and would only be for aesthetic value. In the case of APH, the fact that the hospital has a customer drawing area across the entire country shows that its services are in demand.
Technology
Having determined the level of demand for goods and services, one may consider the level of technology required as compared to the present one (Alan & Jack, 2009). This will be greatly linked to cost since more often technology is a matter of acquisition.
Ease of expansion
The current premises should be evaluated in terms of ability to be expanded. In some instances, the older facility may have been set in a way that limits expansion and any attempts to expand will lead to a botched up process. Considering that redesigning is very expensive, there is usually a chance to redesign any premises that is not flexible.
If premises are expandable it will allow flow of movement of both materials and people. An expanded facility that causes more of backtracking in place of straight and smooth flow is a liability to the organization as it will cause confusion leading to use of more money and time (Hillier & Liebermann, 2001).
Space utilization
Maximum utilization of space does not mean suppressing the current space (Groover, 1987). It simply means that any space available that can profitably be put into utility be used but not to the disadvantage of the existing facility. For instance always ensure that traffic lanes are always spacious.
Arnold Palmer could consider expanding into a new location or different state further from Florida to make it easier for those who come from as far as the western coast to access its services.
Ease of communication and support
The alignment of the facilities should encourage easy communication of vendors, customers and the organization staff. The expanded facilities should therefore put into consideration whether they have easy access to other facilities that serve them. For instance, if a hospital department was to expand, it should be considered where equipment is located or else it would need a lot of movement or buying of new equipment.
Personnel issues
It is of critical importance to note that presence of personnel that is trained does not mean that hiring them would lead to automatic success (Alan & Jack, 2009). The expanding firm must thus be ready to train the personnel to be able to duplicate the success in the original facility.
Many expanding firms tend to concentrate too much on the profit and marketing strategies and overlook the personnel needs which are the key to developing similar roadmaps as the original location.
It should also be noted that some employees quit after expansion, unable to cope with the changes (Mark, Aquilano & Chase, 1999). This means that even the older personnel will need some form of attention perhaps in seminars or trainings to avoid this.
Competition
Consider whether it is worthwhile to enter the competition in the market that is already operating. Check their services and determine if your competitive advantages are sufficient so overcome the competition. This may be considered when factoring demand for services in the area. However, with the current mobility of people, you can still set up a business in the midst of competitors if you are able to sell beyond the precincts of the vicinity.
Expansion capital
Getting enough capital to fund expansion can be frustrating especially for ill prepared businesses. A business should thus consider the cost and find if it can fund all the accrued expenses without suppressing the current business. If it does not have the required amount of funds, it should consider early how to source for it.
Metamorphosis of company culture
There is difficulty in maintaining the bedrock values of a company as it grows (Kumar, Ressler & Ahren, 2009). As the size of staff increases, the cohesiveness starts to wear out and the company culture begins to change. The entrepreneurs need to ensure they remain focused to the obligation of shaping the culture of the firm.
Arnold Palmer hospital would therefore need to transfer some of the older staff to the new facility while ensuring that the original location retains its credibility. The transferred staff would be expected to instigate a culture that replicates the success they have experienced in the mother hospital.
Customer service
It is important to consider the impact expansion will have on customer service so as to put in place necessary controls early enough (Kumar, Ressler & Ahren, 2009). In ordinary circumstances, workload increases in multiples and business get a hard time trying to maintain the existing customers and manage new ones. This can be done through adequate staffing so that customers get the attention they need.
Training of the customer service employees will also do justice to the organization. According to Galloway (2009), a big portion of the entire staff will need on-the-job training when there is a major change taking place in the organization. The role of public relations in a service industry is done in almost equal share by every member of the organization. This is because they interact directly with the customer.
Regulations and restrictions
This mainly affects expansion beyond borders. When a government’s restrictions become too tight or expensive, it discourages expansion. Businesses often try to find less restrictive foreign operating environments that ensure there will be a good profit margin to cover up costs of expansion.
Many organizations when expanding to countries with high cost of entry choose a different form of entry other than Greenfield investment. Most choose mergers or acquisitions or even just setting up office since an office will not be counted as a whole business. In the case of APH, it may be difficult to use either due to the nature of business. It would thus be advisable to expand in countries with less legal requirements.
Resource access and cost savings
Access of raw materials is one of the enticing factors that enable a company to expand to new locations (Hillier & Liebermann, 2001). Lower production costs coming from low labor costs, low cost of power, transport and of other services will lead to unit costs and hence increase competitiveness of the business (Kumar, Ressler & Ahren, 2009).
For a hospital, access is better viewed in terms of ease of transport to the location. Such factors as major roads and airports should be put into consideration.
Recommendations for Arnold Palmer Hospital
If APH was to consider expansion, it must do a careful precision study. It should evaluate its current facilities first and determine:
- any services that would require to be moved to a new facility
- what services would best work in the original location
- what staffing needs would come with the expansion
- any capital equipment that would be required
- All the regulatory needs of the authorities.
Having determined these, the hospital should consider the optimum operation size with capacity increments taking priority in the determination. Even when considering the current expansion needs, there is still need to consider future expansion possibilities so as to erect flexible facilities.
In terms of location, it would be advisable that Arnold Palmer Hospital expands to a different state especially towards the central states of America or towards the western coast. Since it is a hospital that receives patients from all over, its management should choose a city with very good airport connections.
Expanding within Florida would be choosing to compete with itself, considering that it already has Winnie Palmer Hospital in the vicinity. Since the hospital’s services are in demand, expansion is highly recommended.
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