Chapter 2.

History of Performance
Improvement
Daniel B. McLaughlin
Julie M. Hays
Healthcare Operations
Management
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Chapter 2
History of Performance Improvement
Knowledge Based Management (KBM)
Scientific Management
- Mass Production
- Frederick Taylor
- Frank and Lillian Gilbreth
Quality
- Quality Gurus
TQM, CQI, Six Sigma
ISO 9000, Baldrige Award
Lean
Service Typologies
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Operations Management
What is operations management?
Operations management is the design,
operation, and improvement of the
processes and systems that create and
deliver the organizations products and
services. The goal of operations
management is to more effectively and
efficiently produce and deliver the
organizations products and services.
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Operations Management in
Healthcare Organizations
Cost and level of healthcare is increasing
- 1987 11% of US economy for healthcare
- 2004 15% of US economy
Control costs
Improve level of service
Improve quality
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Systems View
Labor
Material
Machines
Management
Capital
Goods or
Services
OUTPUT
INPUT
Transformation
Process
Feedback
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Knowledge Hierarchy
Importance
Learning
Information
Data
Knowledge
Understanding
Wisdom
Relationships
Patterns
Principles
Morals
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Mass Production
Two men use
hammers on
Ford factory
assembly line
Men work on
Ford on
assembly line
and then drive
away
Two men assembling
car in Ford factory
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Frederick Taylor
The Principles of Scientific Management
(1911)
Wasted human effort
One best way
Four principles
- Standard work
- Training
- Cooperation
- Planning
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Frank and Lillian Gilbreth
One best way
Time and motion studies
Cheaper by the Dozen
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Project Management
Gantt chart (early 1900s)
Program Evaluation and Review Technique
(1950s)
- U.S. Navy
- Beta distribution for task times
Critical Path Method (1950s)
- DuPont and Remington Rand
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Quality Gurus
Walter Shewhart
- SPC and PDCA
W. Edwards Deming
Joseph M. Juran

Do
Act
Plan
Check
PDCA
Cycle
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W. Edwards Deming
Father of the quality revolution
1970s energy crisis
Common cause versus special variation
14 points
System of profound knowledge
- Appreciation for a system
- Knowledge about variation
- Theory of knowledge
- Knowledge of psychology
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Joseph M. Juran
Quality trilogy
- Quality planning
- Control
- Improvement

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TQM (CQI) Six Sigma
TQM less codified than Six Sigma
Based on the teachings of Shewhart,
Deming, Juran
Top management support and leadership
Continuous improvement
DMAIC, PDCA
Six Sigma goal of 3.4 DPMO
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Quality Certification and Awards
ISO 9000
- To be certified, an organization must
demonstrate compliance with the standards
- Standards are concerned with the processes of
insuring quality
Baldrige Award
- Based on organizational excellence in seven
categories
- Dissemination of best practices
- 2005 winners
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JIT Lean Agile
Just In Time (JIT)
- Inventory management strategy aimed at
reducing inventory
Lean
- Philosophy of eliminating waste
Agile
- Ability to respond quickly to changing conditions
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Service Process Matrix
Adapted from Schmenner, R. W. 2004. "Service Businesses and Productivity." Decision Sciences 35 (3): 333347.
Degree of Variation
Customer Interaction and Service Customization
Service factory
R
e
l
a
t
i
v
e

T
h
r
o
u
g
h
p
u
t

T
i
m
e

Low
Low High
High
Service shop
Mass service
Professional service
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Supply Chain Management
Supply chain management encompasses the
planning and management of all activities involved
in sourcing and procurement, conversion, and all
logistics management activities. It also includes
coordination and collaboration with channel
partners, which can be suppliers, intermediaries,
third-party service providers, and customers. In
essence, supply chain management integrates
supply and demand management within and
across companies.
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Important Events in Performance
Improvement
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Performance Improvement
Improve the quality, safety, efficiency, and
effectiveness of healthcare using
knowledge-based tools, techniques, and
programs for system improvement.