CHAPTER 1
The Problem and Its Background
The healthcare industry in Hong Kong is an interesting case. Aside from the demand for quality healthcare, there is also a drive to reduce the cost of healthcare expenses. It was reported that the Hong Kong Special Administrative Region (HKSAR) spent HK.9 billion, equivalent to 15.4 % of total public expenditure in the year 2003-2004 on healthcare (Tsang, 2003). This escalating increase calls for the initiative to reduce costs in healthcare (Tsang, 2003). However, it is perceived that by doing so, the quality of the delivery of healthcare services across Hong Kong will be jeopardized (Tsang, 2003). This poses as a challenge for HKSAR in managing the healthcare sector. This situation, of course, is also applicable to private healthcare companies in Hong Kong that are anxious to reduce their costs without the hampering the quality of their services.
One of the private healthcare companies in Hong Kong is Quality Healthcare Asia Limited. Being led by physicians and being the largest listed healthcare company in Hong Kong, the group offers in-demand healthcare services in the region such as facilities management, third party plan administration and paramedical support (Quality Healthcare Asia Limited, 2004). As the name of the company implies, their focus is on delivering quality healthcare to clients, basically by religiously following international healthcare standards (Quality Healthcare Asia Limited, 2004). However, the focus of the company, which is quality, is quite contradicting with the characteristic of the Hong Kong healthcare industry. One of its perceived weaknesses is that the sub-standard medical practice that most healthcare providers follow is “widespread compromising the quality of healthcare and in some instances the health, of Hong Kong’s residents” (Xiao et al, 2002). The industry is also facing the problem of not having any effective tools or methods to assess the quality of healthcare delivery in the region, specifically the outcomes of healthcare delivery (Xiao et al, 2002). This questions the ability of healthcare companies in effectively managing their turf, and in the long run, ensures that they are capable of delivering quality healthcare services to their clients. Measuring the outcome is not the only problem, but also which management methods or strategies they should and would implement. There are other issues that need to be considered such as structures and patient satisfaction, that is why quality management is needed by every healthcare service providers in Hong Kong.
Like all other healthcare companies in Hong Kong, Quality Healthcare Asia Limited faces many challenges ahead of them that may tarnish or uplift their reputation as a healthcare service provider. Not only the company should comply with the plea of the HKSAR to reduce healthcare costs, they should also ensure that in doing so, they are continuing to deliver the quality services they claim to provide. There are also issues of outcome measurements, as well as ensuring that their organizational structure is well-intact and their patients satisfied. Clearly, this indicates a direct challenge to their management approach. This study will try to determine how Quality Healthcare Asia Limited manages the quality of its services. Total Quality Management has long been assisting healthcare companies around the world and by investigating this on Quality Healthcare Limited the research would be able to provide the opportunity to assess the strengths and weaknesses of the company’s approach and would be able to provide the opportunity to suggest recommendations for its improvement. The aim here is to develop a framework based on the results to help the company not only to assess the effectiveness of its management approach, but also to create suggestions that will be helpful in its operations.
BACKGROUND OF THE STUDY
Hong Kong
Hong Kong is a Hong Kong Special Administrative Region (SAR) of China (CIA World Fact Book, 2006). Being a SAR, Hong Kong enjoys a “one country, two systems” formula whereas China’s communists policies will not be imposed to it except defense and foreign relations matters (CIA World Fact Book, 2006). This system is effective for the next 50 years, which started in 1997 (CIA World Fact Book, 2006).
According to Xiao et al (2002), the mid-year population of Hong Kong was approximately 6.5 million in 1997. The actual population growth rate between 1987 and 1997 was 1.5% per annum, and the latest projected growth rate for 1996-2016 is 1.3% per annum. The problem of Hong Kong, however, is the severe aging of its population. 15 to 64 years of age accounts to 72.2 percent of the population – a great gap to the 14.5 percent of the 0 to 14 years citizens (Xiao et al, 2002).
The legal system of Hong Kong is based on the English common law. By occupation, community and social services workers account for 18.8 percent. The Severe Acute Respiratory Syndrome (SARS) outbreak in 2003 somehow upset the Hong Kong economy, but “a boom in tourism from the mainland because of China’s easing of travel restrictions, and a return of consumer confidence resulted in the resumption of strong growth from late 2003 through 2005” (CIA World Fact Book, 2006).
Hong Kong Healthcare Industry
Hong Kong follows a laissez-faire approach to public health (Xiao et al, 2002). This date back to the early colonial government of the 1840’s and has characterized the subsequent development of public health services (Xiao et al, 2002). This indicates the open market competition of healthcare companies in Hong Kong. It consists of both public and private sector. Any Hong Kong citizen can easily access healthcare services in the market, mostly on private healthcare services. On the other hand, citizens such as government employees, police and prisoners have access to government hospitals (Xiao et al, 2002), which are part of Hong Kong’s public health sector. The public sector focuses on providing adequate medical and health services to every citizen of Hong Kong, regardless of income (Taylor, 2002). On the other hand, the private healthcare sector – although having higher rates than the public health services – provides a more flexible consulting hours, more accessible services, and more freedom for patients to choose their doctors (Taylor, 2002).
In terms of structure, the Health and Welfare Bureau is the policy-making body responsible for health. It oversees both the Department of Health and the Hospital Authority (Xiao et al, 2002). The mission of DOH is as the Government’s health advisor and agency to execute health care policy, statutory functions, licensing, inspection, and food and drug safety (Xiao et al, 2002). It assumes public health functions of promotive, preventive, curative and rehabilitative services, and manages public primary health centers (Xiao et al, 2002). On the other hand, HA is responsible for the formulation of health policies and monitoring the performance of the Authority (Xiao et al, 2002).
As mentioned earlier, one of the most precarious problems of the Hong Kong healthcare industry is the cost of expenditures. Xiao et al (2002) reported that the total health care expenditure in 1996/97 was HK.2 billion (4.6% of GDP) with 54% financed by the public sector and 46% by the private sector. In the year 2003-2004, it was reported that HK.9 billion, equivalent to 15.4 % of total public expenditure were spent by the government on healthcare (Tsang, 2003). Reforms initiated by HA, although effective and improved the quality of healthcare services, were costly that the government simply cannot continue pouring such large amounts of money into health care (Taylor, 2002).
Aside from expenditures, another pressing problem is the concern for quality of service. According to Taylor (2002), this applies to both the public and private healthcare companies. Reported concerns in public healthcare services include long waiting times, and the lack of credibility of free health care service and low-cost drugs (Taylor, 2002). There is also the problem of work overload of service providers, which greatly hampers the quality of their service (Taylor, 2002).
Similarly, the private healthcare sector faces concerns in quality service. There are no regulating policies to regulate private healthcare companies and outcomes of their approach are rarely measured (Taylor, 2002; Xiao et al, 2002). There is also variability to price, which somehow neglects the rights to those who do not have the ability to pay (Taylor, 2002). As Xiao et al (2002) stated, the problems that lie include: “…patterns of drug prescription, short physician time spent with patients, little physician explanation of side effects of medication, excessive waiting/queuing time, relative consumer ignorance, questionable rankings of patient satisfaction, and most important of all, a general lack of information on quality and provider performance, and transparency of medical practices should cause concern regarding whether Hong Kong residents are getting “value for money” (where value would include improvements in health outcomes and money would include fees paid at the point of service, taxes, and time cost)” (p.79).
Overall, both public and private healthcare sectors suffer from lack of effective tools, measures and initiatives to measure the effectiveness and quality of their services (Xiao et al, 2002).
Quality Healthcare Limited
Quality Healthcare Limited is a private healthcare company based in Hong Kong that provides healthcare services to their private and corporate contract patients through a network of more than 560 Western and Chinese medical centres, and 44 dental and physiotherapy centres (Quality Healthcare Limited, 2006a). The company is one of the most profitable private healthcare companies in the region, as it delivered a net profit of HK.1 million in 2005 (Quality Healthcare Limited, 2006b). One of its strengths is its continuous drive to improve customer relationship with clients and continuous training of staffs for improvement (Quality Healthcare Limited, 2006b). Furthermore, through the renovations of its facilities, the company reported that the average number of complaints per month declined by 30%. The company also serves its clients and potential clients with a 24-hour Medical Call Centre that is always ready to entertain questions and inquiries (Quality Healthcare Limited, 2006b). However, like all other private healthcare companies, Quality Healthcare Limited continuous to struggle in managing its costs and at the same time, maintaining its quality of service (Quality Healthcare Limited, 2006b).
Total Quality Management
Total Quality Management (TQM) is a management approach for improving quality. It is defined as “…a general philosophy of management. It can be tailored for a particular environment, and there are as many ways to implement TQM as there are companies adapting it” (Price and Chen, 1995, p.116). It is a management approach originally developed for improving manufacturing processes. However, it has recently shown its significance in service industries for improving the quality of service and customer satisfaction which has resulted in increased competitive advantage (Price and Chen, 1995, p.116).
There are three assumptions on why TQM should be implemented by organizations: first, it can save costs because poor quality can cost the company more expenses due to high cost of rework, lost customer, and many other complications; employees naturally care about the quality of work they do and will take initiatives to improve it – so long as they are provided with the tools and training that are needed for improvement, and management pays attention to their ideas; and organizations are systems of highly interdependent parts, and the central problems they face invariably cross traditional functional lines (Hackman and Wageman, 1995).
TQM is also applicable in healthcare. Quality in TQM means creating and sustaining a competitive advantage (Antony and Preece, 2002), which are just the actions that healthcare companies need because of the continuous improvements of medical technologies, reforms, changing customer demands and expectations, and international standards. Kelly (2003, p.12) stated that through the implementation of TQM, healthcare managers can see: how an organization can be successful at CQI projects but not at attaining a quality organizational culture; why defining clinical practice guidelines does not in itself guarantee healthcare quality; why organizational development efforts, independent of clinical context, may not yield expected results; and why, without leadership’s involvement in establishing a quality philosophy for the entire organization, only pockets of excellence may be found throughout the organization.
OBJECTIVES OF THE STUDY
The three objectives of the study are the following:
1. To determine how the Quality Healthcare Limited manages the quality of its services and organizational structure.
2. To determine how the Quality Healthcare Limited measures the quality of its services and organizational structure.
3. To contribute to the study of TQM in the healthcare industry and to be able to build a concise framework that may help both public and private healthcare sector in Hong Kong.
STATEMENT OF THE PROBLEM
Because of the demand for quality healthcare in Hong Kong, which is further burdened by the increasing costs of healthcare expenditure, there is a need to investigate the strategies of healthcare companies specifically on how they manage the quality of their services. The paper will specifically investigate Quality HealthCare Asia Limited.
The following research questions will be addressed in the study:
1. Do Quality Asia Limited practices and implements TQM?
2. What are their strategies in implementing TQM?
3. Which organizational area does the company focus more?
4. What are its approaches in measuring the success of its services?
THEORETICAL FRAMEWORK
This study will apply the input-process-output (IPO) framework. Originating form the Industrial Revolution, the IPO model has been applied to various fields-from manufacturing to communications to computer programming. (Harris & Taylor, 1997) The IPO model is a design of how different input, intermediate, and output variables form causal relationships in a system. (Yu, 1997) In the IPO model, a process is viewed as a series of boxes (processing elements) connected by inputs and outputs. Information or material objects flow through a series of tasks or activities based on a set of rules or decision points. (Harris & Taylor, 1997) Flow charts and process diagrams are often used to represent the process. (Harris & Taylor, 1997) What goes in is the input; what causes the change is the process; what comes out is the output. (Armstrong, 2001) Figure 1.1 illustrates the basic IPO model:
Figure 1.1
Input-Process-Output Model
In order for a system to be useful, they must be able to change one thing into something different; thus, there are many systems that utilise the IPO model. (Armstrong, 2001) Further, to understand a system, one must think of the system as a black box, where the input is sent into the black box, the black box is the process; this approach is called the black box approach. (Armstrong, 2001) Utilising the black box approach is one of the ways in understanding the IPO model. (Armstrong, 2001)
Applying it to the study, the input will be the literatures researched and reviewed and the data from interviews and surveys that will be conducted with the managers of Quality Healthcare Limited. This will be processed with the assessment of results through statistical analysis. Finally, it will lead to the findings of the study, which will be the main output.
SIGNIFICANCE OF THE STUDY
Because the study will explore the TQM of a particular healthcare company, it may contribute to the improvement of service and organizational management of other healthcare companies in Hong Kong as it may unravel useful approaches that they can adopt and use.
REFERENCES:
Antony, J. and Preece, D. (2002). Understanding, Managing and Implementing Quality: Frameworks, Techniques and Cases. Routledge. London.
Armstrong, P. (2001). Input-Process-Output Model. Colorado: Colorado State University.
Hackman, R. and Wageman, R. (1995). Total Quality Management: Empirical, Conceptual, and Practical Issues. Administrative Science Quarterly. Vol.40, No.2, pp.309+.
Harris, G. and Taylor, S. (1997). Escaping from the Box: A New Process Model to Support Participation and Improve Coordination. In Center for Quality of Management Journal, Volume 6, Number 3. Cambridge, MA: The Center for Quality of Management, Inc.
Kelly, D.L. (2003). Applying Quality Management in Healthcare: A Process for Improvement. ACHE, UK.
Price, M.J. and Chen, E.E. (1995), “Total quality management in a small, high-technology company”, in Cole, R.E., The Death and Life of the American Quality Movement, Oxford University Press, New York, NY.
Quality Healthcare Limited (2006a). (online). Available at: https://www.qhms.com/ [Accessed: 04/18/06].
Quality Healthcare Limited (2006b). Announcement of Audited Results for the Year 2005. Quality Healthcare Limited, Hong Kong.
Taylor, G. (2002). Hong Kong’s Health Care Reform: Nursing an Ailing Health Care System Back to Health (online). Available at: http://www.lehigh.edu/~incntr/publications/perspectives/v20/Taylor.pdf [Accessed: 04/18/06].
Tsang, J. (2003). Feedback on the Commerce, Industry & Technology Bureau’s Draft 2004 Digital 21 IT Strategy. From Connection to Communication – Fostering Hong Kong’s e-Business Competence, Hong Kong
Xiao, W., Yip, W. et al (2002). Improving Hong Kong’s Healthcare System: Why and For Whom? (online version). Available at: http://www.hwfb.gov.hk/hw/english/archive/consult/HCS/HCS.HTM [Accessed: 04/18/06].
Yu, A. (1997). An Input-Process-Output Structural Framework for Evaluating Web-based Instruction. In Arizona Sunrise. Available at: [http://seamonkey.ed.asu.edu/~alex/teaching/assessment/structural.html]. Accessed: [04/18/06].
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