Health Delivery Organization: A Case Study

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Health Delivery Organization: A Case Study



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CASE STUDY: Inter-organization process management improves business results and patient health

Here are five company examples that show successful transformations, across a range of industries and locations. VF offers a compelling example of a company using a sharp focus on value creation to chart its transformation course. In the early s, VF was a good company with strong management but limited organic growth. The result was a multiyear transformation comprising four components:. At the same time, profitability has improved substantially, highlighted by a gross margin of 48 percent as of mid A leading consumer-packaged-goods CPG player was struggling to respond to challenging market dynamics, particularly in the value-based segments and at the price points where it was strongest.

The near- and medium-term forecasts looked even worse, with likely contractions in sales volume and potentially even in revenues. A comprehensive transformation effort was needed. To fund the journey, the company looked at several cost-reduction initiatives, including logistics. Previously, the company had worked with a large number of logistics providers, causing it to miss out on scale efficiencies. To improve, it bundled all transportation spending, across the entire network both inbound to production facilities and out-bound to its various distribution channels , and opened it to bidding through a request-for-proposal process.

As a result, the company was able to save 10 percent on logistics in the first 12 months—a very fast gain for what is essentially a commodity service. Similarly, the company addressed its marketing-agency spending. A benchmark analysis revealed that the company had been paying rates well above the market average and getting fewer hours per full-time equivalent each year than the market standard. By getting both rates and hours in line, the company managed to save more than 10 percent on its agency spending—and those savings were immediately reinvested to enable the launch of what became a highly successful brand.

Next, the company pivoted to growth mode in order to win in the medium term. The measure with the biggest impact was pricing. The company operates in a category that is highly segmented across product lines and highly localized. Products that sell well in one region often do poorly in a neighboring state. Accordingly, it sought to de-average its pricing approach across locations, brands, and pack sizes, driving a 2 percent increase in EBIT. Similarly, it analyzed trade promotion effectiveness by gathering and compiling data on the roughly , promotions that the company had run across channels, locations, brands, and pack sizes.

The result was a 2 terabyte database tracking the historical performance of all promotions. Using that information, the company could make smarter decisions about which promotions should be scrapped, which should be tweaked, and which should merit a greater push. The result was another 2 percent increase in EBIT. Critically, this was a clear capability that the company built up internally, with the objective of continually strengthening its trade-promotion performance over time, and that has continued to pay annual dividends. Finally, the company launched a significant initiative in targeted distribution.

To improve its distribution, the company leveraged big data to analyze historical sales performance for segments, brands, and individual SKUs within a roughly ten-mile radius of that retail location. On the basis of that analysis, the company was able to identify the five SKUs likely to sell best that were currently not in a particular store. The company put this tool on a mobile platform and is in the process of rolling it out to the distributor base.

Currently, approximately 60 percent of distributors, representing about 80 percent of sales volume, are rolling it out. Without any changes to the product lineup, that measure has driven a 4 percent jump in gross sales. Throughout the process, management had a strong change-management effort in place. For example, senior leaders communicated the goals of the transformation to employees through town hall meetings. Cognizant of how stressful transformations can be for employees—particularly during the early efforts to fund the journey, which often emphasize cost reductions—the company aggressively talked about how those savings were being reinvested into the business to drive growth for example, investments into the most effective trade promotions and the brands that showed the greatest sales-growth potential.

And the company is better positioned to compete in its market. A leading bank in Europe is in the process of a multiyear transformation of its operating model. Prior to this effort, a benchmarking analysis found that the bank was lagging behind its peers in several aspects. Branch employees handled fewer customers and sold fewer new products, and back-office processing times for new products were slow. Customer feedback was poor, and rework rates were high, especially at the interface between the front and back offices. Activities that could have been managed centrally were handled at local levels, increasing complexity and cost. Harmonization across borders—albeit a challenge given that the bank operates in many countries—was limited.

However, the benchmark also highlighted many strengths that provided a basis for further improvement, such as common platforms and efficient product-administration processes. To address the gaps, the company set the design principles for a target operating model for its operations and launched a lean program to get there. Each process was then optimized from end to end using lean tools. This approach breaks down silos and increases collaboration and transparency across both functions and organization layers. Employees from different functions took an active role in the process improvements, participating in employee workshops in which they analyzed processes from the perspective of the customer.

For a mortgage, the process was broken down into discrete steps, from the moment the customer walks into a branch or goes to the company website, until the house has changed owners. In the front office, the system was improved to strengthen management, including clear performance targets, preparation of branch managers for coaching roles, and training in root-cause problem solving. This new way of working and approaching problems has directly boosted both productivity and morale. The bank is making sizable gains in performance as the program rolls through the organization.

For example, front-office processing time for a mortgage has decreased by 33 percent and the bank can get a final answer to customers 36 percent faster. Two distinct health information systems currently utilized in the health care field include electronic medical records EMR and chronic disease management systems CDMS. The integration of these systems is likely to enable the efficient management of health information and improve the quality of health care as it would provide real-time patient information in a coordinated manner. The lack of real-time information may result in delayed treatment, uninformed decisions, inefficient resource use, and medical errors. Despite their importance and widespread support, these systems have slow provider adoption rates.

Our understanding of how health information technology may be used to improve health care is limited by the relative paucity of research on the adoption, integration, and implementation of these 2 types of systems.

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