1. DISSERTATION PROPOSAL
IKWO OKA
APRIL 30, 2011
LINKING STRATEGY TO OPERATIONS IN THE IMPROVEMENT OF
HEALTHCARE DELIVERY SYSTEM IN NIGERIA
The health care industry today is a complex industry with ever changing relationships
between patients, physicians, hospitals, insurers, employers, communities, and government.
A combination of factors – including the emergence of intense, dynamic competition and
consolidation, increasing expectations of demanding, sophisticated consumers, and
decreasing funding and utilization – have generated an increasingly challenging environment
for hospitals and the health care value chain(Victoria Kanan et al, 2007).
In the face of fierce competition for resources, governments worldwide have to manage
multiple objectives and competing demands. As they strive for greater efficiency and value
for money, they must seek ways to achieve more equity in access and outcomes and to reduce
exclusion. They are under pressure to ensure that services are effective, of assured quality and
safe, and that health providers are responsive to patients’ demands. Progress in one direction
may mean compromise in another. For example, the pressure to increase access to HIV/AIDS
care and treatment, which has helped bring visibility to the human resources crisis in Africa,
brings its own pressures on the capacity of the health system to handle other causes of ill-
health. Progress in increasing staff retention in the public sector through better pay packages
may mean compromise in containing costs. Competition for resources may be between
hospitals and primary level care; between prevention and treatment; between professional
groups; between public and private sectors; between those engaged in efforts to treat one
condition versus another; between capital and recurrent expenditures. This means health
system strengthening requires careful judgement and hard choices (WHO, 2007)
Improvement programmes are usually perceived as cost containment exercises only rather
than relating to improvement of the quality of care, and cost containment, hence large scale
implementations of improvement programmes have been notable for their failure to achieve
sustainable benefits, because such approaches have been fragmented, reflecting the lack of an
over arching objective and appropriate measures and incentives to align the building blocks
involved in healthcare delivery system.
Many conceptual frameworks of health systems recognize that organizational performance
plays a critical role in health system performance. Elizabeth H. Bradley et al,(June 2010) in
their discussion paper on “Developing Strategies for improving Healthcare Delivery” define
seven major strategy areas potentially useful for improving performance among health care
organizations to include; 1) standards and guidelines, 2) organizational design, 3) education
and training, 4) process improvement and technology and tool development, 5) incentives, 6)
1
2. organizational culture, and 7) leadership and management. An approach to improving
healthcare system has to consider the alignment of the three dimension of organisational
performance; strategy, environmental factors and implementation capacities. Invariably,
successful improvement of health care operations must be such that addresses improvements
in the building blocks of the health systems framework, in achieving six intermediate
outcomes; quality, efficiency, utilization, access, learning and sustainability.
Strategy in a business organization is essentially about how the organization seeks to survive
and prosper within its environment over the long-term. The decisions and actions taken
within its operations have a direct impact on the basis on which an organization is able to do
this. The way in which an organization secures, deploys and utilizes its resources will
determine the extent to which it can successfully pursue specific performance objectives. All
business organizations are concerned with how they will survive and prosper in the future. A
business strategy is often thought of as a plan or set of intentions that will set the long-term
direction of the actions that are needed to ensure future organizational success. However, no
matter how grand the plan or how noble the intention, an organization’s strategy can only
become a meaningful reality, in practice, if it is operationally enacted. An organization’s
operations are strategically important precisely because most organizational activity
comprises the day-to-day activities within the operations function. It is the myriad of daily
actions of operations, when considered in their totality that constitute the organization’s long-
term strategic direction. The relationship between an organization’s strategy and its
operations is a key determinant of its ability to achieve long-term success or even survival.
Organizational success is only likely to result if short-term operations activities are consistent
with long-term strategic intentions and make a contribution to competitive advantage. The
relationship between operations and the other business functions is similarly important. The
objective of the operations function is to produce the goods and services required by
customers whilst managing resources as efficiently as possiblei
.
However, organizations in linking strategy and operations are faced with challenges and three
common pitfalls as described by Kaplan and David. P Norton (2008). The first pitfall that
organisations face is the alignment of operational upgrading activities to strategic priorities;
most companies are said to be practicing Total Quality Management, Six Sigma, or other
continuous improvement activities, but doing this across the organization with no sense of
priorities or impact from process improvements. Consequently, much effort does not show up
in tangible results, hence organisations need a formal process for using strategic objectives to
set priorities for where operational improvements can have the largest impact on strategy
execution. Another pitfall identified is the challenge where organisation budgeting and
financial planning are done separately from strategic planning, the duo advocate that the
operational plan and budget be driven from the revenue targets in the strategic plan. The third
challenge centred on management meetings getting consumed with discussions about short-
term operational and tactical issues.
Whilst businesses have somewhat applied the concepts of operations management for
maximum performance, similar reaching effects are yet to be experienced in the healthcare
2
3. setting. One reason attributed to this, is the lack of understanding of operations management
by healthcare professionals, and similarly operations experts’ lack of understanding of
healthcare’s unique characteristics, another reason is the highly human-centred characteristic
and the high risk involved in healthcare. Recognising the gap in empirical evidence
supporting superior performance results in healthcare systems when strategy is linked to
operations and the need for an integrated perspective in order to leverage the abilities of the
individual concepts, my thesis will focus on;
• Studying in detail how functional operational strategies interact with each other
within the conceptual framework of the healthcare system
• Conducting empirical investigation to ascertain whether or not superior performance
results in hospitals (with special emphasis on primary healthcare level) that link
operation and business strategies. Can quality of primary and secondary level
healthcare improve without escalating cost (indirect and direct cost)? Can profitability
in healthcare delivery system be equated to improved health outcomes? Aiming to
answer these questions, I intend to explore the potential of applying existing results in
operations management to solving the problems in health care domain.
References
Elizabeth H. Bradley, Sarah Pallas, Chhitij Bashyal, Peter Berman and Leslie Curry (2010).
Developing Strategies for Improving Health Care Delivery: HNP discussion paper
The Execution Premium (2008): Linking Strategy to Operations for Competitive Advantage- Q&A
with HBS professor Robert S. Kaplan
World Health Organization (2007). Strengthening Health Systems to Improve Health Outcomes:
WHO’S FRAMEWORK FOR ACTION
Victoria Hanna and Kannan Sethuraman (2005): The Diffusion of Operations Management Concepts
into the Health Care Sector
Mills, J.F., Platts, K.W., Bourne, M.C.S.B and Richards, H. (2002) Competing through Competences,
Cambridge: Cambridge University Press.
Mills, J.F., Neely, A.D., Platts, K.W. and Gregory, M.J. (1998) ‘Manufacturing Strategy: A Pictorial
Representation’, International journal of Operations and Production Management 18(11):1067–1085.
3
