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Health Care Leadership Institute: Leadership Development Program
Linking Satisfaction and Performance
Michael D. JohnsonD. Maynard Phelps Professor of Business Administration
University of Michigan Business School
January 23, 2004
© 2004 by Michael D. Johnson
2
Linking Stakeholder Satisfaction and Performance at UMHS
What business model links the various stakeholders within UMHS?
How should stakeholder satisfaction be measured and linked to performance?
How is stakeholder satisfaction measured and linked to performance?
What are the strengths and weakness of the current systems and how could they be improved?
© 2004 by Michael D. Johnson
3
Volvo’s Business (Profit) Model(from Flodin, Nelson and Gustafsson 1997)
ImprovedProfitability
CostReductions
ImprovedProductivity
ImprovedInternal Quality
ImprovedExternal Quality
CustomerSatisfaction
CustomerLoyalty
© 2004 by Michael D. Johnson
4
Sear’s Employee-Customer-Profit Chain
Attitudeabout the job
Attitudeabout the company
Service(Helpfulness)
Merchandise(Value)
Employeebehavior
Customerrecommendations
CustomerImpression
Employeeretention
Customerretention
ROA,margins,revenuegrowth
5 unit increase in employee attitudes
1.3 unit increase in customer impression
0.5% increase in revenue growth
Source: Rucci, Kirn & Quinn, Harvard Business Review Jan. - Feb. 1998
© 2004 by Michael D. Johnson
5
The UMHS was created to leverage the potential synergies across the three elements of the system: Medical School, University Hospital, M-Care
Medical School (*)
UniversityHospital
M-Care
Demand for care givers
Supply of labor force
Research & Technology Development
Support to Customers andCommunity
Customers
Reputation
Possibility of training through patient flow
(*) Medical School: Includes Medical School, Nursery School, Pharmacy School, etc.
© 2004 by Michael D. Johnson
6
A major part of the “business model” at UMHS looks something like this…
FacultySatisfactionand Loyalty
StaffSatisfactionand Loyalty
PatientSatisfactionand Loyalty
BusinessPerformance
(E.g., percent of patient care, word-
of-mouth, etc.)
Keep in mind that there are drivers and consequences of satisfaction for each stakeholder!
© 2004 by Michael D. Johnson
7
For any given stakeholder…
The Purpose of a Satisfaction Measurement System is to: Help operationalize your “business model”. Set priorities for quality improvement. Optimize your investments by linking quality
improvements to performance outcomes.
© 2004 by Michael D. Johnson
8
Building a System
IDENTIFYINGTHE PURPOSE
(STRATEGYAND PLANNING)
BUILDING THE“LENS” OF THE
CUSTOMER(QUALITATIVERESEARCH)
BUILDING THE QUALITY-
SATISFACTION-LOYALTY SURVEY
FROM DATA TOINFORMATION
(DATA ANALYSIS)
FROM INFORMATIONTO DECISIONS
(PRIORITY SETTING)
© 2004 by Michael D. Johnson
9
Reference
© 2004 by Michael D. Johnson
10
CompetitiveAdvantage
CompetitiveVulnerability
Reallocate
Resources?
Don’t Care
(But Watch)
Opportunity
(Move First)
Basics
CompetitiveAdvantage
CompetitorAdvantage
ReallocateResources?
Don’t Copy(But Watch)
Opportunity
(Move First)
Basics
YourCompetitor’s
Offering
Your Company’s
Offering
YourCustomers’
Needs
Your measurement systems should
provide information on 3Cs: Your
Company, Customers, and
Competitors(Gustafsson and Johnson 2003)
© 2004 by Michael D. Johnson
11
CompetitiveAdvantage
Customers’Needs
Siemens Competition
CompetitiveDisadvantage
Commodities
Opportunities… unmet needs
that neither serve…opportunity to innovate
Potentials… unique things
we have… are we ahead of
the market?
Irrelevanciesthat both
have
Threats… unique things competitors
have … are they ahead of the market?
This Venn Diagram Differs by Segment
(e.g. Visionaries, Early Adopters, Early Majority, Late Majority and Laggards)
and by Competitor.
Application of the Framework
© 2004 by Michael D. Johnson
12
Whose “lens” should you adopt?
PeoplePeople
ProductsProducts
OperationsOperations
Lens of theOrganization
Lens of theOrganization
ConvenienceConvenience
SafetySafety
CleanlinessCleanliness
Lens of theCustomer
Lens of theCustomer
© 2004 by Michael D. Johnson
13
Using Critical Incidents to Build the Lens of the Customer
Have customers list “likes” and “dislikes” regarding their interactions with a product, service or company.
Group likes and dislikes into individual attributes or satisfaction survey variables.
Group satisfaction survey variables into key underlying customer benefits or consequences.
Assess reliability and comprehensiveness of the revealed customer requirements.
© 2004 by Michael D. Johnson
14
The End Product is a Lens of the Customer!
ServiceService
ProductsProducts
StoreLayout
StoreLayout
PricesPrices
CustomerSatisfaction
CustomerSatisfaction
CustomerLoyalty
CustomerLoyalty
CleanlinessCleanliness
ConvenienceConvenienceSafetySafety
MotoristServices
MotoristServices
SeparateTake Out
SeparateTake Out
Brand(Reputation)
Brand(Reputation)
Strength ofRelationship
Strength ofRelationship
© 2004 by Michael D. Johnson
15
Using the Lens of the Customer to Drive Survey Design and Analysis
Your “lens” provides a blueprint for survey design. Your survey must have sensitive and reliable
dependent measures in order to determine what is important to customers or other stakeholders.
It is inherently difficult for survey respondents to identify directly what is important to them.
Statistical analysis (regression analysis and causal modeling) yield more objective measures of importance or impact.
© 2004 by Michael D. Johnson
16
The Output of Data Analysis:An Impact-Performance Chart(Source: Viking Tire Company (B) Case)
Performance
Shipping & Delivery
Tire ProductSales Department &
Local RepPricing
Discounts & Payments
Complaint HandlingPromotional Activities
Sales Activities & Support50
55
60
65
70
75
80
85
0 0.1 0.2 0.3 0.4 0.5
Benefit Impact
Be
ne
fit
Pe
rfo
rma
nc
e
© 2004 by Michael D. Johnson
17
Priority Setting
Determine the importance of various drivers on satisfaction.
Determine performance benchmarks - absolute or relative to direct competitors.
Focus improvement efforts (costs) where benefits are greatest – where the impact on satisfaction is high and the firm is performing poorly.
© 2004 by Michael D. Johnson
18
A Strategic Satisfaction Matrix
Low Impact &Strong Performance:
Maintain or reduceinvestment or alter
target market
Low Impact &Weak Performance:
Inconsequential -Do not waste resources
High Impact &Weak Performance:
Focus improvements here - Competitive vulnerability
High Impact &Strong Performance:
Maintain or improve performance - Competitive
advantage
© 2004 by Michael D. Johnson
19
Linking Satisfaction Models to Financial Performance
Management ultimately wants specific estimates of the payoff to investments in quality, satisfaction, and loyalty.
The level of analysis one can perform is highly dependent on how detailed the accounting data is: By customer or stakeholder? By account? By facility?
© 2004 by Michael D. Johnson
20
Sales Satisfaction Model for Volvo Dealers(Source: Gustafsson and Johnson 2003)
Personnel8.99
Models8.50
Information8.48
Delivery8.68
Car Satis-faction9.26
Stated salessatisfaction
8.73
Profit newcar
Stated salesloyalty8.76 Insurance
Financing
VolvoCard
Workshoployalty
0.168
0.314
0.087
0.035
0.094
0.492
0.4100.023
-0.055
0.115
0.072
© 2004 by Michael D. Johnson
21
Estimated Return on Quality (ROQ) Improvements(Not including the car!)
Personnel 266.1Models 54.8Information 19.5Delivery 62.3
Total 402.7
Benefit Area ROQ in SEK
© 2004 by Michael D. Johnson
22
Summary
Your stakeholder satisfaction and loyalty measurement systems should help you to: Operationalize (your business model) Prioritize (your quality improvements) Optimize (your investments)
This requires a system that: Reflects the lens of the customer/stakeholder Is sensitive and reliable Identifies both performance and impact Provides sufficient detail for implementation
© 2004 by Michael D. Johnson
23
Stakeholder Satisfaction and Loyalty at UMHS
© 2004 by Michael D. Johnson
24
Overview of Coverage
Faculty Surveys
Staff Surveys
Patient Surveys
Inpatient Emergency Clinics Out-patient Surgery
© 2004 by Michael D. Johnson
25
Let’s take a look at two different patient satisfaction surveys…
Press Ganey Inpatient Survey Ten areas are evaluated (e.g., admission, room, meals,
nurses, physician). Scales range from 1 = very poor to 5 = very good. Includes overall assessments.
Office Visit Satisfaction Survey Visit rated on 16 attributes (e.g., length of time between
making appointment and day of visit, thoroughness of exam/treatment).
Facilities rated separately. Scales range from 1 = poor to 5 = excellent. Includes overall assessments of the service provider,
satisfaction with the visit, likelihood of returning, etc.
© 2004 by Michael D. Johnson
26
Breakout assignment:
Evaluate both the Inpatient Survey and Office Visit Satisfaction Survey using the following questions:
1. What is the purpose of the survey and how well does the it meet that purpose?
2. Is the survey developed from the lens of the customer or lens of the organization?
3. What is the quality of the survey measurement and level of detail?
4. What is the quality of the analysis?
5. How well does the system allow you to set priorities for quality improvement?
© 2004 by Michael D. Johnson
27
A Note on the Press Ganey Priority Setting Process
1. Rank order performance scores by question (from high to low)
2. Calculate correlation with dependent variable (patient satisfaction) and rank order (from low to high)
3. Sum the two rank orders
4. Rank order the sum of the ranks
© 2004 by Michael D. Johnson
28
Analysis of Office Visit Satisfaction Survey
Random sample of 502 OVSS respondents Factor analysis suggests three primary drivers of satisfaction:
Scheduling & Check-in Provider quality Facilities quality
Three overall evaluations questions similar to the ACSI (American Customer Satisfaction Index) used to create a satisfaction index.
Patient loyalty measured using: Likelihood to recommend Likelihood to reschedule
© 2004 by Michael D. Johnson
29
Office Visit Satisfaction and Loyalty Model
Scheduling &Check-in
(78)
Provider(87)
Facilities(84)
Office VisitSatisfaction
(84)
PatientLoyalty
(94)
0.295
0.433
0.130
0.615
© 2004 by Michael D. Johnson
30
Satisfaction Drivers
Impact-Performance Chart
Facilities
Scheduling &Check-in
Provider
76
78
80
82
84
86
88
0.00 0.10 0.20 0.30 0.40 0.50
Impact
Per
form
ance
© 2004 by Michael D. Johnson
31
Description Relative Impact Performance
Time between appointment and visit 9% 72.25
Ability to schedule appointment 19% 77.92
Time on hold when making appointment 0% 70.08
Courtesy of person on the phone 3% 83.35
Helpfulness of check-in staff 8% 86.17
Promptness of check-in staff 14% 86.29
Courtesy of medical assistant 14% 85.84
Time at office/clinic until provider is seen 34% 69.25
Scheduling & Check-in
© 2004 by Michael D. Johnson
32
Provider
Description Relative Impact Performance
Personal interest in medical problem 10% 87.37
Ability to answer questions 0% 88.59
Thoroughness of exam/treatment 21% 87.96
Provider's case knowledge 14% 84.37
Explanation of procedures and tests 3% 85.26
Adequacy of information/education received 4% 85.45
Time spent with provider 18% 84.08
Provider is courteous and respectful 20% 91.27
How well the pain was managed 10% 85.25
© 2004 by Michael D. Johnson
33
Facilities
Description Relative Impact Performance
Cleanliness of restrooms 11% 81.76
Cleanliness of exam room 54% 87.50
Clarity of direction to the office 14% 84.60
Ease of parking 21% 76.72
© 2004 by Michael D. Johnson
34
UMH Patient Satisfaction vs. ACSI Benchmarks
88
84
82
73
63
61
50 55 60 65 70 75 80 85 90
Amazon.com
UMH Survey
Federal Express
Hospitals (Overall)
IRS (Individual Tax Filers)
McDonalds
UMH Survey Satisfaction vs. ACSI Scores
© 2004 by Michael D. Johnson
35
Sensitivity of the Measures?
0
10
20
30
40
50
60
70
Explanation ofMedical
Proceduresand Tests
Cleanliness ofthe Exam
Room
OverallSatisfactionw ith the Visit
Perc
en
t R
esp
on
ses
Excellent
Very Good
Good
Fair
Poor
© 2004 by Michael D. Johnson
36
Sensitivity of the Measures?
Would Schedule Next Appointment with Provider
0102030405060708090
DefinitelyWould
ProbablyWould
Unsure ProbablyNot
DefinitelyNot
Per
cen
t R
esp
on
ses
© 2004 by Michael D. Johnson
37
Conclusions and Implications
Your satisfaction measurement systems should: Have a clear purpose (e.g., policy deployment,
quality improvement) Reflect the lens of the customer Provide detailed, sensitive and reliable data Provide explicit impact and performance
information Be linked to meaningful business performance
metrics
© 2004 by Michael D. Johnson
38
Conclusions and Implications
My own impression is that the current array of stakeholder satisfaction measurement systems at UMHS: Provides good coverage and detail Vary with respect to quality of data and analysis
Be careful not to base organizational strategies and goals on weak data and analysis.
Ultimately, the various systems should be linked via a “business model”.