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Creating value through knowledge management

case study of a corporate hospital

Brahmam Rayala

G. V. R. K. Acharyulu

Health Care Management

ealthcare service is a team
based approach, and in
t o d a y s
information-driven economy,
uncovering the most opportunities -
and ultimately derive the most value -
from intellectual rather than physical
assets is the king pin for success. The
capacity to manage human intellect,
and to transform the intellect into a
service or a group of services is fast
becoming the most important
phenomenon in the ever- changing
competitive environment. To get the
most value from a hospitals intellectual
assets, Knowledge Management plays
a significant role in sharing that,
knowledge must be shared and serves
as the foundation for collaboration.
Continuous upgradation of knowledge
and application of the new tools and
techniques, leaving no room for error
and looking for new ways to exceed
the customer expectations and
effective utilization of knowledge and
human skills through knowledge
management (KM) concept which help
the organizational objectives of
continuous improvement of quality and
customer delight. This paper aims to
review the conceptual aspects of
knowledge Management in a
corporate hospital and identify key
factors for creating value to the
Knowledge Management is the
process through which organizations
generate value from their intellectual
and knowledge-based assets. Most
often, generating value from such
assets involves sharing them among
employees, departments and even with
other hospitals in an effort to devise
best practices.
KM is also made up of a whole
range of soft issues that involves
fostering an environment in which
knowledge and information are shared
and new knowledge is created.
A growing number of
policymakers, healthcare providers,
and consumers believe information
resources hold the key to improving
the healthcare system. These
advocates say that judiciously
collected and effectively
communicated information can help
professionals provide better care, turn
patients into enlightened consumers
of health services, and ultimately
Knowledge Management (KM) in health care sector has become a big issue with
the entry of private players in Hospital & health care industry. Based on a Value
Creation Model for corporate Hospitals the paper emphasizes the role of KM to
combine fostering of innovations and improvement of services with revenue
enhancement, cost reduction and overall productivity management.
enable individuals and communities to
address some of the root causes of
illness before professional
intervention is required.
According to Tom Davenport and
Larry Prusak Knowledge
Management is fluid mix of framed
experience, values, and contextual
information and expert insight that
provides a framework for evaluating
and incorporating new experiences and
information. According to James
Quinn Knowledge Management is a
professional intellect in organization
centers on know-what, know-how,
know-why, and self-motivated
Types of knowledge:
In general, however, intellectual
and knowledge-based assets fall into
one of two categories: explicit or tacit.
Included among the former are assets
such as patents, policies, procedures,
patient rights, confidentiality of
information, patient records
management, training programs,
business plans, marketing research and
customer relationship programs. As a
general rule of thumb, explicit
knowledge consists of anything that
can be documented, archived and
codified, often with the help of IT. Much
Faculty Member, Apollo Institute of
Hospital Administration
Faculty Member, Apollo Institute of
Hospital Administration
harder to grasp is the concept of tracit
knowledge, or the know-how contained
in peoples heads. The challenge
inherent with tacit knowledge is figuring
out how to recognize, generate, share
and manage it.
KM initiative:
A KM system should meet the
needs of the people, not simply the
needs of an elite group, To contribute
to a KM system or process is; it is
required What mission-critical
information need to do a job? Is it
previously completed project
deliverables? Is it process
methodologies? Is it customer
information? The answers should
serve as the cornerstone of your KM
initiative. In hospitals the knowledge
has to be managed with creation of
conditions for generation and
application of knowledge. Corporate
Hospitals in India have already
initiated the knowledge management
practices to leverage tacit knowledge
which lies in the skill of people.
The Value chain Perspective for
Knowledge Management System in
corporate hospital:
Hospital Value Chain: .
The focus of value chain of a
corporate hospital is to create value
through the activities categorized as
primary and secondary, The primary
activities involve patient care like Front
Office & Billing, Consultations,
Diagnostics and Operations etc.. The
secondary activities (Support
activities) include HR.; procurement,
House Keeping; Food and Beverages,
Technology, marketing & Sales,
Accounts & Finance etc.. These
support activities are integrating
functions which .., cut across various
primary activities within the
To gain competitive advantage for
over its rivals, a hospital must deliver
value to its customers through
performing these activities more
efficiently than its competitors or
performing the activities in a unique
way that create greater differentiation.
An efficient value chain of a hospital
leads to cost reduction; increased
patient turnovers, better healthcare
delivery, reputation and maximization
of shareholders wealth.
KM value Model for a Corporate
Creating value for stakeholders is
very important in the competitive.
environment. With the entry of new
players and Third Party Administrators
into healthcare delivery, it is high time
to put all out efforts by corporate
hospitals to generate surplus
compared to yesteryears. In view of
spiralling costs, increased employee
turnover and complexity of corporate
hospitals, value creation by effective
and efficient healthcare management
practices through adoption of
knowledge management system is
need of the hour. The model can
consists of key partners like medical,
para-medical, non medical,
management and customers and the
linkage among the partners for value
creation is shown in the following
Value creation for Key partners:
Medical, Paramedical and Non-
The hospital is well equipped with
all leading journals and encyclopedia,
magazines and books available on
various health related subjects.
Professionals are encouraged to attend
CME programs like national and
international conferences, seminars,
symposiums, workshops, etc., to
capture and share valuable knowledge
consisting of their previous live
experiences, innovations and future
course of actions.
A unique thing of the coporate
hospital is that it has a web portal
where lot of information is available
with respect to the organization,
Figure : KM - Value creation Model of a Corporate Hosital
CME, Workshops,
Training programs,
Conferences. Quality
Circles, Focus Group
work, Quality
Improvement teams
Customer Relationship
Management Patient
Education Programs Customer
Relationship Management
Patient Education Programs
Patient Education Leafiets.
Effective utilization
of Explicit and
Implicit Knowledge
through data,
creation, capture and
Culture, Communication
Values, Feed back Information
system Investment Decisions
Health Care Management
demands by efficient intelligent
communication system and analyze
and implement the decisions taken by
the Management. The organization
has identified its core competency in
intellectual assets for efficient patient
care and enabled pooling and sharing
of knowledge through organized
networked hospitals which are
geographically located.
Advantages of Knowledge
Some benefits of KM correlate
directly to bottom-line savings, while
others are more difficult to quantify. In
todays information-driven economy ,
companies uncover the most
opportunities - and ultimately derive
the most value - from intellectual rather
than physical assets.
To get the most value from a
companys intellectual assets, KM
practitioners maintain that knowledge
must be shared and serve as the
foundation for collaboration.
Foster innovation by
encouraging the free flow of ideas
Improve patient service by
streamlining response time
Boost revenues by getting
more patient turn outs and improved
bed occupancy.
Enhance employee retention
rates by recognizing the value of
employees knowledge and rewarding
them for it.
Streamline operations and
reduce costs by eliminating redundant
or unnecessary processes ( Activity
Based Costing)
Become an intelligent
organization with clearly defined
processes based on customer needs
Create good learning,
development and promoting best ideas
in the organization.
Accessing remote
information and expert opinions online
- Telemedicine, prescriptions etc
Healthcare information
system is the key enabler for
enhancing the value of information.
Substantially enhance
individual and group productivity in a
corporate hospital by allowing the use
and reuse of knowledge during day to
day activities as well as in doing
strategic tasks such as new drug
development, technology forecasting
in medical field.
In view of ever changing demands
and expectations from customers in
healthcare and coupled with entry of
private insurance players and third
party administrators, technological
changes, it is the hour of need that
corporate hospitals should intensify
their efforts in managing intellectual
assets in their knowledge
Management system. KM can be
viewed not as a tool or technology but
as a philosophy of the Management
and the concept has to percolate down
from top management to safe-guard the
bottomline of the organization. It is
required that a joint effort involving
healthcare professionals and
knowledge management experts be
carried out to venture towards the
realization of a knowledge rich
healthcare environment. Since the
healthcare industry is fast growing, lot
of untapped opportunities need to be
explored where the potential of
Knowledge Management practices is
high in the near future. Though a
variety of technologies have emerged
to support knowledge management
solutions; the success of such
initiatives is highly dependent upon
organization culture and process and
continuous harness of knowledge from
within and outside organizations.
1. California Management Revievv,
Volume 44, No.4, Summer 2002 p 129-
3. Davenport, T., Making knowledge
work productive and effective in
Knowledge Management (Ark Group;
November 2002)
4. Kaluzny, A. D. 1974. Innovation in
health services: theoretical framework
and review of research. Health Services
Research, (9): 101-120.
5. Express Healthcare Management, Vol.
3 No. 22 , 1-15 January 2003
6. Indian Management, Vol. No.42, Issue
5, Business Standard publication; May
2003 p 32 - 40.

seminar papers, recent developments

in different areas within the
organization and outside. Information
can be uploaded for accessing by
other professionals on the web. In
order to extract the tacit knowledge of
the employees they are given
incentives for the best idea every
Patient cure and care and delight
are the prime objectives of the hospital.
Particularly in the healthcare delivery,
the information sharing is highly
critical in saving many lives. As part
of KM initiative, Customer Education
Programs are conducted to create
awareness among the patients about
diseases and various precautionary
measures to be taken. A recent study
conducted at the hospital with respect
to waiting time analysis of Ultrasound
procedure found that the customer was
to wait for more than 2 hours to get the
procedure done due to lack of
awareness and information sharing
system. Subsequently, customers were
given Leaflets consisting information
guidelines about the procedure in
advance, thereby waiting time is
considerably reduced to half an hour.
Due to this study, patients were very
happy with reduction in waiting time
and at the same time no. of patients
per month also increased.
Once the value is created to the
customers and employees
automatically it leads to creation of
value to the organization, all
departmental heads meet everyday
morning and share their experiences
and problems related to concerned
departments which will enable them to
know about the organization workflow
to take current stock of the situation.
Management conduct feed back
survey from the employees customers
and suppliers etc. on regular basis to
enable them to incorporate
improvements in the system. The
thrust on the management is to improve
bottomline. Anticipating customer
Health Care Management