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Heizer/Render, Operations Management 7th Edition and Principles of Operations Management 5th Edition

Internet Case Study for Chapter 6: Managing Quality

Falls Church General Hospital

Founded in 1968, the Falls Church General Hospital (FCGH) is a privately owned 6l5-
patient bed facility in the incorporated township of Falls Church, Virginia. Falls Church
is four miles from downtown Washington, D.C., and is surrounded by the counties of
Arlington, Fairfax, and Alexandria, Virginia, all affluent urban/suburban communities
with a highly educated population composed largely of employees of the U.S.
government and high-tech engineering firms. Falls Church General Hospital, with 895
employees, provides a broad range of healthcare services, including drug/alcohol abuse
wards, emergency rooms, x-ray and laboratory facilities, maternity wards, intensive- and
cardiac- care units, and outpatient facilities. In January 1990, the hospital began a series
of ads in The Washington Post highlighting its concerned doctors and nurses, its friendly
support staff, and its overall philosophy that its employees care about their work and their

The Issue of Assessing Quality Healthcare

Quality healthcare is a goal all hospitals profess, but few have developed comprehensive
and scientific means of asking customers to judge the quality of care they receive. A
tremendous amount of effort has been devoted to assessing the clinical quality of hospital
care; books, journals, and papers on the topic abound. The problem, however, is that past
efforts to measure hospital quality have largely ignored the perceptions of customers--the
patients, physicians, and payers. Instead of formally considering customer judgments of
quality, the healthcare industry has focused almost entirely on internal quality
assessments made by the health professionals who operate the system. In effect, a system
for improving healthcare has been created that all but ignores the voice of the customer.

The board of FCGH believes that all hospitals need to make the transformation from the
current practice of attempting to ensure quality to measuring and improving the quality of
care from both the external, customer perspective and the internal, provider perspective.
Fueled by concerns in recent years about costs and medical practice variation and by the
Heizer/Render, Operations Management 7th Edition and Principles of Operations Management 5th Edition

demand for greater social accountability, there is an emerging demand by patients and
payers that quality healthcare be provided at best value.

As board president, Dr. Irwin Greenberg recently stated at the annual FCGH meeting

"As the prices people pay in the future for given levels of service become
more similar, hospitals will be distinguished largely on the basis of their
quality and value as assessed by customers. We must have accurate
information about how our customers, not just the healthcare professionals
who work here, judge the quality of care in this institution. Many hospitals
already have some methods for measuring patient satisfaction. A recent
survey of more than two hundred hospitals showed that two-thirds
routinely conduct patient satisfaction surveys.

Typically, the surveys are distributed at discharge to patients who are free
to respond or not. The main value of such surveys is to gain quick
knowledge of problems experienced by patients, many of whom often fill
out questionnaires because they are disgruntled about some specific aspect
of the care they received."

In response to Dr. Greenberg's statement, and in light of the advertising campaign,

hospital administrator Carla Kimball called a meeting of her department heads to discuss
the issue of quality. "Can we really deliver on our promises? Or are we in danger of
failing to live up to the level of healthcare our patients expect, and do we risk losing
them?" Ms. Kimball asked.

Annie Kerr, head of nursing, continued the debate

"I agree that surveys, such as the one Dr. Greenberg mentioned in his
speech, are valuable. But how do we measure the quality of our
healthcare? Some patients who leave FCGH happy may have actually
received poor treatment here. If we are serious about improving the quality
of care, we need more valid and reliable data on which to act. We need
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answers to specific, quality-related questions about activities in areas that

affect patients--admission, nursing, medical staff, daily care, and ancillary

"I have an idea," said Merrill Warkentin, Kimball's staff director. "I just
finished reading a book by John Groocock. He's the Vice-President for
Quality at TRW, a big manufacturer. He says there are 14 steps in TRW's
internal quality audits. I made a photocopy of those steps (see Table 1).
Why don't we consider his approach?"

When the meeting ended, Ms. Kimball read Groocock's list again and began to think
about the whole issue of quality control in U.S. firms. It had worked in many
manufacturing companies, but could the concepts of quality control really be used in a

TABLE 1: Steps in TRW's Quality Audit

1. Quality to the customer. Is conformance of the product to established quality standards

measured? Is quality of the organization's product compared with that of competitors'

2. Quality costs. Have the costs of quality been measured and have areas for possible cost
savings been identified?

3. Design review. Do procedures exist to review designs for quality? Are these
procedures being carried out?

4. Product qualification. Have procedures been established and followed to qualify new
products before any deliveries to customers?

5. Product liability. Has each product been scrutinized regarding safety and are
appropriate records kept? Does a written plan exist for dealing with a major product
liability problem?
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6. Process capability. Has the capability of all processes been measured and is that
information used in product design and development?

7. Incoming inspection. Are incoming lots inspected in an efficient manner and are
appropriate records kept?

8. Supplier quality. Are suppliers made aware of their quality responsibilities? Are
records kept on nonconformance?

9. Process control. Has the company developed policies for controlling processes? Have
employees been trained to follow those policies?

10. Inspection and test planning. Do inspection and test plans exist for all products and
are records maintained on the results? Is all test equipment calibrated regularly?

11. Quality performance indicators. Are quality performance indicators regularly

published throughout the organization and made available to employees?

12. Employee involvement program. Are employees involved in quality improvement

through some process such as quality circles?

13. Multifunctional quality improvement team. Has a quality improvement team covering
all functional areas been established to monitor quality and work to improve it?

14. Quality business plan. Has quality been integrated into the organization's business
plan--and from there into the overall strategic plan?
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1. Why is it important to get the patient's assessment of healthcare quality? Does a patient
have the expertise to judge the healthcare he or she receives?

2. How might a hospital measure quality?

3. Using the steps in Table 1, discuss how each might apply to FCGH.

4. How can the value of a human life be included in the cost of quality control?

5. There are certain parallels between the evaluation of healthcare quality and educational
quality. How are customer surveys used to evaluate the quality of teaching at your
institution? How are the results used? Are any other measures available to assess
educational quality? What improvements would you suggest to the current system?