Why Service Operations Management is Critical in Healthcare - part 1

Source: https://www.peterstark.com/key-to-engagement/

Source: https://www.peterstark.com/key-to-engagement/

This post was originally published as a LinkedIn post on January 12, 2017. The original can be viewed here.


Service operations management is critical as it deals with the unique decision making challenges that only exist in a service-based organization(ie. Hospitals, healthcare facilities)- issues that don’t occur in traditional product-based organizations(manufacturing, retail, etc.).

Here are some challenges that Service Operations managers are trained to solve:

Services are easily customizable.

Although a service is highly customizable, it can only be customized within strict self-imposed boundaries. In a healthcare setting, for example, a boundary parameter can be the provision of a pleasant experience but only to a point where it does not increase cost or reduce quality of care to other patients. The more individual attention is given to you, the more it is taken away from someone else. This explains why nurses and ER specialists only spend a few minutes with you – it’s not that they don’t care; it’s that they need to be able to respond to someone else very quickly.

Services are highly perishable.

Unlike products, unused services cannot be inventoried for future use. It’s simply gone. And with it, the financial cost that went into making that unused service available in the first place. Managing the Opportunity Loss of idle service capacity is the most challenging as it entails trying to match capacity with demand but this is difficult to do in practice. See below.

Service Demand fluctuates rapidly and frequently.

Demand for services can be notoriously difficult to reliably and accurately forecast. For example, what is the difference between a 30% chance or 40% chance of needing an emergency urologist on standby in the ER at 2am? In either case, the service must be provided as the consequences of not having that service available could be significant. Variability in demand inevitably produces situations when demand exceeds capacity resulting in long wait times or when capacity exceeds demand resulting in idle time and increased cost - but reduced wait times. Managing demand is tricky because the right decision can still produce undesirable outcomes.

Variability in Patient Experiences.

As customers are intricately involved in service delivery, variability is the result; Different patients with the same ailments may need different things. As well, the inherent variability in how customers experience what you give them results in difficulty in providing a consistent level of service. For example, patients with appendicitis may encounter different ER experiences based on their age(child or senior citizen), when they visit(weekday or weekend), and time of day(mid-day or midnight). For more details on managing ER patient experiences, read my and my Schulich MBA’s team on Patient Experience Design here.



Fitzsimmons, J. & Fitzsimmons, M. Service management : Operations, Strategy, Information Technology(7th Ed). New York : McGraw-Hill, 2011


The content of this post is for informational and entertainment purposes only and is not to be viewed as recommendations or advice from the author.