Process Transformation – A Way to Reduce Cost, Improve Quality, Etc., Etc., Etc.

“Gary Skarke is an expert in the area of transformation. His company’s success, for the most part, has been outside of healthcare but has touched healthcare on a small scale. As we all know, healthcare is going through a significant transformation and most of what he will share in the article below aligns well with what is happening in the healthcare industry today."

This is the third article in a series of articles focusing on the many types of transformation his company has helped other organizations navigate successfully and how these same situations are occurring within healthcare today.” – Jim Wiederhold

Click here to read the first and second article.

Process transformation focuses on making major changes to the activities and tasks (the how) by which the organization delivers its products and/or services. A core process (i.e., one that adds value to the customer) might be inquiry to order, order to cash, or product line development. Tools used to transform processes frequently includes business process reengineering, process redesign, Six Sigma, Lean or other quality related tools.

A global software manufacturer reduced the cost to process a customer order from $800 to $125. Sales reps saved an average of two hours a week (7% improvement) contacting customers by phone. The CEO said, “Sales reps tell me the time they used to spend putting together sales forecasts now spend that time on strategies to make that forecast a reality.” Initially, the client was frustrated because they spent several months analyzing the “as is” order process and the team was totally unmotivated. Their over analysis was paralyzing them. They quickly re-energized when they shifted to redesigning the “to be” process.

In healthcare, organizations are compelled to improve their treatments, eliminate non, value-added tasks, reduce wait time and cost, treat more patients -- while improving quality and patient outcomes. Such dramatic improvements can generally only be achieved and sustained with a rigorous and aggressive process improvement effort.

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Strategy Transformation – A New Business Model for a Rapidly Changing Industry

‘Gary Skarke is an expert in the area of transformation. His company’s success, for the most part, has been outside of healthcare but has touched healthcare on a small scale. As we all know, healthcare is going through a significant transformation and most of what he will share in the article below aligns well with what is happening in the healthcare industry today.

This is the second article in a series of articles focusing on the many types of transformation his company has helped other organizations navigate successfully and how these same situations are occurring within healthcare today.” – Jim Wiederhold

Click here to read the first article.

Strategy transformation focuses on developing and implementing a new strategy to respond to competitive pressures. One global company needed to grow revenue and profitability and their strategy was to expand their business model to sell not just products but also services. Previously, they sold software products and relied on customers to implement – but customers could not always implement successfully. So, the company made a strategic decision to get into the services business. The company realized they did not have the processes, skills, behaviors, metrics or culture to be successful in that new business model. “We don’t ever interact with the customer and our people do not have the skillsets to successfully interact with customers either.” Typically, such changes require five years. Given the urgency of the situation, the company went on a fast track implementation program. Based on the strategy Playbook for the first year and then three years, the company had a roadmap for making the significant transitions required. At the end of year three, our audit determined the company achieved the business results as well as operational results of doubling revenues and increasing profitability by 30%.

In the U.S healthcare industry, organizations similarly must have dynamic strategies to determine how to maneuver the changing regulatory and legislative landscape and then quickly and successfully implement that strategy, while ensuring a focus on patient centered care and value. Legislation is changing the way healthcare providers do business but cannot negatively impact delivery of healthcare services to patients. As a result, organizations are trying to merge or acquire other providers in the healthcare chain, such as CVS acquiring a health insurance company, pharmacies (both stand alone and grocery-store based) provide clinic services, and healthcare systems are formed to take advantage of economies of scale and increased market share. Given the short time horizon, it is even more critical to have flexible strategies with expedited implementation to ensure results are achieved before the next wave of changes occur.

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What is transformation…and why should we care?

“I’d like to introduce Gary Skarke. He is an expert in the area of transformation. His company’s success, for the most part, has been outside of healthcare but has touched healthcare on a small scale. As we all know, healthcare is going through a significant transformation and most of what he will share in the article below aligns well with what is happening in the healthcare industry today.

This is the first in a series of articles focusing on the many types of transformation his company has helped other organizations navigate successfully and how these same situations are occurring within healthcare today.” – Jim Wiederhold

* * * * * * * * * *

In today’s environment, organizations must change – and change dramatically – to survive and thrive. Who remembers what happened to RCA televisions, Motorola cell phones, or Myspace (competitor with Facebook) or how they lost their market leadership? They did not make the dramatic innovations and changes (typically called transformations) to stay ahead of the competition. Businesses have made transformations for a number of years although they were previously called under the headings of quality, reengineering, Lean Six Sigma, and others. Such transformations were made to cut costs, grow, increase customer satisfaction or simply stay in business. United States healthcare similarly has and is undergoing transformations, many of which are mandated by the U.S. government, like electronic medical records. We wanted to share what transformations are happening with businesses so that they can be applied more readily to healthcare.

Organizations are appropriately cautious about transformations. A 2015 survey by McKinsey* found that only 26% have been “very” or “completely” successful at both improving performance and equipping the organization to sustain improvements over time. Transformation is an overused term. It is not a tweek, but an overhaul – a complete change in the way business is done. IBM was at one time only a provider of hardware such as computers but transformed successfully into a provider of consulting services. The amount of effort that goes into the change is proportional to the impact on the organization. The bigger the change, the bigger the effort, and the bigger the potential results. Transformations can be around any or all of the following: strategy, process, systems, metrics and culture. We will cover each of these areas in a series of brief articles.

* McKinsey & Co., 2015, “How to Beat the Transformation Odds”

TBO International LLC provides transformation services to help clients beat the odds for successful outcomes.

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