An empirical investigation of performance assessment of Indian healthcare industry

Abstract

PurposeThe purpose of the study is to measure the performance of Indian hospitals, both operationally and financially, by using hospital KPI's. The assessment is predominantly done by linking it to the existing Lean practices in Indian hospitals.Design/methodology/approachAn empirical study based on cross-sectional survey of hospital managers and specialists in various private healthcare facilities across India was conducted to validate the proposed Lean framework. From an extensive literature survey, the authors identified quality, delivery, efficiency, accessibility and patient centeredness to be the main operational performance (OP) indicators for hospitals. Business or financial performance was measured based on parameters which are average revenue per occupied bed (ARPOB), earnings before interest, tax, depreciation and amortization (EBITDA) and operating revenue. Confirmatory Factor Analysis (CFA) was carried out using a specialized technique, called Structural Equation Modelling(SEM) and an explicit factor structure was hypothesized.FindingsManagement commitment towards Lean in hospitals is statistically proven to have impacted operational and financial performance. However, leanness in technology and business processes showed no statistical significance on either operational or financial performance parameters. Hospital stakeholders showed statistical significance on though it had no impact on the financial performance. Results obtained from the statistical analysis indicate a positive impact of hospital Lean practices on timely delivery of services and improved service quality. Efficiency, accessibility of services and patient centered behavior in hospital operations could not be statistically proven to have impacted the financial performance.Social implicationsEffectiveness of Lean management (LM) principles in improving hospital operations is largely dependent on patient centered behavior. Empowered employees who are trained to add value from a customer view point, make hospital operations safe and improved. Properly trained and communicated employees who are committed to quality improvements can make a positive impact on patients' quality of life and thus positively impact the society. The study lists ways to attain the required outcomes.Originality/valueThis paper is among the very few that has attempted to suggest ways to link implementation of Lean practices more effectively in Indian hospitals to improve hospital performance at operational and financial levels.