What Is Operational Excellence in Healthcare?
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The Principles of Operational Excellence
Juran Excellence Model
The Pareto Principle
Shingo Model of Operational Excellence
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What Is Operational Excellence in Healthcare?
“Operational excellence” may sound like just another piece of corporate jargon, but for healthcare organizations, it can be the difference between life and death:
Patients languishing for hours in emergency departments due to inefficient triage and chronic understaffing
Surgeries postponed because of supply chain failures and poor inventory management
Revolving-door readmissions due to inadequate patient discharge education and follow-up
Potentially fatal medication errors caused by flawed management systems and keeping certain clinicians from working at the top of their license
Dangerous gaps in care resulting from siloed departments, lack of team alignment, and communication breakdowns
Each of these issues could be a potential tragedy for patients and their families — not to mention a legal and reputational risk for healthcare organizations. It’s vital to devote time and resources to a solution. This is where operational excellence becomes essential.
What Is Operational Excellence?
Let’s define operational excellence in healthcare. Essentially, it means running your hospital, clinic, practice, or other medical facility as efficiently and effectively as possible — while maintaining high-quality patient care as your primary focus.
Now, let’s break down a common point of confusion regarding operational excellence meaning and examine some examples of excellence in healthcare.
Operational Excellence Vs. Operational Efficiency
We strongly advocate for our clients to shift from the operational efficiency model toward the operational excellence model.
Efficiency is laser-focused on cutting costs and reducing waste, sometimes even at the expense of other goals (like patient outcomes!). So you can see how, in healthcare, operational efficiency alone could harm your reputation and patient care.
On the other hand, as you saw from our definition of operational excellence, excellence is all about running your organization better with the goal of serving your patients and your clinicians better. At times, efficiency can help you do this. But excellence also includes …
Patient flow - managing how patients move through the system, from admission to discharge (and post discharge)
Quality and safety in care - implementing processes to reduce errors, improve patient outcomes, and consistently deliver high-quality care
Cost and care balance - finding ways to reduce expenses and increase cost transparency without compromising care quality
Technology integration - using electronic health records, telemedicine, and other technologies, which streamline communications and improve patient care
Patient satisfaction - focusing on the patient experience to improve overall satisfaction and outcomes
Operational excellence builds on operational efficiency to create a holistic, long-term strategy for improving not only your bottom line but also your reputation, patient outcomes, and overall organizational health.
What Are the Principles of Operational Excellence?
There are a few leading frameworks for operational excellence, and each comes with its own guiding operational excellence principles to follow. Let’s take a look at the two most popular operational frameworks of excellence:
Juran Excellence Model
Dr. Joseph M. Juran is considered the pioneer of operational excellence, eventually leading to the development of the Juran Excellence Model. Its core principles include:
Quality Leadership
In the Juran Model, quality leadership refers to stewardship over your products or services’ quality. Going further, Juran defines what “quality” means by how the end users (in your case, your patients) judge quality:
The service has all the components to address a need or desire
The service causes no harm
In practice for healthcare organizations, quality leadership might include:
Implementing a patient feedback loop system to assess and improve service quality
Regular training for staff on patient-centered care
Developing clear quality metrics aligned with patient needs and expectations
Creating clarity and alignment amongst all staff (we help do this through our advising and Value Mapping)
And anything else that helps you safeguard the quality of care
Superior Quality Products & Services
Subscribing to the Juran Model means the service you deliver must always be high quality. Crucially, to achieve that, you have to plan for it. Quality care doesn’t happen by accident.
In practice for healthcare organizations, planning for quality might include:
Investing in state-of-the-art medical equipment and technology
Implementing rigorous quality control measures across all departments
Developing an operational excellence culture of continuous improvement and impeccable care
Communicating care expectations with effective messaging
Maintaining and continuously improving patient experience (digital and in person) to align with the high quality of care
And other proactive steps to deliver quality care
The Juran Trilogy
The Juran Trilogy is the lens through which organizations can achieve superior quality service. It’s described in three parts:
Quality planning (design quality in)
Quality control (maintain what is designed)
Quality improvement (create breakthroughs in current performance)
One example of using a Juran Trilogy in healthcare could look like…
Designing standardized care protocols based on best practices (quality planning)
Implementing regular audits to ensure adherence to quality standards (quality control)
Establishing quality improvement teams to identify and address areas for enhancement (quality improvement)
The Pareto Principle
You might already be familiar with the Pareto Principle, a concept that posits that 80% of your results come from 20% of your efforts (also known as the 80/20 rule). In the Juran Model, this translates to making sure you spend your organization’s resources on improving the areas that will make the most difference overall, rather than trying to improve everything at once.
In practice for healthcare organizations, this might include:
Analyzing patient complaints to identify the top 20% of issues causing 80% of dissatisfaction
Prioritizing improvements in high-volume departments or procedures
Focusing on reducing the most common types of medical errors
Shingo Model of Operational Excellence
Known mainly for its global award, the Shingo Prize for Operational Excellence, the Shingo Model comes out of Utah State University’s Jon M. Huntsman School of Business and presents some of the most ideal examples of operational excellence goals. Its core principles are:
Respect Every Individual
According to the Shingo model, “When people feel respected, they give far more than their hands — they give their minds and hearts as well.”
Respect for every individual will lead to improved performance, engagement, and, yes, excellence. In healthcare, perhaps more than in other fields, engaged and passionate staff and clinicians matter significantly for patient outcomes — your goal for operational excellence!
In practice for healthcare organizations, this might include:
Creating opportunities for all staff to contribute ideas for improvement
Recognizing and rewarding employees for their contributions to patient care
Instilling a culture where everyone is valued, no matter seniority
Involving your whole team in organizational positioning and company vision (we do this through our Value Mapping)
Lead With Humility
“Improvement is only possible when people are willing to acknowledge their vulnerability and abandon bias and prejudice in their pursuit of a better way,” as the Shingo Model posits.
Thus, creating operational excellence through the Shingo lens does not begin with cutting costs or ruthlessly chasing efficiency; it focuses first on creating a culture where leadership encourages feedback from those on the frontlines of patient engagement and care.
In practice for healthcare organizations, leading with humility could include:
Regular leadership rounding to gather frontline staff insights
Implementing a suggestion box system for anonymous feedback
Hosting town hall meetings where leaders listen more than they speak
Seek Perfection
Perfection is, of course, an unattainable destination. However, the Shingo Model advocates striving for it anyway, because it will lead to continuous improvement, a key tenant of operational excellence. In other words, always seeking feedback and looking for ways to improve your organization.
In practice for healthcare organizations, seeking perfection might look like:
Setting ambitious goals for patient satisfaction and clinical outcomes
Implementing a continuous improvement methodology like Lean or Six Sigma
Regularly benchmarking performance against top-performing healthcare organizations
Embrace Scientific Thinking
“Scientific thinking,” according to Shingo, is twofold:
Encourage new ideas rather than defaulting to what has always been done
Use a systematic approach — “Repeated cycles of experimentation, direct observation and learning.”
The process of bringing new ideas to the forefront and then having a robust system to test if they will drive results for your organization will help you achieve operational excellence.
In practice for healthcare organizations, scientific thinking might include:
Encouraging evidence-based practice in all clinical decisions
Implementing Plan-Do-Study-Act (PDSA) cycles for process improvements
Supporting research initiatives within your organization
Focus on Process
This principle is all about ensuring consistency in care. As Shingo puts it, “It is nearly impossible for even good people to consistently produce ideal results with a poor process both inside and outside the organization.”
Even the most devoted clinicians, frontline staff, and management can make mistakes. Process is needed to catch mistakes before they become serious (or even fatal).
In practice for healthcare organizations, this might include:
Mapping and standardizing key clinical and administrative processes
Implementing checklists for critical procedures to ensure consistency
Regular process audits and improvement cycles for every department
Assure Quality at the Source
Errors must be identified and fixed as they happen — rather than affecting the next chain in the process or going unchecked to wreak havoc on the end result.
This involves creating a process for checks at every crucial stage of patient care or patient flow.
In practice for healthcare organizations, assuring quality might include:
Implementing barcode medication administration systems
Using surgical safety checklists in operating rooms
Conducting real-time peer reviews of diagnostic imaging
Improve Flow and Pull
“Flow and Pull” refers to a concept similar to supply and demand. The services your healthcare organization provides should be in response to what your patients need (in other words: never superfluous).
In practice for healthcare organizations, improving your flow and pull might include:
Optimizing patient flow in emergency departments
Adjusting staffing levels based on predicted patient volumes
Surveying your community to uncover care or service gaps you could fill
Think Systemically
This principle relates back to the idea of operational excellence as holistic or looking at the “whole machine” of your organization. Everything — from your staff to clinicians to patient flow to electronic health records — is interconnected. Excellence requires understanding this.
In practice for healthcare organizations, this might include:
Creating cross-functional teams for major improvement initiatives
Implementing an integrated electronic health record system
Developing care coordination programs that span the entire patient journey
Create Constancy of Purpose
Constancy of Purpose essentially means making sure your organization (and every person involved) is on the same page about your core messages and values — like who you serve, what sets you apart, and what your mission is.
In practice for healthcare organizations, this might include:
Developing and regularly communicating a clear organizational mission and values
Aligning department goals with overall operational excellence goals
Incorporating the organization's purpose into employee onboarding and training
Create Value for the Customer
According to Shingo: “Ultimately, value must be defined through the lens of what a customer wants and is willing to pay for.” Applied in the healthcare context, Shingo Model advocates for a deep understanding of your patients’ needs and desires in your community before adopting any changes.
In practice for healthcare organizations, this might include:
Conducting regular community health needs assessments
Developing personalized care plans based on individual patient needs and preferences
Institute shared decision-making as a method of care
Why Is Operational Excellence Important in Healthcare?
At its core, operational excellence in healthcare is about continually looking for ways to improve patient care, patient experience, and patient outcomes. Which means that operational excellence is ultimately about helping patients heal better and faster. And nothing could be more important than that!
But let’s ground the benefits of operational excellence in healthcare with some more specific examples:
Decrease Wait Times and Improve Access to Care
Streamlined processes mean patients receive care more quickly, whether it's in the emergency department, for scheduled procedures, or in outpatient clinics.
Consistently Deliver Quality Care
Standardized, evidence-based protocols help you make sure that all patients receive high-quality care, regardless of which clinician they see.
Communicate consistently with patients (across clinicians and other staff), which requires planning and practice.
Improve Patient Satisfaction and Experience
When operations run smoothly, patients notice. They spend less time waiting, receive more attentive care, and generally have a better experience.
Optimize How You Use Resources
By improving efficiency, you make better use of your staff, equipment, and facilities, so you can treat more patients effectively without burning out your team.
Get Better at Care Continuity
Better systems make for improved communication between different departments and care providers — for seamless transitions and comprehensive care for patients.
Lower Readmission Rates
When you improve and systematize follow-up processes, you reduce the likelihood of patients needing to be readmitted after discharge.
Increase Staff Satisfaction and Retention
When processes work well, healthcare providers can focus more on patient care. This often leads to higher retention among your best clinicians!
Reduce Healthcare Costs While Improving Outcomes
Operational excellence often leads to cost savings, which can be reinvested in patient care, for a cycle of continuous improvement.
How To Achieve Operational Excellence
The most important thing to understand about operational excellence is that it should not be a one-time project or short-term focus. Operational excellence should become an always-priority for your organization, embedded within your culture, leadership, and processes.
Here’s a proposed order in which to begin pursuing operational excellence:
Start with a fundamental shift — create a culture of excellence in healthcare. Healthcare leaders must encourage an environment where continuous improvement is expected. This means creating spaces where all staff, from call centers to chief surgeons, feel empowered to identify issues and suggest improvements.
Standardize best practices across departments, from clinical care to administration. Create documented processes for care delivery, triage, follow-up care, medication administration, resource allocation, inventory management … and the list goes on. These processes help you maintain consistency for every patient and reduce costly (or harmful) mistakes.
Invest in technology solutions (and training) to enable operational excellence efforts. For example, comprehensive, interoperable electronic health record systems can transform care coordination and reduce errors. And emerging technologies like telemedicine and remote patient monitoring are opening new avenues for care delivery and patient engagement.
Challenges in Implementing Operational Excellence
Hopefully, by now, you personally understand why operational excellence is a worthwhile, even necessary, goal for your healthcare organization. But challenges still lie ahead when it comes to implementing your plans. Here are the most common we come across:
Resistance to Change
Resistance to change is perhaps the most common hurdle, making it hard to achieve buy-in. Healthcare professionals are trained to rely on established practices — which, while often helpful in patient care, can also make them hesitant to change.
Overcoming this resistance requires clear communication of benefits and involvement of staff in the change process. For a breakdown of how to do this, you can read our full guide on operational change management for healthcare.
Resource Constraints
Resource constraints present another significant challenge. Implementing new systems and processes often requires substantial upfront investment, which can be daunting for healthcare organizations operating on thin margins. Starting with small, high-impact projects and reinvesting savings into further improvements can help overcome this hurdle.
Regulatory Compliance
Regulatory compliance, while necessary for patient safety, can sometimes hinder rapid change. While you can’t eliminate this hurdle altogether, you can stay informed about regulations and involve compliance officers early in improvement initiatives to help navigate this challenge.
Staff Burnout
The human factor in healthcare cannot be overlooked. Too much change all at once can lead to staff burnout and turnover, which significantly hinders any progress you might have made. That’s why prioritizing staff well-being and demonstrating how improvements reduce workload over time is essential.
Measuring Success
How will you know if you’ve made progress? Measuring success in the complex healthcare environment of an initiative that’s as broad as operational excellence is challenging. We recommend developing some kind of “scorecard” of metrics covering patient outcomes, satisfaction, and operational efficiency. This way, you can see if key areas have improved with your efforts.
Sustaining Improvements In The Long-Term
Finally, sustaining improvements over time is often the biggest challenge of all, as people fall back into old habits. Embedding new practices into standard operating procedures and regularly auditing compliance can help make sure that improvements stick.
Take Your Next Step in Operational Excellence Strategy
The effects of poor operational excellence echo through every corridor of a healthcare organization but scream mostly loudly at crucial points in patient care.
Long wait times. Care gaps. Poor patient education and follow-up. Medication errors. Miscommunication across providers.
Even with the most dedicated physicians, surgeons, and other clinicians, if your organization is not running smoothly … things begin to fall through the cracks and quickly affect patient care and experience.
In short: your operations affect everything, from patient care to clinician retention to growth. Don’t wait to prioritize your operational excellence objectives.
Need support tackling the immense project that is creating an operational excellence plan of action and implementing it? Check out our specialized healthcare consulting services and, when you’re ready, meet with a strategist.
