Flevy Management Insights Case Study
Strategic Growth Plan for Coastal Nursing Facility in Healthcare


Fortune 500 companies typically bring on global consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture, or boutique consulting firms specializing in Service Design to thoroughly analyze their unique business challenges and competitive situations. These firms provide strategic recommendations based on consulting frameworks, subject matter expertise, benchmark data, KPIs, best practices, and other tools developed from past client work. We followed this management consulting approach for this case study.

TLDR A coastal nursing and residential care facility faced rising operational costs and declining patient satisfaction, necessitating a strategic overhaul of its service design and operational efficiency. By implementing Service Design Innovation and an Operational Excellence Program, the organization increased patient satisfaction by 15% and reduced costs by 12%, highlighting the importance of patient-centered care and streamlined operations.

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Consider this scenario: A coastal nursing and residential care facility is facing a strategic challenge in optimizing its service design to meet the evolving needs of its patient population.

The organization has seen a 20% increase in operational costs, coupled with a 10% decrease in patient satisfaction scores over the last two years. External challenges include a rising competitive landscape with new entrants offering specialized care services, and regulatory changes impacting operational standards and patient care protocols. The primary strategic objective is to enhance service design and operational efficiency to improve patient care quality and satisfaction while managing costs.



The strategic challenges this organization faces suggest that service design inefficiencies and outdated operational practices might be at the core of its problems. The evolving healthcare landscape demands modernization and innovation in care delivery, which this facility has struggled to keep pace with. Additionally, internal resistance to change and a lack of alignment between staff training and patient care expectations could be exacerbating these issues.

Market Analysis

The nursing and residential care facilities industry is undergoing significant transformation, influenced by demographic shifts, technological advancements, and evolving patient expectations. The demand for personalized and high-quality care services is increasing as the population ages.

Examining the competitive landscape reveals:

  • Internal Rivalry: High, due to an increasing number of facilities offering specialized services.
  • Supplier Power: Moderate, with a growing market for healthcare technology solutions.
  • Buyer Power: High, as patients and families have more choices and access to information about care options.
  • Threat of New Entrants: Moderate, regulated by stringent healthcare standards and licensing requirements.
  • Threat of Substitutes: Low, given the essential nature of nursing and residential care services.

Emergent trends include the integration of digital health technologies and a shift towards patient-centered care models. Major changes in the industry dynamics present both opportunities and risks:

  • Adoption of Telehealth Services: Offers the opportunity to expand care delivery and improve patient engagement, with the risk of requiring significant upfront technology investments.
  • Increased Focus on Holistic Care: Presents an opportunity to differentiate services but requires comprehensive staff training and potentially new hiring.

A STEER analysis indicates that technological (T) advancements and regulatory (R) changes are the most significant external factors impacting the industry, presenting opportunities for innovation in service delivery but also requiring careful navigation of compliance issues.

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Internal Assessment

The organization has a strong commitment to patient care but faces challenges in operational efficiency and technology adoption.

In conducting a 4DX Analysis, it's clear that the facility excels in compassionate care but struggles with executing strategic initiatives due to unclear goals and lack of accountability. Focusing on a few critical objectives and measuring results could drive significant improvements in operational performance.

The 4 Actions Framework Analysis reveals opportunities to eliminate redundant administrative processes, raise the standard of care through technology integration, reduce complexities in patient admissions, and create new services tailored to patient preferences.

A Jobs To Be Done (JTBD) Analysis indicates that patients and their families are seeking not just medical care but a holistic care experience that supports physical, emotional, and social well-being. Addressing these needs through service design could differentiate the facility in a competitive market.

Strategic Initiatives

  • Service Design Innovation: Redesign care delivery processes to be more patient-centered, aiming to improve patient satisfaction and care outcomes. This initiative will leverage technology to streamline operations and enhance the patient experience, expected to increase patient retention and attract new patients. Resource requirements include investments in digital health technologies and training for staff on new systems and processes.
  • Operational Excellence Program: Implement a continuous improvement program focused on reducing waste and increasing efficiency in care delivery and administrative processes. The goal is to lower operational costs while maintaining high care standards. Value creation comes from cost savings and improved resource allocation. Resources needed include process improvement expertise and change management support.
  • Staff Development and Engagement: Develop a comprehensive training and development program to align staff skills with the evolving needs of patient care. This initiative aims to enhance staff satisfaction and retention, thereby improving patient care quality. Value is created through a more engaged and skilled workforce. This will require investment in training programs and possibly hiring additional staff with specialized expertise.

Service Design Implementation KPIs

KPIS are crucial throughout the implementation process. They provide quantifiable checkpoints to validate the alignment of operational activities with our strategic goals, ensuring that execution is not just activity-driven, but results-oriented. Further, these KPIs act as early indicators of progress or deviation, enabling agile decision-making and course correction if needed.


What you measure is what you get. Senior executives understand that their organization's measurement system strongly affects the behavior of managers and employees.
     – Robert S. Kaplan and David P. Norton (creators of the Balanced Scorecard)

  • Patient Satisfaction Scores: An increase in these scores will indicate success in improving the care experience.
  • Operational Cost Reduction: Measuring reductions in operational costs will reflect the effectiveness of the Operational Excellence Program.
  • Staff Retention Rates: An increase in retention rates will signal success in staff development and engagement efforts.

These KPIs provide insights into the effectiveness of the strategic initiatives in enhancing service design, operational efficiency, and staff engagement, directly impacting patient care quality and financial performance.

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Stakeholder Management

Success of the strategic initiatives relies on the active involvement and support of both internal and external stakeholders, including care staff, management, technology partners, and regulatory bodies.

  • Care Staff: Frontline employees responsible for delivering patient care.
  • Management: Leadership team guiding strategic direction and resource allocation.
  • Technology Partners: Vendors providing digital health solutions and support.
  • Regulatory Bodies: Agencies governing healthcare standards and practices.
  • Patients and Families: The primary recipients of care services.
Stakeholder GroupsRACI
Care Staff
Management
Technology Partners
Regulatory Bodies
Patients and Families

We've only identified the primary stakeholder groups above. There are also participants and groups involved for various activities in each of the strategic initiatives.

Learn more about Stakeholder Management Change Management Focus Interviewing Workshops Supplier Management

Service Design Best Practices

To improve the effectiveness of implementation, we can leverage best practice documents in Service Design. These resources below were developed by management consulting firms and Service Design subject matter experts.

Service Design Deliverables

These are a selection of deliverables across all the strategic initiatives.

  • Service Design Improvement Plan (PPT)
  • Operational Excellence Roadmap (PPT)
  • Staff Development Framework (PPT)
  • Technology Integration Financial Model (Excel)

Explore more Service Design deliverables

Service Design Innovation

The organization utilized the Value Proposition Canvas (VPC) to deeply understand patient needs and the Customer Journey Mapping (CJM) to visualize the entire patient experience from initial contact through ongoing engagement. The Value Proposition Canvas was instrumental in aligning the services offered with the actual needs and desires of the patients. This framework helped the team to identify mismatches between what the facility provided and what patients valued most.

Following the insights gained from the VPC, the team:

  • Conducted in-depth interviews and surveys with current and potential patients to gather data on their expectations and experiences.
  • Mapped out the existing service offerings against the patient needs identified, pinpointing areas for improvement and innovation.
  • Designed new service models that directly addressed the gaps found, focusing on enhancing patient satisfaction and care outcomes.

Customer Journey Mapping was then applied to re-envision the patient's experience through the facility's service touchpoints. This approach allowed for a holistic view of the patient's journey, identifying critical moments that matter to patients and opportunities for service innovation.

Through the implementation of CJM, the organization:

  • Mapped the end-to-end journey of a patient, from pre-admission through to discharge and post-care follow-up.
  • Identified pain points and moments of truth that significantly impacted patient satisfaction and loyalty.
  • Redesigned service touchpoints to eliminate friction and enhance the overall patient experience, integrating feedback mechanisms at key stages.

The results of implementing these frameworks were transformative. Patient satisfaction scores saw a significant increase, and the facility noted an enhanced reputation in the healthcare community. By aligning services more closely with patient needs and reimagining the care journey, the organization not only improved its service design but also set a new standard for patient-centered care in the industry.

Operational Excellence Program

The organization adopted the Lean Six Sigma methodology to drive its Operational Excellence Program. Lean Six Sigma provided a structured approach to identify and eliminate waste and reduce variability in operational processes. This methodology was particularly useful for the strategic initiative of improving operational efficiency, as it combined Lean's focus on process speed and efficiency with Six Sigma's emphasis on quality and precision.

Implementing Lean Six Sigma involved:

  • Training key staff members in Lean Six Sigma principles and techniques, ensuring a broad understanding across the organization.
  • Mapping out all operational processes to identify non-value-adding activities and sources of defects or variability.
  • Applying Lean tools to streamline workflows and Six Sigma's DMAIC (Define, Measure, Analyze, Improve, Control) process to systematically improve process quality.

The application of Lean Six Sigma led to a marked reduction in operational costs and significant improvements in process efficiency and quality. The program not only achieved its goals of lowering costs and enhancing operational performance but also fostered a culture of continuous improvement among staff, contributing to sustained excellence and innovation in patient care delivery.

Staff Development and Engagement

To address the strategic initiative of Staff Development and Engagement, the organization turned to the Competency Framework and the Appreciative Inquiry (AI) model. The Competency Framework was used to define the specific skills, knowledge, and behaviors required for each role within the facility, ensuring that staff development efforts were aligned with organizational needs and strategic goals. This framework was crucial for identifying gaps in current competencies and designing targeted training programs.

Through the Competency Framework, the organization:

  • Conducted a comprehensive skills audit to assess current competencies against the requirements of the facility's strategic objectives.
  • Developed personalized development plans for staff, focusing on closing skill gaps and facilitating career progression.
  • Implemented a series of training sessions, workshops, and mentoring programs to address identified competency gaps.

Appreciative Inquiry was then utilized to foster a positive organizational culture that supports engagement and continuous learning. By focusing on the strengths of individuals and the organization, AI facilitated a shift towards a more collaborative and innovation-driven workplace.

Applying AI, the facility:

  • Engaged staff in a series of workshops to identify and amplify the positive aspects of the work environment and culture.
  • Collaborated with employees to envision future possibilities and co-create plans for achieving these aspirations.
  • Launched initiatives that built on the organization's strengths, encouraging innovation and enhancing staff morale and engagement.

The combination of the Competency Framework and Appreciative Inquiry led to significant improvements in staff satisfaction, retention, and performance. Employees became more engaged and committed to the organization's vision, driving higher levels of patient care and satisfaction. This strategic initiative not only enhanced the capabilities of the staff but also created a more positive, resilient, and adaptive organizational culture.

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Key Findings and Results

Here is a summary of the key results of this case study:

  • Increased patient satisfaction scores by 15% through the implementation of Service Design Innovation, focusing on patient-centered care.
  • Reduced operational costs by 12% as a result of the Operational Excellence Program using Lean Six Sigma methodologies.
  • Improved staff retention rates by 20% following the Staff Development and Engagement initiative, leveraging the Competency Framework and Appreciative Inquiry.
  • Enhanced patient care quality and outcomes, evidenced by a 10% decrease in readmission rates and positive community feedback.

The strategic initiatives undertaken by the organization have yielded significant improvements in patient satisfaction, operational efficiency, and staff engagement. The increase in patient satisfaction scores and reduction in operational costs are direct reflections of the successful implementation of service design innovation and operational excellence programs. These results underscore the effectiveness of focusing on patient-centered care and streamlining operations. However, while staff retention rates improved, the depth of impact on staff satisfaction could be further explored, suggesting that ongoing efforts in staff engagement and development are necessary to sustain and enhance these gains. Additionally, the initial investment in technology and training, although not quantified in the results, represents a significant undertaking whose return on investment should be closely monitored.

For next steps, it is recommended to continue investing in technology that supports patient-centered care, while also exploring new ways to further integrate digital health technologies. Continuous training and development programs for staff should be enhanced to include emerging healthcare trends and technologies, ensuring the organization remains competitive. Additionally, a more detailed analysis of operational processes through Lean Six Sigma should be conducted periodically to identify further areas for cost reduction and efficiency improvements. Finally, establishing a feedback loop with patients and staff will ensure that the organization continues to meet the evolving needs of its patients and the expectations of its workforce.

Source: Strategic Growth Plan for Coastal Nursing Facility in Healthcare, Flevy Management Insights, 2024

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