Skip to main content

Impact of operational innovations on customer loyalty in the healthcare sector

Abstract

This study investigates the effects of operational innovations, such as application of advanced information technology (IT) systems and supported knowledge and skills (SKSs), on care quality and customer loyalty in the healthcare industry. A research model is proposed based on previous studies and examined the relationships among the constructs using the structural equation modeling approach. Research data were collected through a survey of patients and employees of participating hospitals in Korea, with a patient and an employee as one set. The results of the study indicate that operational innovations result in improved customer closeness, which is associated with IT systems usage and SKSs for delivery of quality care, which have a positive impact on patient satisfaction and customer loyalty. Thus, hospital managers should encourage employees to generate new ideas for work efficiency, care quality, customer loyalty, and organizational performance.

This is a preview of subscription content, access via your institution.

Fig. 1

References

  1. André B, Ringdal G, Loge J, Rannestad T, Laerum H, Kaasa S (2008) Experiences with the implementation of computerized tools in health care units: a review article. Int J Hum Comput Interact 24(8):753–775

    Article  Google Scholar 

  2. Andreassen T, Lindestad B (1997) Customer loyalty and complex services: the impact of corporate image on quality, customer satisfaction and loyalty for customers with varying degrees of service expertise. Int J Serv Ind Manag 8(4):1–32

    Google Scholar 

  3. Barclay D, Higgins C, Thompson R (1995) The partial least squares (PLS) approach to causal modeling: personal computer adoption and use as an illustration. Technol Stud 2(2):285–324

    Google Scholar 

  4. Barki H, Titah R, Boffo C (2007) Information system use–related activity: an expanded behavioral conceptualization of individual-level information system use. Inf Syst Res 18(2):173–192

    Article  Google Scholar 

  5. Barlow J, Roehrich J, Wright S (2013) Europe sees mixed results from public–private partnerships for building and managing health care facilities and services. Health Aff 32(1):146–154

    Article  Google Scholar 

  6. Barnes J (1997) Closeness, strength, and satisfaction: examining the nature of relationships between providers of financial services and their retail customers. Psychol Market 14(8):765–790

    Article  Google Scholar 

  7. Beltrán-Martín I, Roca-Puig V, Escrig-Tena A, Bou-Llusar J (2008) Human resource flexibility as a mediating variable between high performance work systems and performance. J Manag 34(5):1009–1044

    Google Scholar 

  8. Birken S, Lee S-Y, Weiner B, Chin M, Schaefer C (2013) Improving the effectiveness of health care innovation implementation: middle managers as change agents. Med Care Res Rev 70(1):29–45

    Article  Google Scholar 

  9. Block D (2013) Disruptive innovation: contributing to a value-based health care system. Phys Exec 39(5):46–50

    Google Scholar 

  10. Bowen D, Siehl C, Schneider B (1989) A framework for analyzing customer service orientations in manufacturing. Acad Manag Rev 14(1):75–95

    Article  Google Scholar 

  11. Brown T (2006) Confirmatory factor analysis for applied research. The Guilford Press, New York

    Google Scholar 

  12. Brown M, Bussell J (2011) Medication adherence: WHO cares? Mayo Clin Proc 86(4):304–314

    Article  Google Scholar 

  13. Burton-Jones A, Straub D (2006) Reconceptualizing system usage: an approach and empirical test. Inf Syst Res 17(3):228–246

    Article  Google Scholar 

  14. Buttar H (2016) Global care assistance and automation robots market, forecast to 2021. Frost & Sullivan. https://ww2.frost.com/

  15. Carpenter D (2004) Capital and IT. Hosp Health Netw 78(5):7–9

    Google Scholar 

  16. Chesbrough H (2011) Open services innovation. Jossey-Bass, San Francisco

    Google Scholar 

  17. Consoli D, Mina A (2009) An evolutionary perspective on health innovation systems. J Evolut Econ 19(2):297–319

    Article  Google Scholar 

  18. Drucker P (1998) The discipline of innovation. Harv Bus Rev 76(6):149–157

    Google Scholar 

  19. Eid M, Lischetzke T, Nussbeck F, Trierweiler L (2003) Separating trait effects from trait-specific method effects in multitrait–multimethod models: a multiple-indicator CT-C (M–1) model. Psychol Methods 8(1):38–60

    Article  Google Scholar 

  20. Ennis K, Harringto D (2001) Quality management in Irish healthcare. Serv Ind J 21(1):149–168

    Article  Google Scholar 

  21. Ferlie E, Fitzgerald L, Wood M, Hawkins S (2005) The nonspread of innovations: the mediating role of professionals. Acad Manag J 48:117–134

    Article  Google Scholar 

  22. Fisher R (1955) Statistical methods and scientific induction. J Roy Stat Soc 17(1):69–78

    Google Scholar 

  23. Fosstenløkken S, Løwendahl B, Revang Ø (2003) Knowledge development through client interaction. Organ Stud 24:859–879

    Article  Google Scholar 

  24. Frei F (2008) The four things a service business must get right. Harv Bus Rev 86(4):70–80

    Google Scholar 

  25. Furey T (1991) How information power can improve service quality. Plan Rev 19(3):24–26

    Article  Google Scholar 

  26. Giorgio A (2011) ICT for telemedicine and health care innovation. Recent Pat Biomed Eng 4(2):110–125

    Article  Google Scholar 

  27. Gnanlet A, Yayla-Kullu H (2013) Impact of national culture on the quality of information delivery in service. Serv Bus 8(1):135–169

    Article  Google Scholar 

  28. Goldstein S, Schweikhart S (2002) Empirical support for the Baldrige award framework in US hospitals. Health Care Manag Rev 27(1):62–75

    Article  Google Scholar 

  29. Goldstein S, Ward P, Leong G, Butler T (2002) The effect of location, strategy, and operations technology on hospital performance. J Oper Manag 20:63–75

    Article  Google Scholar 

  30. Greenwood R, Hinings C, Brown J (1990) P2 form strategic management: corporate practices in professional partnerships. Acad Manag J 33:725–755

    Google Scholar 

  31. Gupta V, Gollakota K, Srinivasan R (2009) Business policy and strategic management: concepts and applications. PHI Learning Private Limited, New Delhi

    Google Scholar 

  32. Hallowell R, Schlesinger L, Zornitsky J (1996) Internal service quality, customer and job satisfaction: linkages and implications for management. Hum Resour Plann 19(2):20–31

    Google Scholar 

  33. Harkness J (2011) Guidelines for best practice in cross-cultural surveys. Survey Research Center, Institute for Social Research, University of Michigan, Michigan

    Google Scholar 

  34. Hartline M, Ferrell O (1996) The management of customer contact service employees: an empirical investigation. J Market 60(4):52–70

    Article  Google Scholar 

  35. Hau L, Anh P, Thuy P (2017) The effects of interaction behaviors of service frontlines on customer participation in the value co-creation: a study of health care service. Serv Bus 11(2):253–277

    Article  Google Scholar 

  36. Hay J, Hill A (2006) Service guarantee strength: the key to service quality. J Oper Manag 24(6):753–764

    Article  Google Scholar 

  37. Herzlinger R (2013) Innovating in health care-framework, vol 314-017. Harvard Business School Background Note, Boston, pp 1–54

    Google Scholar 

  38. Heskett J, Thomas O, Loveman G, Sasser W, Schlesinger L (1994) Putting the service-profit chain to work. Harv Bus Rev 72(3):164–174

    Google Scholar 

  39. Homburg C, Stock R (2004) The link between salespeople’s job satisfaction and customer satisfaction in a business-to-business context: a dyadic analysis. J Acad Mark Sci 32(2):144–158

    Article  Google Scholar 

  40. Innovation 360 (2015) Operational innovation design workshop. http://i360institute.com/operational-innovation-design/

  41. Karimi J, Somers T, Gupta Y (2001) Impact of information technology management practices on customer service. J Manag Inf Syst 17(4):125–158

    Article  Google Scholar 

  42. Kenagy J (2001) A brief commentary on disruptive innovation in health care: US senate committee on commerce, science and transportation. http://commerce.senate.gov/hearings/072301Kenagy.pdf. Accessed 22 Dec 2015

  43. Kim S, Choi J (1999) A study on strategy for improving health care service through quality function deployment. J Korean Soc Qual Manag 27(1):1–19

    Google Scholar 

  44. Koppel R, Metlay J, Cohen A, Abaluck B, Localio A, Kimmel S, Strom B (2005) Role of computerized physician order entry systems in facilitating medical errors. J Am Med Assoc 293(10):1197–1203

    Article  Google Scholar 

  45. Korea Tourism Organization (2009). http://english.visitkorea.or.kr/enu/index.kto

  46. Kreye M, Roehrich J, Lewis M (2015) Servitizing manufacturers: the importance of service complexity and contractual and relational capabilities. Prod Plan Control 26(14–15):1233–1246

    Article  Google Scholar 

  47. Kubr M (2002) Management consulting: a guide to the profession, 4th edn. International Labour Organization, Geneva

    Google Scholar 

  48. Langabeer J (2007) Health care operations management. Jones and Bartlett, Sudbury

    Google Scholar 

  49. Langabeer J, Rose J (2003) Creating demand driven supply chains: concepts, economics, and strategies for demand driven organizations, 2nd edn. Spiro Press, London

    Google Scholar 

  50. Larivière B, Bowen D, Andreassen T, Kunz W, Sirianni N, Voss C, Wünderlich N, Keyser A (2017) Service encounter 2.0: an investigation into the roles of technology, employees and customers. J Bus Res. https://doi.org/10.1016/j.jbusres.2017.03.008

    Google Scholar 

  51. Lee S (2003) Korea: from the land of morning calm to IT hot bed. Acad Manag Exec 17(2):7–18

    Article  Google Scholar 

  52. Lee T (2010) Turning doctors into leaders. Harv Bus Rev 88(4):50–58

    Google Scholar 

  53. Lee D (2015) The effect of operational innovation and QM practices on organizational performance in the healthcare sector. Int J Qual Innov 1(8):1–14

    Article  Google Scholar 

  54. Lee D (2017) A model for designing healthcare service based on the patient experience. Int J Healthc Manag. https://doi.org/10.1080/20479700.2017.1359956

    Google Scholar 

  55. Lee S, Olson D (2010) Convergenomics: strategic innovation in the convergence era. Gower, Burlington

    Google Scholar 

  56. Lee S, Lee D, Kang C (2012) The impact of high performance work systems in the health care industry: employee reactions, service quality, customer satisfaction, and customer loyalty. Serv Indus J 32(1):17–36

    Article  Google Scholar 

  57. Lee D, Hong K, Kim N (2016) Effects of hospital leadership, organizational systems, and ESWOS on medical error reduction. Serv Bus 10(1):159–177

    Article  Google Scholar 

  58. Levine M, Birnbaum H (1998) Integrated health management: the patient-centred future of demand management. Dis Manag Health Outcomes 3(1):11–22

    Article  Google Scholar 

  59. Li L, Benton W (2006) Hospital technology and nurse staffing management decisions. J Oper Manag 24:676–691

    Article  Google Scholar 

  60. Liaw S (2002) Understanding user perceptions of world-wide web environments. J Comput Assist Learn 18(2):137–148

    Article  Google Scholar 

  61. Lindlar J (2007) Electronic health record use and the quality of ambulatory care in the US. Arch Intern Med 167(13):1400–1405

    Article  Google Scholar 

  62. Macintyre M, Bestwick S (2012) Opportunities to improve health visiting services through lean thinking in case studies in service innovation. In: Macaulay l, Miles I, Wilby J, Tan Y, Zhao L, Theodoulidis B (eds) Case studies in service innovation. Springer, New York, pp 95–100

    Chapter  Google Scholar 

  63. Maizes V, Rakel D, Niemiec C (2009) Integrative medicine and patient-centered care. Explor J Sci Heal 5(5):277–289

    Google Scholar 

  64. Meyer S, Collier D (2001) An empirical test of the causal relationships in the Baldrige health care pilot criteria. J Oper Manag 19(4):403–425

    Article  Google Scholar 

  65. Mishra A, Shah R (2009) In union lies strength: collaborative competence in new product development and its performance effects. J Oper Manag 27(4):324–338

    Article  Google Scholar 

  66. Morash E (2001) Supply chain strategies, capabilities, and performance. Transp J 41(1):37–54

    Google Scholar 

  67. National Institute of Standards and Technology (NIST) (2017) 2017–2018 Baldrige excellence framework (Health Care). Gaithersburg, MD: Baldrige Performance Excellence Program. https://www.nist.gov/baldrige/self-assessing/baldrige-sector/health-care

  68. Nemeth C, Cook R (2007) Healthcare IT as a source of resilience. International Conference on Systems, Management and Cybernetics, pp. 3408–3412

  69. Nunnally J (1978) Psychometric theory, 2nd edn. McGraw Hill, New York

    Google Scholar 

  70. Parasuraman A, Zeithaml V, Berry L (1988) SERVQUAL: a multiple-item scale for measuring customer perception of service quality. J Retail 64(1):12–40

    Google Scholar 

  71. Peters T, Waterman R (1982) In search of excellence: lessons from America’s best-run companies. Warner Books, New York

    Google Scholar 

  72. Platt R (2007) Speed bumps, potholes, and tollbooths on the road to panacea: making best use of data. Health Affair 26(2):w153–w155

    Article  Google Scholar 

  73. Porter M, Teisberg E (2004) Redefining competition in health care. Harv Bus Rev 82(6):1–15

    Google Scholar 

  74. Pritschet L, Powell D, Horne Z (2016) Marginally significant effects as evidence for hypotheses: changing attitudes over four decades. Psychol Sci 27(7):1036–1042

    Article  Google Scholar 

  75. Raposo M, Alves H, Duarte P (2009) Dimensions of service quality and satisfaction in healthcare: a patient’s satisfaction index. Serv Bus 3(1):85–100

    Article  Google Scholar 

  76. Rosenberg N (2009) Some critical episodes in the progress of medical innovation: an Anglo-American perspective. Res Policy 38(2):234–242

    Article  Google Scholar 

  77. Sawhney R, Piper C (2002) Value creation through enriched marketing-operations interfaces: an empirical study in the printed circuit board industry. J Oper Manag 20(3):259–272

    Article  Google Scholar 

  78. Stock G, McFadden K, Gowen C III (2007) Organizational culture, critical success factors, and the reduction of hospital errors. Int J Prod Econ 106:368–392

    Article  Google Scholar 

  79. Tamayo-Torres I, Gutierrez-Gutierrez L, Haro-Dominguez M (2010) Innovation and operative real options as ways to affect organisational learning. Int J Technol Manag 49(4):421–438

    Article  Google Scholar 

  80. Tan K (2002) Supply chain management: practices, concerns, and performance issues. J Supply Chain Manag 38(1):42–53

    Article  Google Scholar 

  81. Thakur R, Hsu S, Fontenot G (2012) Innovation in healthcare: issues and future trends. J Bus Res 65(4):562–569

    Article  Google Scholar 

  82. Windrum P (2014) Third sector organizations and the co-production of health innovations. Manag Decis 52(6):1046–1056

    Article  Google Scholar 

  83. Yoon S, Choi D, Park J (2007) Service orientation: its impact on business performance in the medical service industry. Serv Indus J 27(4):371–388

    Article  Google Scholar 

Download references

Acknowledgements

This research was supported by the Bisa Research Grant of Keimyung University in 2015.

Author information

Affiliations

Authors

Corresponding author

Correspondence to DonHee Lee.

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Hong, K., Lee, D. Impact of operational innovations on customer loyalty in the healthcare sector. Serv Bus 12, 575–600 (2018). https://doi.org/10.1007/s11628-017-0355-4

Download citation

Keywords

  • Operational innovation
  • Customer closeness
  • Service quality
  • Customer loyalty