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Exam questions Management in the Healthcare Sector
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- Katholieke Universiteit Leuven (KU Leuven)
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Management in the healthcare sector – Exam questionsINTRODUCTION
Salleramics: describe the evolution of Sally’s company and the steps in her career
Phase 1: production vs coordination
In the beginning, Sally is doing everything by herself (first half-time and later on full-time) and she
knows everything by herself. If there is only one person, there is no coordination needed. At a certain
moment, she cannot handle all the orders anymore, so she gets help. When Sally gets more and more
collaborators, she eventually had to become a manager for coordination.
Phase 2: division of labor: with or without specialization
In the beginning, everyone knows how to make all the pottery (different types and models). After a
while, not everybody is expected anymore to know all the different tasks. Someone has to know a
certain task, the other person is expected to know another task… We call this division of labor or
specialization. (This will result in wealth). There will be a distinction between people who do the
production of the pottery and people who do other things, like shipping. The more specialization you
have, the more coordination you need. Because the specialists only look at their own thing.
Phase 3: structure
In the beginning, they do all the things in the same place. But after a while, they start to stumble over
another one’s products etc. They try to solve this problem by changing the structure. They create
different divisions: consumer products, contract products, designer products… They will not do it all in
the same place anymore.
Phase 4: ownership
In the beginning, Sally owns everything, she paid for all the equipment etc. Now the company is
growing and bigger infrastructure is needed. When you grow, you need more resources. Who pays for
all of this?
• When you’re successful and you make products that people want, and you sell them at a
higher price than what it costs you to make, you have a profit. The profit is in the company
now. You can use the profit for different things. You can use it to grow the company: buy
different equipment etc.
• Another option = investments. If you stay the only owner of the company and something is
going wrong, you’re losing all the money. With investors, it is more safe because it isn’t all your
money anymore, but the downside is that you lose control. Investors are also needed when
you want your company to grow faster.
What is the task of a manager in a world full of specialists?
The more specialization there is, the more coordination is needed. Specialists only focus on their
specific areas of expertise, so it is the task of the manager to ensure effective collaboration,
communication and alignment across different functions.
Other tasks of a manager: organization, integration, talent management, leadership, motivation,
decision making, problemsolving, conflicts between co-workers, quality…
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,What is the “management paradox”?
The fact that you do not participate in the production process, increases the efficiency of the
production process!
For example: harvesting potatoes. When you keep adding laborers, at some point you will come to
‘resource constraints’ (= restrictions on availability/ utilization of resources (time, materials, human/
financial resources). When they work with 9 and the 10th person is not participating in the process, the
outcome is better! The 10th person is coordinating people and ensures that the work is done in a more
efficient way.
What are the 3 types of organizations that exist in society?
1. Organisations administered by governments on behalf of the public (POLITIC)
- Synonym: public sector
- Government agencies: ministry etc
2. Organisations that create for-profit economic activity (ECONOMIC)
- Synonym: private sector, commercial sector
3. Organisations that are neither public/ private (SOCIAL)
- Synonym: plural sector, civil society, social profit
- They’re not owned by shareholders or investors
- They’re not owned by the public/ the government/ the politicians
- They’re created by people who self-organize
- They’re not-for-profit
- Healthcare, education, arts, environment
- Bv Red-cross
Why do people work together? Why create organizations?
By working together, we can achieve things we couldn’t do by ourselves.
If not: it is simpler, cheaper, more flexible to work individually
Why do we need management in general? What is the essence of management?
(Zie ook vraag 2)
Coordination & resource allocation
- Coordination refers to the process of harmonizing and integrating the activities of individuals,
teams, and departments within an organization to achieve common goals. It involves ensuring
that different parts of the organization work together in a cohesive and synchronized manner
to maximize efficiency, effectiveness, and overall performance.
- Resource allocation refers to the process of distributing available resources (human & financial
resources, time, equipment, materials, technology) to different activities, projects, or tasks
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, within an organization to achieve the organization's objectives and maximize overall efficiency
and effectiveness.
Organizational innovation: more/ better coordination (implementation of new ideas, strategies,
practices)
Why do we need management specifically in the healthcare sector?
To reduce the growth in healthcare costs to sustainable levels
CHAPTER 1: VALUE CREATION
What is value?
Value is an abstract concept, not concrete like products or services. Value is something that comes
from a product’s …:
- Usefulness: cost saved for the customer (time, labor, materials)
- Quality
- Availability: (for example the energy price: it has gone up because of the shortage)
- Associated image: value is often intangible → emotional value, status, looks and feel
- Service associated
- Example: Ferrari vs Ford
Value is a complex concept that changes over time (example: evolving solution – dusting off or scurvy)
because needs change over time
Can we calculate value?
- What is B2B? = Business-to-business
o Companies that sell their products to other companies
o Calculating the value here is easier, because this is more rational
o For example: a company needs to buy 100 cars for its employees, they will be very
rational about how much they’re willing to pay for the cars. They just want to buy the
most cost-effective product.
o We do this by looking at the time, labor or materials that you can save.
- What is B2C? = Business-to-customer
o Companies that sell their products to customers
o As a customer, you know these companies better than B2B companies (for example:
we know Coca Cola, but we don’t know the company that sells sugar to Coco Cola)
o For example: if you as a customer want to buy a car, you’re more influenced by the
design, the looks, what other people have…
o It is much more difficult to make the calculation, because it is subjective!
In general: the more intangible the value, the more it is individual. It is not defined by the producer,
but it is defined customer by customer.
What is the chief responsibility of management?
The objective of management = create value for customers.
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, - This implies that organizations do not exist for themselves and to make money, but they exist
to serve their customers (= external focus). They differentiate themselves from groups that
focus on well-being of members (internal focus)
- There is only one way to test if the job is well-done = client satisfaction aka a customer willing
to pay for it. It is not about input or processes (example failure: technically great product but in
search for customers – electrica car years ago).
One of the management’s chief responsibilities is to
- Remember external orientation
- Remind others about it (because there’s a natural tendency to focus on (internal) input)
Name the three inputs or resources that go into work.
3 inputs that companies spend money on:
- Manhours/ time/ labor (employees)
- Materials (something you consume during the process)
- Investments (something you buy but don’t use up, for example a building or a car that is used
for a very long time)
There was an historical shift from managing inputs (see above) to managing outputs (results or
performance → in which the customer is interested).
Name the different mindsets for evaluating value.
1) Manufacturing mindset
2) Marketing mindset
3) Shareholder mindset
4) Value-chain mindset
What is the manufacturing mindset of value?
- The value is seen as efficiency
- Challenge: increase productivity
o Make the production process as efficient as possible
- Goal: make more things, more cheaply
o Pursuit of ‘best practice’: look at different companies who are doing the same things
→ try to study and copy the best one → then teach others how to do it more
efficiently
o Efficiency as a science: observe, measure, record, analyse
▪ Frederick Taylor: Taylorism → never assume that the best way to do
something is the way it has always been done
This mindset makes sense when demand outstrips supply (wanneer vraag aanbod overstijgt). Because If you
are the first one that can make a product affordable, it creates new markets. “Make and sell”-paradigm
= the company is primarily focused on creating and delivering its products rather than invest in
customer relationships.
Example: Ford Model T → this was the first car that was produced in series. It made the car cheaper,
so people who first could never buy a car were now able to buy one. The whole society changed.
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, What is the main limitation of the manufacturing mindset of value?
Mixed reputation:
- Bad: synonymous with deskilling and dehumanization
- Good: it is the cause of much of our prosperity (welvaart) and living standards
Main limitation: single-minded focus only on efficiency
- Not wrong because efficiency is important, but too limited
o This led to an intense inward focus (make & sell-paradigm)
o You don’t look at what others are doing
- Implies giant factories
o Which are expensive
o And slow to switch to new models: require long product cycles
What is the “make and sell” model?
A traditional production model that is used in the “manufacturing mindset of value”. It is a business
approach where a company focusses on manufacturing/ producing products and then selling them to
customers.
Transition from manufacturing mindset to marketing mindset
Taylorism based on assumptions
-Reasonable at the beginning of the 20th century: the number of goods produced was small →
the challenge was the produce more + cheaper → producers determine the value
- No longer reasonable by the middle of the 20th century: scarcity replaced by consumer plenty
The definition of value needed a different answer!
What is the marketing mindset of value?
Peter Drucker came with a redefinition of value. He said that efficiency was necessary, but not
sufficient. Customers don’t buy products, but satisfaction of needs = value.
The old mindset was “inside out” => make-and-sell (efficiency = doing things right).
While the new mindset is rather “outside in” and thus looking through the customer’s eyes: sense-
and-response to customer’s needs (effectiveness = doing the right things).
There is also a crucial distinction between selling and marketing. Selling = convincing a customer to
buy whatever it is you make. While marketing = understanding what customers value so that you can
work to satisfy their needs.
To help managers develop the outside-in perspective, Drucker formulated three questions:
- What is our business?
- Who is the customer?
- What does the customer value?
What is the main limitation of the marketing mindset of value?
Over time, they can lose touch with the market, because there is a natural tendency to focus inward.
Regularly asking those (What is our business, Who is the customer, What does the customer value?)
questions to the customer is an antidote.
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