Performance of the Healthcare Industry in Relation to Implementation of Supply Chain Management Innovations

Abstract

The Healthcare industry has the potential of becoming one of the biggest contributors to the economy of United Arab Emirates. In the recent years, the healthcare industry has faced challenges that come along with the changing operating environment. For this reason, healthcare industry requires continuous innovation to cope with the changes in the current market. Thus, this research is aimed to focus on the performance of the healthcare industry in relation to the adoption and implementation of supply chain management innovations, in addition, the research further sought to understand the effect of supply chain management innovation in the provision of health care services all across UAE. To achieve this, a structured questionnaire in the format of the Likert scale was sent to healthcare facilities in each of the three sampled towns in UAE. The three towns are Umm al-Quwain, Ras Al Khaimah, and Abu Dhabi. Most of the studies scored highly, except for the government procurement regulations. Furthermore, the assertion that supply chain management innovation positively affects the provision of healthcare services was strongly upheld. Findings from this study also suggest that more innovation needs to be done in supply chain management to cushion healthcare providers from fluctuating prices of medical supplies.

Chapter 1: IntroductionIn this chapter, the essential supply chain management innovation practices in United Arab Emirate in relation to the objectives of this research and the basic reason for conducting this research will be discussed.

Background

Supply chain management (SCM) is a fiber which connects the all the phases of manufacturing processes right from production to delivery all the way to end user, often through a complex network of suppliers. SCM practices, when applied correctly, can play a greater role in ensuring that drugs and relevant medical devices are available for the benefit of the public. Healthcare facilities hold inventory for two main reasons: to improve customer service and to reduce the cost of logistics. According to Rivard-Royer, 2002, the motivation of this differs with each facility as they try to balance between too much inventory and inadequate inventory, each of which has its own shortcomings.

Moreover, supply chain management can also be viewed as a practice that aims at advancing the way organizations sources their raw materials and present their end user products to the customers. According to Warner (2002), the philosophy of supply chain management is wholly owned by Forrester. Kottler (2005) claims that the distribution of goods (logistics) has been broadened explicitly by the supply chain management concept.

In recent years, service industry brags of having the largest share of a countrys GDP for most of the developed countries. In addition, service industry also contributes largely to the employment opportunities in both developing and developed countries (Breen & Crawford, 2004). The United Arab Emirates is a perfect example, the service industry contributes to over 60 percent of the annual GDP (Shihab, 2001 pg. 91). In the United Arab Emirates, it is clear that the service industry is beginning to take control of the economy following the aggressiveness of the organizations involved. In this journey, UAE service industry is not left behind. It is one of the pillars that the government puts their focus on in its attempt to be a major block in the region.

The health care industry in the United Arab Emirates has demonstrated that it has a potential to be a major contributor to the countrys economy. It is therefore important to focus on factors that determine the improvement of healthcare facility organizations. One of the key determinants of that improve the performance of health care organizations is supply chain management. According to Ahmad and Daghfous, 2010 pg. 161, supply chain management is to be a tool of increasing supply chain competitive advantage that consequently leads the improved organizational performance. A well-implemented supply chain management practice will increase revenue, boost customer satisfaction, improve service delivery and ultimately reduce costs (Baltacioglu et al, 2007, p. 111).

In the United Arab Emirates, the government has made tremendous steps in improving the healthcare industry. One of the key attempts is to improve the healthcare facility other than increasing the number if health care facility all around the country is the increased budget allocation from about Dh36 billion to Dh40 billion as at 2015 (Godwin, 2006). However, even after all these efforts, there are complaints about the services offered by the public health facilities. Some of the complaints include long waiting time and low efficiency (Margolis et al, 2003 p.244).

Every organization must improve the organizational performance so as to reach corporate strategic mission, objectives, and values (Rao and Holt, 2005 p. 889). Organizational performance tasks include: create the goals of the organization, do a follow up on the progress to ensure that the goals are achieved and improve on areas of weakness. Careful study of the performance loopholes would reduce the risk of failing the achieve the defined goals. The guidelines for measuring organizational performance are shareholders return, product sale performance and financial performance among others. In the healthcare industry, organizational performance can be measured on occupancy rate, mortality rate, morbidity rate, cost recovery and the number of board-certified physicians (Hariharan et al, 2004 p.301).

Organizational PerformanceThe performance of an organization can be determined by how an organization meets its financial and market demands (Combs, Liu, Hall, and Ketchen, 2006 p.519). Generally, organizational performance can also be measured by non-financial methods (Henri, 2006 p.81). Financial criteria include sales growth, the return on investment, profit and business performance while the non-financial standards include market share and innovation performance (Gunasekaran, Patel and McGaughey, 2004 p.342). According to Henri, 2006, supply chain integration can also be used as a measure of organizational performance. Today, a number of studies have been conducted to examine the relationship organizational performance and supply chain management (Li et al, 2006; Zhu and Sarkis, 2004; Vickery et al, 2003).

This study is interested in the overall assessment of the organizational performance that is related to government-owned healthcare facilities in the United Arab Emirates. The common measures of services offered in public health facilities are cost, quality of healthcare delivery, safety, promptness, internal customer satisfaction, Total Quality Management methodology implementation, effective and efficient diagnosis and treatment, technology and innovation, reduced process/procedure times, patient relationship management, patient satisfaction, speed of recovery, ability to provide efficient service, and supplier relationship management (Acharyulu & Shekhar, 2012 p.91). This study will also look at the innovations in the supply chain management and its impact on the healthcare service delivery.

Supply chain management practice

sThere are several activities that organizations undertake in order to effectively implement supply chain management practices (Chien and Shih, 2007 p.383). According to Henri, 2006, the long-time aims of supply chain management are the integration of supply chain and to increase market share while the short-term aims are to reduce inventory and to increase productivity. Supply chain management practices are defined differently by various authors. Li et al, 2006 describe Supply chain management practices as activities that organizations undertake so as to encourage proper supply chain management. Walker, Di Sisto, and McBain, 2008 defines supply chain management practices as a unique partnership between suppliers and retailers. Koh and Collins, 2007 classify supply chain management practices as a close partnership with customers, close partnership with suppliers, strategic planning supply chain benchmarking, outsourcing and many suppliers, just-in-time supply, holding safety stock and sub-contracting and few suppliers and e-procurement. Moreover, Chong et al, 2010 generalize it into customer relationship management, demand management, supplier relationship management, service performance, capacity and resource management, service supply chain finance, information, and technology management and order process management.

Reason for the topicA careful study of literature clearly outlines the drawbacks of past studies relating to supply chain management practices to be a generalization of study across all organizations. To address this shortcoming, Boon-itt, and Pongpanarat, (2011) encourages researchers to put emphasis on specific supply chain management practice in the service sector. For this reason, this study will focus on the effects of supply chain management practice in health care sector in the United Arab Emirates.

Objectives of the studyTo address the issue of Supply Chain innovation in the healthcare industry and how it improves the quality of services accessed by patients in healthcare facilities in the United Arab Emirates...