You can score very well on this assignment using the materials provided as part of the course. However, if you have access to other sources of information such as reference books or the Internet, you may find it interesting to look there for additional relevant information. Very short extract from published sources may be included in context but you should avoid copying significant amounts of text from other authors. You should note that whilst the internet can provide lots of information much of it is not refereed and should be treated with caution.
If you take material from the course or elsewhere and incorporate it in your answer word-for-word, you must indicate where you have taken it. Not to do so it termed ‘plagiarism’ and is regarded as an infringement of copyright. To attempt to pass off such work as your own is cheating.
You must therefore acknowledge all your sources of information.
Plagiarism will lead to a loss of marks and extensive plagiarism could mean that you fail this TMA. For more information about what constitutes plagiarism or cheating, you should refer to the current Assessment Handbook.
General
There are three questions in this TMA at the end of this case study. You should answer them all. You should notice the mark allocations for each question and allocate your effort accordingly. Appropriate use of diagrams is expected throughout the TMA.
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Read the following case and then answer all the questions that follow.
Quest Diagnostics (A): Improving Performance at the Call Centers
Zeynep Ton and Cate Reavis
MaryAnn Camacho’s first day at Quest Diagnostics (Quest), the leading provider of diagnostic services and solutions in the United States, was the first Monday in July 2015 and it was a whirlwind. As she walked through the front door of the company’s Lenexa, Kansas, call center, she was struck by all the people milling about. They were clearly waiting for something and most seemed nervous. She soon learned that they were brand new customer service representatives (reps)—over 50 of them—there for their first day of training. She was puzzled. This location only had 400 employees— and 50 were brand new?
Camacho had been hired as the Executive Director of Quest’s National Customer Service (NCS) organization. She would be overseeing two locations—one in Tampa, Florida, and one in Lenexa— plus roughly 250 reps working remotely from home. Camacho’s position was new to Quest. The company’s customer service function had been consolidated in 2013 when its 20 regional customer service centers were pared down to two.
The consolidation process had been difficult and Quest’s leadership, most notably Jim Davis, Executive Vice President of General Diagnostics, and Scott Jeffers, Vice President of Lab Operations and Operational Excellence, knew that the NCS had to perform better. Labor costs were too high and
employees—especially reps—were not staying on the job for long. Even worse, perhaps, customers were waiting over two minutes on the phone just for someone to answer, reps were often unable to give the right information in one call, and the company was losing key customers. “When patients have a bad experience,” explained Davis, “they complain to their doctors and then the doctors, if they hear five patients who had a bad experience at Quest, they’re going to flip their labs to the other guy.”
Camacho understood the challenges she faced. She knew Quest needed to transform its operations at the NCS. The question was: where to start?
Company Background
Quest Diagnostics was founded in 1967 as the Metropolitan Pathology Laboratory in New York City.
It was renamed Quest Diagnostics in 1996, the year it went public.
Between 1996 and 2012, Quest grew considerably through more than a dozen acquisitions across the United States. Acquired labs continued to operate autonomously, purchasing their own equipment, following their own operational practices, and serving customers through their own call centers. Several of the acquisitions were outside of Quest’s core laboratory business.
Quest enjoyed top-line growth as a result of its acquisitions and, starting in 2000, its stock began an upward trajectory .But by 2008, its core laboratory business began to falter. Quest began losing business to its top competitor, Laboratory Corporation (LabCorp), most notably when LabCorp won over one of Quest’s key customers, UnitedHealthcare Insurance.
A new CEO, Steve Rusckowski, was hired in 2012 to direct a turnaround. An MIT Sloan graduate, Rusckowski had served as CEO of Philips Healthcare, where revenue grew 50% during his six-year tenure. At Quest, Rusckowski helped articulate the firm’s vision, goals, and strategy. The vision was to empower better health with diagnostic insights. The three goals were (a) helping create a healthier world, (b) building value, and (c) creating an inspiring workplace. The five-point strategy was to:
The new strategy emphasized “Everyday Excellence”; that is, what we do everyday matters). The importance of the work Quest did was not lost on Rusckowski. As he told one journalist, “While the diagnostic industry represents a mere 2% of healthcare costs, it provides information for how 70% of healthcare decisions are made.”
Competition
Quest’s largest commercial competitor was LabCorp, with 36,000 employees, 39 labs, and 1,750 patient service centers operating in 60 countries and with $6 billion in revenue and $910 million in operating income. Quest also competed with small regional and local esoteric laboratories. Increasingly, however, it competed with hospital-affiliated and physician-office laboratories. Despite the added cost, more and more medical establishments were bringing testing inhouse to have more control over specimen samples and quality of patient care.
Value Proposition
Quest offered a one-stop shop for diagnostic tests at prices that were lower than what hospitals charged for inhouse testing. Low prices and transparency in pricing had become more important since patients were increasingly paying out of pocket for tests (due to high deductibles or because some tests were not covered by insurance) and were getting smarter about their options. The company’s extensive network also made it convenient to collect and deliver specimens across the US.
Quest’s IT solutions made doing business with it seamless for both medical professionals and patients. Physicians could use Care360, Quest’s electronic medical record portal, to order tests and access the results and to access information about patient history that enabled them to make better decisions about what tests to order. Physicians who needed access to the results of tests they had not themselves ordered could use QuestConnect. Through MyQuest, the patient portal, patients could access their own tests results.
An Obstacle to Operational Excellence: Employee Turnover
To drive operational excellence, Quest developed the Quest Management System (QMS), which included the company’s own approaches to process management, project management, change
management, and continuous improvement. QMS included modules for various operational approaches such as process mapping and standardization, root-cause problem solving, and frontline-driven process improvement.
In 2013, Rusckowski hired Jim Davis to lead Quest’s operations. Davis had spent more than a decade in GE’s aircraft engine and medical device divisions. A graduate of MIT Sloan, Davis also had an applied math degree from MIT and an aeronautical engineering degree from the University of Michigan. At MIT Sloan, where Davis had been exposed to lean production systems, he internalized the importance of standardizing and improving processes to improve quality, speed, and costs. Under his leadership, Quest centralized procurement and began standardizing patient services, specimen processing, and logistics.
One of the problems Davis identified as a key to improvement was high employee turnover across the network, particularly in the customer-facing groups: “We had high employee turnover in our patient services centers. We also had it in logistics, which, by the way, is customer-facing… Our logistics people go to doctor’s offices, pick up specimens, and they see the staff. They build relationships and those relationships matter.” Turnover was especially problematic for the NCS.
Davis’s team found that taking into account the cost of recruiting, onboarding, training, and time to full productivity, turnover was costing Quest between $7,000 and $10,000 per departing employee. With thousands of people leaving every year, that was a $50-70 million annual loss. Not only that, but the constant churn was undermining customer service. Once Davis’s team quantified the cost of the problem, Davis noted “It didn’t take a lot to get Steve’s and the head of HR’s attention on this.”
Q1. Apply the Soft Systems Method to this Situation case, including rich picture and conceptual mapping in order to brainstorm, analyse and make suitable recommendations. Provide a detailed narrative explaining your thinking process. (1500 words) (40 marks) the diagrams must be draw by hand on paper then scan it.
Q3. What are the main insights or new understandings that you gained from the application of SSM to the case study? (400 words) (20 marks)
Q4. Review the relevance and suitability of hard or soft approach in highlighting issues faced by it. (400 words) (20 marks
