The Service Line Model

A Brief Analysis of its Implications

Travis Barker, MPA GCPM 2012

The Service Line Methodology represents an asset for corporations seeking to adapt to the new financial and regulatory environment of the healthcare field. The operating conditions of the new financial & regulatory environment require an assessment of the benefits and risks associated with the service line methodology prior to delineating the assets to be realigned. Successful implementation of the service line methodologies is achieved as a result of how well the corporation is able to negotiate internal and external perceptions.

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The Service Line Model

Travis Barker MPA GCPM

Table of Contents Managed Care and the Budget Control Act of 2011 Changes Pure Form Challenges The Legislative Environment Pure Service Line Consolidation of Emphasis Mixed Service Line Areas for Emphasis Managing Risks Service Line Expansion Opportunities Alternative Models Evaluating the Service Line Closing

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The Service Line Model

Travis Barker MPA GCPM

Service Line Management was preceded by the functionalized product line model as well as was introduced prior to managed-care in the hospital and healthcare field. Marketing and proactive drivers were subsequently identified to develop and build upon existing markets. The language used to describe the model, of the service line, was identified as preferable to product line by healthcare professionals. This change in terms was supported by the lack of success the healthcare industry had in implementing a product emphasis in line development of their services which is usually fewer than the previous product model required. Despite these limitations the Service Line concept represents a set of methodologies that can help companies improve outputs while decreasing costs.

Constituency Needs Budget & Control Act Pressures

Managed Care & the Budget & Control Act of 2011
With the introduction of managed care and the budget & control act of 2011 the ability for healthcare organizations to drive market development was weakened; the service line model was subsequently developed with a focus on costs and outputs in contrast to the previous product focus that lacked the same limitations.

Changes
The introduction of managed care and the budget & control act of 2011 necessitated an increased focus on working within existing constraints. Solvency was thus emphasized over expansion efforts.

Pure Form
The service line model in its purest form requires the full integration of all supporting components in the pursuit of specific outputs. The matrix organization, which represents a hybrid of the functional line and pure service line approaches, loses some of the benefits inherent in the purer approach while allowing for traditional oversight mechanisms to still be used.

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The Service Line Model

Travis Barker MPA GCPM

Pure Form

Balanced Approach that Addresses Challenges of Pure

Challenges

Challenges
Acquisition of companies through mergers or financial partnerships represents a challenge to the service line model in that the pure integration of all supporting components in the pursuit of identified shared outputs is limited according to corporate, department, historical, geographical, and cultural boundaries.

The Legislative Environment

Realignment of said processes, structures, technologies, and resources is aided by the pure service line model in economies where efficiencies and cost control efforts are not mitigated by other considerations. In the legislative environment monopolies are frowned upon. The point at which a merger becomes viewed as increasing quality by the community instead of a monopoly is open to debate. Managing the perception of this line of demarcation becomes pivotal in the pursuit of economies of scale that utilize the service line methodology. Moves to further integrate the components acquired through mergers or formal partnerships runs the risk of being perceived as monopolizing available resources and over-competing with smaller businesses. Similarly, maintaining the functional lines of demarcation that separate individual product/service and corporate entities limits the economies of scale that impact corporate emphasis on outputs and expansion of services and resources that would further contribute to these same output measures.

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The Service Line Model

Travis Barker MPA GCPM

Full integration of components in pursuit of individual service lines

Mixed Integration of some components in pursuit of individual service lines. Other components not integrated.

Pure Form of Service Line Methodology

Mixed Form of Service Line Methodology

Environmental Considerations
Customer Location Needs Services Flexibility Tailored

Legislative Considerations

Size Competition Quality Fairness

Pure Service Line Consolidation of Emphasis

The pure service line methodology consolidates lines around output. Output allows the realization of clusters that support economies of scale while simultaneously integrating efforts to increase quality. Examples of service line consolidation include the integration of support components into the following categories:

Output

Input

Consolidation of Emphasis

Fiscal Analysis

Housing stabilization (for all customers, regions, needs, contracts, etc.) Behavioral supports (for all customers, regions, needs, contracts, etc.) Treatment services (for all customers, regions, needs, contracts, etc.) Case management (for all customers, regions, needs, contracts, etc.)

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The Service Line Model

Travis Barker MPA GCPM

Mixed Service Line Area for Emphasis

Introducing a mixed service line methodology can be thus strengthened through the introduction of a combination of strategies within pure service line and matrix structures. Each support component of the service line (which is themselves a service line) can be further integrated in the pursuit of larger objectives. Examples include:
Type

Scope

Financial Analysis

Multiple Service Line Strategy

Differentiation

Oversight Concerns

Emphasize & consolidate service lines (treatment, consulting, employment, age, etc.) Emphasize & consolidate regional lines (city, county, state, etc.) Emphasize & consolidate customer lines (age, disability, service location, etc.) Emphasize & consolidate financial lines (contract, funding source, etc.) Emphasize & consolidate support lines (service levels, needs, staffing types, etc.) Emphasize & consolidate oversight/leadership lines (operations, executive, financial, etc.) Emphasize & consolidate planning lines (mission statements, value statements, strategic plans, marketing plans, regional meetings, task force model, etc.) Emphasize & consolidate output lines (housing, employment, medical stability, satisfaction ratings, etc.) Emphasize & consolidate contract lines (state, county, private pay, etc.) Emphasize & consolidate policy lines (reporting, incidents, financials/GAAP, performance, hiring/discharge, training, emergency response/preparedness, etc.) Emphasize & consolidate facility lines (maintenance, leasing, moves, etc.) Emphasize & consolidate technology lines (servers, computers, fax machines, internet, databases, incident reporting software, HR/ERP software, etc.) Emphasize & consolidate information lines (updates, reports, plans, frequency, issues/concerns, corrective action plans, strategy formulation, etc.) Emphasize & consolidate process lines (process analysis, streamlining processes, aligning processes, minimizing duplication, eradicating scrap processes, etc.) Emphasize & consolidate transportation lines (agency vehicles, maintenance, leasing, moves, etc.)

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The Service Line Model

Travis Barker MPA GCPM

Managing Risks
The pure service line methodology runs the risk of increasing the perception that efforts to create a monopoly are present. In this regulatory and economic business environment, which is market driven (in contrast to driving the market), the ability to increase market share through efforts to create a monopoly are limited and highly improbable; thus, the perception that a series of mergers or consolidations of service lines might represent efforts to create a monopoly would be unwarranted. The service line model contains characteristics that aid larger corporations to manage these perceptions while supporting efforts to improve quality and business solvency. The following list includes a few tools from the service line model: Flexibility

Responsiveness

Adaptability

Service Line Risk Mitigation

Control Mechanisms
Relationship Management Relationship management that emphasizes responsiveness &individually tailored services Localization of authority that emphasizes flexibility and responsiveness to changes in customer/stakeholder needs A matrix based (and thus non-pure form of the ) service line model supports multiple branding and marketing of services while limiting the perception of size that is characteristic of monopolies Localization of responses to concerns thereby delineating the recognition of distinct service, corporate, and regional lines. Differential branding of individual service lines

Service Line Expansion Opportunities

The pure service line methodology is not in conflict with efforts to expand. Negotiating a balance between efforts to expand service lines and the regulatory concerns with larger corporations can be supported through strategies identified above as well as inclusion of the following practices: 7|Page The Service Line Model Travis Barker MPA GCPM

Input Analysis

Means Analysis

Market & Opportunities Analysis

Output Analysis

Following the customer to new service environments (employment, alternative housing models, alternative treatment models, alternative support models, etc.) Identifying customers served in other environments that can also be served by the corporation (prison, schools, hospitals, institutions, treatment programs, employment, behavioral consulting, etc.) Marketing & branding efforts(internal & external) to improve customer recognition of the quality of services and relationships Emphasizing leadership methodologies over that of management methodologies Community stewardship practices (public & private; resources & training; expertise & consulting; advocacy & legislative; participating in public/community forums/committees, etc.) o Emphasis on (all) inputs o Emphasis on (all) means o Emphasis on (all) outputs

Alternative Models
Although a pure service line will produce more benefits than a mixed model it is noted in the literature that the matrix, and thus mixed, model of organizational management of the service lines is more common. The reason for this is that the pure service line model tends to produce redundancies and silos that lend to territorialism; Inefficient utilization of resources results.

Singular Focus

Mixed Focus

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The Service Line Model

Travis Barker MPA GCPM

Evaluating the Service Line

Evaluating the service line faces the same cultural and technological challenges of any business endeavor. With increased complexity, such as in a matrix structure, determining productivity, efficiency, and utilization metrics becomes more difficult. Whereas outputs measures can aid the business evaluation of marketing, transportation, and utilization the input measures evaluating the contributions of management, training, and development become obscured due to overlapping lines. Strategy, resources, and structure must align to leverage the benefits of the service line model.

Tech Specifications

Stakeholder Requirements

HR Specifications

Competitive Advantage Components

Forecasts Costs

Revenue

Closing
The Service Line Methodology represents an asset for corporations seeking to adapt to the new financial and regulatory environment of the healthcare field. The operating conditions of the new financial & regulatory environment require an assessment of the benefits and risks associated with the service line methodology prior to delineating the assets to be realigned. Successful implementation of the service line methodologies is achieved as a result of how well the corporation is able to negotiate internal and external perceptions.

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The Service Line Model

Travis Barker MPA GCPM