resource management for healthcare quality results ...

The Journal

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ManElgement DevE3opment /

On the centrality of strategic human resource management for healthcare quality results and competitive advantage Charles R. Gowen III Department

of Management,

Northern I/Iinois University, DeKalb, Illinois,

Kathleen l. McFadden Department of Operations Management and Information Northern Illinois University, DeKalb, Illinois, USA

Systems,

William J. Tallon College of Business, Northern Illinois

University, DeKalb, Illinois,

Journal of Management Development, Vol. 25 NO.8, 2006, © Emerald Group Publishing Limited, 0262-1711

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JMD 25,8

806 Received August 2005 Accepted October 2005

On the centrality of strategic human resource management for healthcare quality results and competitive advantage Charles R. Gowen III Department of Management, Northern Illinois University, DeKalb, I11inois,USA

Kathleen L. McFadden Department of Operations Management and Information Systems, Northern Illinois University, DeKalb, Illinois, USA, and

William]. Tallon College of Business, Northern Illinois University, DeKalb, Illinois, USA Abstract Purpose .- Healthcare organizations have addressed current error issues by adopting quality prbgrams, which usually include strategic human resource management (HRM). However, little research has focused on the determinants of successful quality programs at healthcare organizations. The purpose of this paper is to examine the centrality of strategic HRM for addressing healthcare errors, error reduction barriers, quality management processes and practices, quality program results, and competitive advantage. Design/methodology/approach - The methodology of this study involves the analysis of questionnaire data from the quality ancl/or risk directors of 587 US hospitals by factor analysis and regression analysis. Findings - The findings focus on highly statistically significant relationships of strategic HRM with antecedent healthcare error sources, error reduction barriers, and quality management processes and practices, as well as the strategic HRM consequences of perceived quality program' results and sustainable competitive advantage. RJsearch limitations/implications - The limitations of perceptual data and common method variance are checked. Future research could investigate international effects. Practical implications - The practical implications are that hospital errors can be successfully addressed with effective strategic HRM, quality management processes, and quality management practices. Originality/value - The original contribution of this paper is the centrality of strategic HRM as a determinant of successful quality programs at healthcare organizations. Keywords

Human resource management, Health services, Quality progranrmes

Paper type Research paper

Introduction Journal of Management Development Vol. 25 No.8, 2006

pp.1J06.826 © Emerald Group Publishing Limited 0262-1711 DOl 10.1108102621710610684277

In the context of quality management initiatives, strategic human resource management (HRM) can be critical to the efficacy of healthcare errors, error reduction barriers, quality management processes and practices, program results, and competitive advantage. Many studies demonstrate the critical impact of employee-oriented strategic

HRM practices on the outcomes of quality management programs (Bowen and Lawler, 1992; Lawler, 1992; Lawler et al., 1995, 2001; Simmons et al; 1995; Snape et al., 1995; Talaq and Ahmed, 2003). Furthermore, strategic HRM practices can act as a moderator of the impact of a quality management system on organizational performance (Bou and Beltran, 2005; Challis et al., 2005; Schonberger, 1994). Specifically for healthcare quality management programs, strategic HRM systems improve organizational success (Caron et al., 2004; Chen et al., 2004a; Manion, 2004). For healthcare quality management systems, strategic HRM has recently demanded greater importance. Employee commitment is critical to maintain quality program success when 40 percent of healthcare workers reported intentions to leave the field in the last few months (Vfilkins, 2004). Comparing the AON Corporation annual national surveys of 2003-2004, healthcare workforce commitment has increased from 91 to 97.6 percent, while commitment for the overall US workforce has dropped from 99.7 to 97.6 percent (AON, 2005). A study of healthcare employee commitment revealed key predictors are organizational support, job skill enrichment, quality control, and a culture of continuous learning (Kontoghiorghes and Bryant, 2004). Finally; from research on the not-for-profit sector in general, employee commitment is enhanced by organizational vision, effective communication, and internal marketing of organizational values to employees (Alatrista and Arrowsmith, 2004). Therefore, this study explores the relationships among healthcare error sources, error reduction barriers, quality management processes, quality management practices, strategic HRM, quality program results, and sustainable competitive advantage. The research framework that drives this empirical study shown in Figure 1 and is discussed.

Human resource management

807

Quality Management Processes Quality Program Results

Healthcare Error Sources

Strategic

Figure 1.

HRM

Sustainable Competitive Advantage

Error Reduction Barriers Quality Management Practices

Framework for the effects of healthcare error sources and error reduction barriers on quality management processes, strategic HRM, and quality management practices, and then on quality program results and sustainable competitive advantage

]MD 25,8

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Healthcare error sources and error reduction barriers In the face of national attention paid to medical errors and barriers to error reduction, healthcare organizations have recently expanded quality management programs that promise to enhance error reduction. The sources of healthcare errors are difficulties in the design of tasks/jobs, equipment failure/malfunction, lack of employee expertise! knowledge, infrastructure (public/internal backup services), unplanned circumstances/ events, and computer issues (Barry et al., 2002; Spath, 2000). Some research demonstrates the psychological and systemic barriers that prevent learning from healthcare errors (Edmondson, 2003, 2004; Tucker and Edmondson, 2003). Specifically, barriers to error reduction result from lack of support from top management, lack of resources, fear, lack of incentives, lack of knowledge/understanding (McFadden et ai, 2004; Ryan and Thompson, 1998). Institute of Medicine (2000, 2001) (laM) reports suggest that medical errors account for more than 98,000 US hospital deaths per year and 58 percent may have . been prevented. The 10M reports recommend improvements in healthcare quality systems to resolve medical errors. Other studies have reported even higher error rates, such as the insurance company consultant HealthGrades' study of comprehensive data from 2000 to 2002 which concluded that about 195,000 deaths in US hospitals can be attributed to medical errors, Another study revealed an error rate of 40 potentially harmful drug errors daily at American hospitals (Tanner, 2002). Errors cause longer and more costly hospital stays (Nordgren et al, 2004). The Juran Institute estimated the cost of poor quality at nearly a third of our direct medical expenses. By comparison, 14.9 percent of real l'S Gross Domestic Product was spent on healthcare in 2002, far beyond the expenditure for Germany, France, Italy, Britain, and Japan (Mehring and Koretz, 2004). Concern about the increasing worldwide number of high profile major errors raises the awareness of the need for cultural and structural change in healthcare systems (Walshe and Shortell,

2(04). The current direction of healthcare error reduction and quality improvement initiatives signals an emphasis on patient safety (Barry and Smith, 2005). Healthcare process improvement and patient flow are critical to hospital productivity and patient safety (Zimmerman, 2004). Benchmarking healthcare facilities for best practices has emerged as the most common process improvement approach (Dolan, 2003). In a study of surgeons over four years, the development of a patient safety data system identifiedseveral process improvement factors (Shively et al., 2004). The renowned father of patient safety, Doctor Martin Merry, claims healthcare needs a paradigm shift toward a patient-centered system (Merry, 2003). In addition, healthcare facilities are being redesigned based on patient safety (Reiling et al., 2004). Recent interest in the .application of quality management practices for healthcare has been widely promoted on a global scale (Chan, 2004; Kazandjian, 1997, 2003; Van den Heuvel et al., 2005). Strategic human resource management In research on healthcare quality management, strategic HRM commands paramount importance for program results and sustainable competitive advantage (Zairi, 1998). Strategic HRM can be implemented as high employee commitment practices leading to quality program effectiveness (Bou and Beltran, 2005). Successful implementation of employee empowerment and team-building is essential for healthcare quality programs (Adinolfi, 2003). Furthermore, strategic HRM in healthcare has proven to be imperative for a sustainable competitive advantage (Kanji and Sa, 2003).

Strategic HRM has been conceptualized by the high commitment work practices Human resource (HCWP), configurational fit, and contingency fit approaches (Takeuchi et al., 2003). management The HCWP perspective emphasizes employee empowerment and progressive practices in selection, training, rewards, recognition, information sharing, team-building, and socialization (Geisler, 2005; Sullivan, 2004). Arthur's (1992, 1994) studies of HRM systems in steel minimills concluded that a commitment-based HRM system results in higher productivity, lower scrap rate, and lower employee turnover. 809 To achieve a competitive advantage, HCWP are highly correlated to customers' ratings -------of service quality (Schneider and Bowen, 1993). In studies of HCWP, such as progressive employee selection, training, skill development, and motivation, there were positive associations with perceived firm performance (Delaney and Huselid, 1996) and corporate financial performance (Huselid, 1995). Likewise, employee empowerment and communication practices enhanced employee trust (Tzafrir et al., 2004). In turn, progressive selection and training practices improved perceived organizational and market performance (Harel and Tzafrir, 1999). Studies focusing on total quality management (TQM) programs have demonstrated such critical success factors as employee involvement and effective leadership (Fisher et al., 2005; Vora, 2004; Warwood and Roberts, 2004). Soltani et al: (2004) reported critical dimensions of performance appraisal for a _TQM context include employee participation, responsibility, feedback, and individualized training. Also for TQM programs, employee involvement, training, communication, and learning are critical to improve firm performance and customer satisfaction (Claver et al., 2003). However, there may be moderators, such as international competition, for the success of HCWP and quality programs (Das et al, 2000). Likewise, Boxall (1998, 2003) demonstrated how HCWP implemented as a "high performance work system" proved to be more effective for manufacturing firms than for service organizations. Finally, higher performing manufacturing companies relied more on commitment-based HRM systems than just traditional TQM practices (Challis et al, 2005). A second view articulates a "strategic bundle" of HRM practices, which interact to provide synergistic results on organizational performance (Haynes and Fryer, 2000). Takeuchi et al. (2003) provide evidence that Japanese HRM practices, such as long-term commitment, in-company welfare, skill development, and team-based problem solving, lead to firm financial performance, A study of Australian banks concluded that employee empowerment in a "bundle" of HRM practices leads to greater employee well-being and productivity, as well as to corporate performance and service quality (Geralis and Terziovski, 2003). A similarly strategic "bundle" of HRM practices, such as performance-oriented incentives, benefits, promotion, training, and career development, resulted in more successful implementation of corporate strategy (Horgan and Muhlau, 2003). Likewise,' Bunning (2004) demonstrated that an individualized HRM system, comprised of a "bundle" of selection, rewards, benefits, and retention practices, will be more successful for the organic organization now and in the future. Finally, IffiM configurations, in terms of acquisition, developmental, egalitarian, collaborative, documentation, and informational "bundles," are reported to lead to greater organizational financial performance, with intellectual capital as a mediator (Youndt and Snell, 2004). The third perspective of a "contingency fit" promotes the view that organizational performance will be (j)ptimized by an externally appropriate fit between the firm's

]MD 25,8

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business strategy and HRM practices (Takeuchi et al., 2003). Kanji and Sa (2003) argue for a contingency fit of employee and organizational performance measurement in healthcare TQM initiatives. Likewise, HRM practices in general for healthcare organizations must be effectively aligned with business strategy (Zairi, 1998). Strategic alignment of HRM systems should be implemented externally and internally for an organization (Schneider et al., 2003). Several case studies reveal the power of strategic HRM alignment in leading corporations (Becker and Huselid, 1999). The theoretical foundation of the contingency fit model has been conceptualized recently in terms of the resource-based view of the firm in many ways (Becker and Gerhart, 1996; Boxall, L:003;Boxall and Purcell, 2003; Colbert, 2004; Paauwe and Boselie, 2003; Ramlall, 2003). An empirical evaluation of the contingency fit model revealed the significant impact of HRl\1 capabilities on corporate financial performance with management effectiveness as a mediator (Huselid et al., 1997). Although the contingency fit of HRM practices can create sustainable competitive advantage (Ordonez de Pablos, 2004b, 2005), in theory (Iackson et al., 2003) and in a study of Spanish manufacturing firms demonstrates that knowledge management and organizational learning are significant moderators (Ordonez de Pablos, 2004a). Empirical research has demonstrated the effectiveness of strategically aligned HRM practices, such as selection, training, and development (Hatch and Dyer, 2004), participation and development (Karami et al., 2004), rewards and recognition in TQM programs (Chang, 2005), and social networks as a mediator (Collins and Clark, 2003). Specifically for healthcare, quality improvement ideas and implementation originate from employee quality teams (Mears, 1994). Often an integrated patient safety team is a multidisciplinary and committee approach to solving patient safety problems (Gandhi ei al, 2003). In Thailand, healthcare quality programs are based on several cross-functional quality teams. and quality circles in the nursing department (Sriratanaban and Wanavanichkul, 2004).

Quality management

processes and practices

Healthcare quality programs are designed around quality management processes and practices. Quality management processes define how a program is implemented and commonly include continuous quality improvement (CQI), program information! communication, project review/closure, project results sharing. The CQI philosophy is the most common approach for healthcare organizations and embraces gradual and system-wide change to improve quality (Clark, 1999; Handfield and Ghosh, 2001; Kelly, 2003; McLaughlin and Kaluzny, 1999). The CQI journey was the quality system .deployed by the first healthcare Malcolm Baldrige National Quality Award winner, ~SM Health Care, by transforming the organization to a culture of patient care in many respects (Ryan and Thompson, 1998). CQI demands a systems approach for improvement in hospital processes, communication, customer focus, and error management practices (Lighter and Fair, 2000). Also, successful quality management processes require effective quality project selection, review and closure, and results sharing (Barry et al., 2002; Pande et al., 2000; Pyzdek, 2001; Stahl et al., 2003). Quality management practices determine which techniques are adopted by healthcare organizations and usually consist of customer satisfaction evaluation, supplier quality evaluation, statistical quality/process control, competitive benchmarking, and supply chain management. Even though the philosophy of CQI

is intended to be global, common quality practices include competitive benchmarking Human resource and statistical quality/process control chart analysis (Carey, 2003; Carey and Lloyd, management 2001; Kelley, 1999). CQI also includes customer satisfaction evaluation by surveys, the plan-do-check-act process for guiding each quality project, and the other quality tools such as checksheets, histograms, Pareto charts, cause-and-effect diagrams and scatter diagrams (Bell and Krivich, 2000). Finally healthcare organizations have recognized the powerful impact of supplier quality evaluation (Tucker, 2004). They have exploited 811 supply chain management for their CQI system (Bendoly et al., 2004; Chen and Paulraj, -------2004; Chen et al., 2004b; Lejeune and Yakova, 2005; Narasimhan, 1997), especially in terms of lean operations (Barry and Smith, 2005; Tan et al., 1999)..

Healthcare quality program results Healthcare quality program initiatives have proven highly effective in terms of quantitative and qualitative results. Common quantitative results are enhanced customer satisfaction, cost savings, and reduction of frequency and severity of errors (Barry et al., 2002). Qualitative errors include greater understanding and awareness of errors, as well as reduction in the impact of errors, which are validated by best practices (McFadden et al., 2004) and the performance measurement system (Kazandjian and Lied, 1999). Successful implementation of CQI has been reported for the past decade at hospitals (Mannello, 1995), as well as providing compliance with the Joint Commission on Accreditation of Healthcare Organizations aCAHO) mandates (Mace, 2004). CQI offers new applications to specialties such as radiology (Applegate, 2004). CQI implementation has resulted in successful international programs, including the Mexican hospital system, Japanese hospitals, Australian healthcare, British National Health Service, Netherlands hospitals, and African hospitals (Kazandjian, 1997, 2003; Rungtusanatham et al., 2005). Recent clinical practice improvement has been patterned after CQI in Australia (Leigh et al, 2004). With strong political promotion, Singapore has initiated quality assurance committees for all hospitals and a national medical audit program which have resulted in a reputation for being one of the best hospital systems in the world (Lim, 2004). Similarly a national CQI system has been initiated in The Netherlands (Beers en et al, 2004). Quality programs have also proven highly successful in terms of quantitative results for healthcare organizations (Carey, 2003; Johnstone et al., 2003; Lazarus and Novicoff, 2004; Volland, 2005). Commonwealth Health Corporation (in Bowling Green, Kentucky) has reported program costs of $900,000 and savings of $2.5 million due to reduced patient wait times, reduced processing time for billing and reports, and improved teamwork (Thomerson, 2001, 2002). In the first year of its six sigma system in 2001, Heritage Valley Health System (in Western Pennsylvania) invested $123,000 in training to address issues of patient care and satisfaction, financial operations, staff retention and recruitment, and collaboration with physicians on clinical initiatives (Beaver, 2004a, b). Results include more than $1 million in capturing otherwise lost revenue, partnering with other hospitals, and a second wave of training of staff. At Charleston Area Medical Center, six sigma teams have focused on savings in supply chain management, for example savings of $1.7 million from one project that improved the management of surgical equipment inventory (Lazarus and Neely, 2003; Lazarus and Stamps, 2002). At North Shore - Long Island Jewish Health System, projects in accounts receivable, operating room and emergency room turnaround time, billing

JMD 25,8

812

accuracy, and medication errors have saved over $275,000per project (Cooper,2002). Finally; international healthcare applications of six sigma include the reduction of pharmacist dispensing errors (Chan, 2004)and many other errors at a Dutch hospital (Van den Heuvel et al., 2005). Sustainable competitive advantage The effective implementation of quality management systems and practices could result in sustainable competitive advantage for healthcare organizations. Research demonstrates that several core quality practices result in sustaining competitive advantage for certain dimensions of quality (Flynn et al; 1995). Sustainable competitive advantage can be conceptualized as the degree that corporate resources are characterized by four factors: value, rareness, imitation cost, and nonsubstitutability (Barney, 2002; Hitt et al., 2003). Value refers to the degree that the firm's resources enable the organization to respond to external threats and opportunities. For example, Wal-Mart's superior supply chain management system allows the discounter to achieve "every day low pricing" in spite of changes in its environment. Rareness concerns the degree that competing firms do not possess the organization's particular valuable resources, such as a pharmaceutical firm's patented products. Imitation cost focuses on the cost disadvantage faced by other firms that do not possess a certain resource. An example would be the exorbitantly high cost for a rival to duplicate Microsoft's products. Nonsubstitutability captures the degree that a resource has no strategic equivalent, such as a unique CEOlikeJeff Immelt at General Electric. Ideally, a firm would want to command the highest level of all four factors. But, practically, a firm will only capture just some measure of each factor. Also, resources can be tangible, such as program financial investment and physical facilities; intangible, such as program technology, reputation, and corporate culture; and human, such as training for specialized skills and knowledge, communication, interpersonal abilities, and employee work motivation; all of which could become competitive advantages if exploited successfully (Grant, 2002). Hospital quality management and HRM practices can be expected to enhance corporate competitive advantage. Appropriately designed program design practices could improve the value and rareness of programs through greater efficiency in the implementation of quality management practices. Adaptation of HRM factors could increase the rareness and imitation cost by tailoring each hospital's quality program for optimum employee motivation and training. Applying quality practices to hospital operations can raise the imitation cost and nonsubstitutability of the quality program by greater process productivity, lower operational costs, and better customer .relationship management. Therefore, more appropriate implementation of the quality management processes and practices, as well as strategic HRM, could enhance the success of a hospital's quality program beyond that of a competitor that did not exploit such practices. The literature review leads to the following research hypotheses for this study: Hl. Healthcare error sources are positively related to quality management processes, quality management practices, and human resource management. H2.

Barriers to error reduction are negatively related to quality management processes, quality management practices, and human resource management.

H3. Healthcare quality management processes are positively related to program results and sustainable competitive advantage. H4.

Healthcare quality management practices are positively related to program results and sustainable competitive advantage.

H5.

Healthcare strategic human resource management is positively related to program results and sustainable competitive advantage.

Methodology Sample and measures

A questionnaire about hospital error sources, error reduction barriers, quality management processes and practices, strategic HRM, perceived quality program results, and sustainable competitive advantage was sent to 951 US hospitals with a quality program Our list was initiated from the 6,005 hospitals in the Hospitallink.com web site list. From the hospital's web site, we obtained the hospital's general telephone number and address. Telephone calls to about ninety percent of the Hospitallink.com hospitals revealed the name and phone number of the quality and risk management directors. Then we called each of the quality/risk directors to describe the survey, ask for their interest to participate, and request their e-mail address, In most cases, we had to leave a voice mail message. Although we attempted to secure separate responses from the quality and risk directors, they most often collaborated on a completed questionnaire. Receiving a response from the most appropriate director was paramount (as recommended by Flynn et al, 1990). Occasional multiple responses from a hospital were checked for inter-rater reliability analysis described later in this section. The multiple .responses from each of those hospitals were averaged for a single observation for purposes of data analysis. The survey consisted of sending an electronic-mail message, with the I cover letter and the questionnaire as an attachment. The questionnaire contained drop-down boxes for ease of response. Approximately, a month after the first mailing, the nonrespondents were sent an e-mail reminder with the questionnaire attached. A second reminder was sent bye-mail in another month. The respondents were guaranteed confidentiality. As the incentive to participate, we sent them a report with the overall averaged results for benchmarking purposes after we had received their responses and had received about 300 responses overall. Our Quality Program survey attracted 587 fully-useable hospital responses after several months of data collection. The response rate was approximately 62 percent. The sample consisted of representation proportional to the regional distribution of hospitals in the Hospitallink.comlist, as reported in Table I. The goodness-of-fittest for geographic representation gives a X 2 value of 1.96 (with 4 degrees of freedom), so the sample is not statistically significantly different from the population. Other characteristics compare favorably with the population, such as the respondents' average quality program age of 12.2 years and about 87 percent are community hospitals (versus teaching hospitals). Also respondent hospitals employed an average of 2.7 quality department personnel, had an average active staff of 198physicians, and had an average of 158 beds (with a range of 6-1,300beds).


813

~.

]MD 25,8

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Constructs, reliability, and validity This survey evaluates the relationships among seven constructs, specifically, healthcare E:ITOrsources, error reduction barriers, quality management processes, quality management practices, strategic HRM, quality program results, and sustainable competitive advantage. Several indicators for each of the constructs were derived from a search of the relevant literature. Healthcare error sources include difficulties in the design of tasks/jobs, equipment failure/malfunction, lack of employee expertise/knowledge, infrastructure (public/internal backup services), unplanned circumstances/events, and computer issues (Barry et al., 2002; Spath, 2000). Error reduction barriers result from lack of support from top management, lack of resources, fear, lack of incentives, lack of knowledge/understanding (McFadden et al., 2004; Ryan and Thompson, 1998). Quality management processes are represented by continuous quality improvement, program information/communication, project review/closure, and project results sharing (pande et al; 2000; Ryan and Thompson, 1998). Quality management practices include customer satisfaction evaluation, supplier quality evaluation, statistical quality/process control, competitive benchmarking, and supply chain management (Agus, 2005; Carey and Lloyd, 2001; Evans and Lindsay, 2005; Gowen and Tallon, 2005; Ryan and Thompson, 1998). Strategic HRM relevant to quality programs are employee quality teams, program agent training, best-practices/information sharing, employee financial rewards, employee recognition, and employee promotion opportunity (Ahmad and Schroeder, 2003; Bou and Beltran, 2005; Bowen and Lawler, 1992; Gowen and Tallon, 2003; Schonberger, 1994; Snape et al, 1996). The quality program results consist of quality improvement, customer satisfaction increase, net cost savings, reduced frequency of errors, and reduction in the severity of errors (Barry et al, 2002; Kazandjian and Lied, 1999; Spath, 2000). Finally, sustainable competitive advantage is represented by the resulting quality program value added, rareness, cost-to-imitate, and nonsubstitutability (Barney, 1991, 1997, 2001, 2(02). The hospital quality program variables were assessed by a questionnaire survey. Each of the quality program.survey items was defined briefly. The respondents rated their use of design/HRM items and realization of result items on a six-point Likert scale. The Likert scale used 0 (zero) as "none," 1 as "very low," 2 as "low," 3 as "moderate," 4 as "high," and 5 as "very high." To improve construct validity (Nunnally and Bernstein, 1994), an initial version was tested in a pilot survey sent to several hospital quality program directors to improve the accuracy of the survey. Based on their feedback, the survey was modified slightly in terms of refining the description of some items. The reliability and validity of the data collection process were checked. Although perceptual measures have proven acceptable, especially when objective data is unavailable such as the case of hospital error information for legal reasons, there are . some issues to consider (Ketokivi and Schroeder, 2004). To address the potential reliability issue, the multiple respondents of each of several hospitals exhibited

I

Table I. Geographic representation of the sample and population

East Midwest South Southwest West

Sample (percent)

Population (percent)

20.8 27.6 26.4

28.6 26.7

9.9 15.3

12.3 16.3

16.1

Cronbach a inter-rater reliability values with an average of 0.848 and a range of 0.766-0.879 (which is beyond the minimum acceptable level of 0.70 for exploratory research according to Nunnally and Bernstein, 1994). Similarly a validity issue is raised


by the potential common method variance due to a single respondent rating all of the variables. The application of Harman's one-factor test resulted in ten factors accounting for 57.5 percent of the overall variance, with the first factor explaining 18.5 percent of the variance. Because a single factor did not occur and no factor accounted for most of the variance, the single method of data collection is not a reasonable risk -------(podsakoff et al.; 2003; Podsakoff and Organ, 1986).

Results The constructs for the healthcare error sources, error reduction barriers, quality management processes, quality management practices, strategic HRM, quality program results, and sustainable competitive advantage are delineated by confirmatory factor analysis (CFA) and scale reliabilities (Cronbach coefficient as). We employed CFA using principal components analysis with orthogonal rotation (specifically, Varimax rotation with Kaiser normalization as advocated by Hinkin, 1995, as well as Nunnally and Bernstein, 1994). For each of the seven constructs, CFA resulted in a single component. The factor loading appears in parentheses for each of the following items. Healthcare error sources include the design of tasks/jobs (0.52), equipment failure/malfunction (0.68), lack of employee expertiselknowledge (0.48), infrastructure such as public/internal backup services (0.74), unplanned circumstances/events (0.46), and computer issues (0.64), with overall explained variance of 35 percent and Cronbach a of 0.62. Error reduction barriers result from lack of support from top management (0.69), lack of resources (0.63), fear (0.62), lack of incentives (0.78), lack of knowledge/understanding (0.63), with overall explained . variance of 45 percent and Cronbach a of 0.69. Quality management processes are represented by continuous quality improvement (0.56), project review/closure (0.69), program informati0l1vcommunication (0.68), and project results sharing (0.72), with overall explained variance of 44 percent and Cronbach a of 0.58. The quality management practices include cu~tomer satisfaction evaluation (0.59), supplier quality evaluation (0.74), statistical quality/process control (0.69), competitive benchmarking (0.74), and supply chain management (0.69), with overall explained variance of 48 percent and Cronbach a of 0.72. Strategic HR1V[relevant to quality programs are employee quality teams (0.61), program agent training (0.59), best-practices/information sharing (0.69), employee financial rewards (0.!)2), employee recognition (0.73), and employee promotion opportunity (0.59), with overall. explained variance of 36 percent and Cronbach a of 0.64. The quality program results consist of quality improvement (0.72), customer satisfaction increase (0.67), net cost savings (0.70), reduced frequency of errors (0.75), and reduction in the severity of errors (0.74), with overall explained variance of 51 percent and Cronbach a of 0.76. Finally, sustainable competitive advantage is represented by the resulting quality program ~alue added (0.60), rareness (0.77), cost-to-imitate (0.79), and nonsubstitutability (0.77), with overall explained variance of 54 percent and Cronbach a of 0.72. All of the constructs meet the "practical significance" level of 0.50 for factor loadings and of 0.60 for scale reliabilities needed for exploratory research (Flynn et al., 1990; Hair et al., 1995). The construct means, standard deviations, and reliabilities are represented in Table II.

815

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Construct

Mean

SD

1

2

3

4

5

6

7

l.HES 2.ERB 3. QMP1 4.QMP2 5..SHRM 6..QPR 7..SCA

2.36 2.35 3.41 2.87 2.15 3.07 2.31

0.70 0.93 0.86 0.98 0.75 0.82 0.93

(0.62) 0.31 *** 0.18*** 0.27*** 0.21 *** 0.19*** 0.16***

(0.69) -0.13** -0.08 - 0.10* -0.03 -0.01

(0.58) 0.54 *** 0.61 *** 0.47*** 0.27***

(0.72) 0.63*** 0.43*** 0.38***

(0.64) 0.37*** 0.30***

(0.76) 0.30***

(0.72)

ReIiabiIities (Cronbach Coefficient as) appear in parentheses on the diagonal; *p < 0.05; up < 0.01; ***p < 0.001. Descriptive statistics, correlation coefficients, and reliabilities" for the constructs: healthcare en-or sources (HES), error reduction barriers. (ERB), quality management processes (QMP1), quality management practices (QMP2), strategic human resource management (SHRM), quality program results (QPR), and sustainable competitive advantage (SCA) Notes:

Table II.

a

Discussion of results and limitations This study of healthcare quality programs reveals compelling evidence for strong relationships among hospital error sources, error reduction barriers, quality management processes, quality management practices, strategic HRl'vl, perceived quality program results, and sustainable competitive advantage. To test the relationships shown in Figure 1, the first series of linear regression analyses examines the effects of healthcare error sources and elTor reduction barriers on quality management processes, quality management practices, and strategic HRM. The second series of linear regression analyses tests the relationships of quality management processes, quality management practices, and strategic HRM on perceived quality program results and sustainable competitive advantage. The first and second hypotheses are supported by the results reported in Table m. As in the first row, healthcare error sources are highly statistically significantly related to quality management processes, quality management practices, and strategic HRl'vl, confirming the general literature about quality and medical errors (Barry et al., 2002; Institute of Medicine, 2000, 2001; Spath, 2000). In the second row of Table Ill, error reduction barriers are highly statistically significantly and negatively related to quality management processes, quality management practices, and strategic HRM, consistent with the literature about error reduction barriers (Edmondson, 2003, 2004;

HES ERB

~12 Adj. R 2

Table III.

QMP1

QMP2

SHRM

0.246* * * - 0.202***

0.325 ** * - 0.175 ***

0.261 * * * - 0.175 ***

2~:~***

3~:~r**

2~:6r**

0.07

0.10

0.07

Notes: a Standardized regression coefficients are reported; *p < 0.05; * * P < 0.01; * ** p < 0.001. Results of regression analysis for healthcare error sources and error reduction barriers, regressed on quality management processes (QMP1), quality management practices (QMP2), and strategic human resource management

/ McFadden et al., 2(04). The negative relationships are expected due to the deleterious Human resource impact error reduction barriers have on the successful implementation of a quality management management and human resource system (Ryan and Thompson, 1998; Tucker and Edmondson, 2003). The third hypothesis is partially supported by the results reported in Table IV. As in the first row, quality management processes are highly statistically significantly related to the quality program results, confirming the general litera ture about 817 successful quality programs (Barry et al., 2002; Institute of Medicine, 2000, 200l; Spath, -------2000). However, the lack of a statistically significant impact of quality management processes on sustainable competitive advantage suggests that quality program processes do not provide a distinctive competence without some other factors, such as strategically designed HRM (Zairi, 1998). The fourth and fifth hypotheses are supported by the results reported in Table IV. For the fourth hypothesis represented by the second row of Table IV, quality management practices are statistically significantly related to perceived quality program results and sustainable competitive advantage, confirming the literature about these quality practices (Agus, 20'05; Barry et al., 2002; Barry and Smith, 2005; Ryan and Thompson, 1998). In contrast for the fifth hypothesis, as in the third row of Table IV, strategic HRM is highly statistically significantly related to perceived quality program results and sustainable competitive advantage, consistent with the literature about strategic HRM (Adinolfi, 2003; BOll and Beltran, 2005; Kanji and Sa, 2003; Takeuchi et al., 2003). The strategic HRM indicators in this study, i.e. employee teams, training, sharing best practices, financial rewards, recognition, and promotion opportunity, have been previously reported as highly effective in motivating organizational performance (Arthur, 1992, 1994; Gallie et al., 2001; Manion, 2004; Pfeffer, 1998; Schonberger, 1994). There are some limitations common to survey research, such as the reliance on perceptual data and the use of a single method of data collection. Relative to the perceptual data issue, research indicates that self-reported evaluations are highly consistent with marie objective observations, especially when the respondents are at the appropriate point in the organization to make such evaluations (Dess and Robinson, 1984; Ketokivi andi Schroeder, 2004; Robinson and Pearce, 1988). Likewise, Bommer et al. (1995) argue from a meta-analysis of the literature that subjective measures should not serve as proxies but objective measures are no panacea due to their narrow focus. Furthermore, triangulation with more objective data on hospital quality

QMPI QMPZ SHRM F R2

Adj.R2

QPR

sex

0.30Z*** 0.098* 0.181 *** 66.4Z*** 0.Z6 0.25

ns 0.106 * 0.309*** 50.63*** 0.15 0.15

Notes: a Standardized regression coefficients are reported; * p < 0.05; * * P < 0.01; * * * p < 0.00l. Results of regression analysis for quality management processes (QMPl), quality management practices (QMPZ),and strategic human resource management, regressed on quality program results and sustainable compe1titiveadvantage

TableN ..

JMD 25,8

818

practices and program results was mitigated by the legal barriers to divulging such information. Similarly for the potential common method variance issue, the application of Harman's one-factor test reported before and other methods (podsakoff et al., 2003; Podsakoff and Organ, 1986) suggests that the single method of data collection is acceptable.

Conclusions and managerial implications This research of the centrality of strategic HRM, specifically for the effects of hospital errors, error reduction barriers, and quality management processes and practices, has several important implications for healthcare practitioners charged with achieving superior program results and competitive advantage. The overall results suggest that hospital errors can be successfully addressed with appropriate quality management processes, quality management practices, and strategic HRM, as suggested in past literature (Institute of Medicine, 2000, 2001). Comparing the regression results for those three factors, the greatest impact in this study is for the quality management practices, including customer satisfaction evaluation, supplier quality evaluation, statistical quality/process control, competitive benchmarking, and supply chain management. Also the results imply that hospital error reduction barriers can be resolved with the implementation of the relevant quality management processes and practices, as well as strategic HRM, which has been suggested in past studies (Edmondson, 2003, 2004; McFadden et al, :i:004; Tucker and Edmondson, 2003). The three hospital quality program factors have effects that are different for program results than for competitive advantage. Achieving superior hospital quality program results are highly dependent on all three factors: quality management processes, quality management practices, and strategic HRM. Yet the impact on program results is greatest for quality management processes, consisting of continuous quality management, project reviews/closure, information sharing, and project results sharing. In contrast, the impact on sustainable competitive advantage is greatest for strategic HRM, which includes employee teams, training, information sharing, rewards, recognition, and promotion opportunity. Our findings suggest that strategic HRM could vastly improve an average hospital quality program relative to its competition. At the same time, healthcare organizations should not abandon quality' management processes and practices. Rather any hospital quality program is built around its quality management processes and practices. Certainly, there is considerable opportunity for improvement in all three factors. Therefore, our results irldicate that appropriate hospital quality management processes and practices -establish a foundation for a successful quality program, upon which strategic HRM can

provide a competitive advantage. The pragmatic contribution of this study for healthcare administrators lies in the opportunities offered by strategic HRM for enhancement of quality management tn achieve improvements in patient safety. Since an estimated 58 percent of deaths due to medical errors may have been prevented, systemic changes are needed in healthcare quality systems (Institute of Medicine, 2000, 2001). The present study suggests that the expansion of healthcare quality management, quality practices, and strategic HRM offer unique opportunities for reducing errors, providing results, and creating competitive advantage. As well as expanding quality managemerit and practices, this study suggests greater urgency for hospitals to exploit strategic HRM practices.

These programs ha ve not been consistently adopted by hospitals although interest and Human resource awareness is high (Weiler, 2004). This timely study provides empirical evidence that management these systems are highly related to quality results and hopefully will provide guidance to healthcare administrators to enhance hospital quality programs. Therefore, more effective healthcare quality management processes, quality management practices, and strategic HRM should lead to improvements in healthcare patient safety. In future research, healthcare practitioners could benefit from a study of the effects 819 of international culture. International considerations that affect quality management in -------manufacturing (Das et aL, 2000) could influence healthcare. Political considerations and institutional capacities have recently promoted a paradigm shift for quality management in Singapore (Lim, 2:004) and Canada (Baker and Norton, 2004). It would be exciting to compare our US findings against those observed for healthcare in other countries.

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Corresponding author Charles R. Gowen III can be contacted at: [email protected]

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