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Service Recovery in Healthcare

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SERVICE RECOVERY IN HEALTHCARE
Customers’ satisfaction with a company can be profoundly impacted due to service failures and subsequent efforts of recovery. This is especially so in the healthcare industry where service recovery covers a vast range of complex issues and highly emotional patients (Berry and Bendapudi, 2007) whose level of tolerance is usually lower after a service failure (Matilla, 2004). Therefore, the need for service recovery strategies is very important. The purpose of this essay is to discuss the concept of service recovery, particularly in healthcare. This purpose will be achieved through utilising, exploring and analysing a wide range of literature written on the topics of service recovery and service recovery in healthcare. It will look at service recovery – its definitions and its dimensions, and it will discuss it as it is applied to healthcare. Finally, it will look at generational differences and their possible effects on service recovery.
Failure often takes place when a customer’s experience and their expectations of a service are different. Maxham (2001) defined service failure as ‘any service related mishaps or problems – real and/or perceived – that occur during a customer’s experience with the firm’. It is believed that the single most important factor that leads to service failure lies within the nature of service itself, which creates endless possibilities for errors and consequently the need for service recovery. Smith and Bolton (2002) recognised two types of failure – outcome and process. They explained that outcome failures occur when the core offerings of the service fails and would usually involve utilitarian exchange; whereas, process failures often involve symbolic exchanges and has to do with the way in which the service was delivered. Where customers would easily forgive when they think the company has no control over failure (Maxham & Netemeyer, 2002), they are not easily forgiving if they feel the company could have prevented the failure from happening (Folkes, 1984). Moreover, Gronroos (2000) believes that increased customer awareness of possible service failure is strongly linked to the stark contrast between intangible services and tangible products. In the event of failure it is the company’s responsibility to regain customer satisfaction through the process of service recovery.

In the event of service failure, what does the company do to recover? Zeithaml and Bitner (2003) defined service recovery as ‘reactions taken by an organisation or service supplier in response to a service failure’. Groonroos (1988), and Andreasson (2000) both agreed to this definition of service recovery, believing service recovery to be actions taken by service providers in direct response to failure. Hoffman and Kelley (2000) characterised service recovery as ‘the actions of a service provider to mitigate and repair the damage to a customer that results from the providers’ failure to deliver a service as designed’. Overall, service recovery simply deals with the company’s ability to deal with failures before customers have a chance to complain (Michel and Meuter, 2008). Studies have shown that only a fraction of customers actually complain about a bad service they have received and so many companies have included situations where service failure have occurred but no complaint made into their service recovery strategies (Smith et al., 1999).
In response to service failures, actions taken can be a combination of tangible efforts and psychological recoveries (Lewis and McCann, 2004). Bitner et al (1990), Kelly et al. (1993), Tax et al. (1998) Hoffman et al. (1995) and Miller et al. (2000) have all identified with using the critical incident technique in identifying and assessing strategies of service recovery. Those they identified include: empathy, apology, follow-up, compensation, correction, acknowledgement, explanation, managerial intervention and exceptional treatment.
Apologising and then correcting the problem are both necessary in service recovery (Lewis and McCann, 2004). Kelly et al. (1993) and Hoffman et al. (1995) found managerial interventions to be important, but Lewis and Spyrakopoulos (2001) found that there were benefits to front-line staff handling service recovery. Moreover, the justice theory (Tax et al., 1998) proposed there were three dimensions to service recovery that deals with customer’s perception of outcome (distributive justice), the manner in which they were treated (interactional justice) and the process used in fixing the failure (procedural justice). Matilla and Cranage (2005) believe ‘informational justice’ to be a fourth dimension and put forth the argument that customers lessen the blame credited to the service provider when they are accurately informed and are given choices. They hypothesized that as a result, consumers are given the perception that they are in control of the end result of the encounter. Furthermore, Hoffman and Kelley (2000, pp.149) believe that ‘the service recovery itself; the outcomes connected to the recovery strategy; and the interpersonal behaviours enacted during the recovery process and the delivery of outcomes are all critical in service recovery assessment.’

There have been various debates surrounding the relationship of recovery efforts and different outcomes as research as suggested the customer satisfaction after recovery can be higher than if the customer hasn’t encountered any problems. This jump in satisfaction is referred to as the ‘service recovery paradox’ (McCollough and Bharadwaj, 1992) and is when satisfaction rates of satisfied customers are far higher than those of customers yet to encounter problems. This paradox is supported by Smith and Bolton (1998) but there is little evidence to support it. Maxham (2001) questioned its existence whilst Michel and Meuter (2008) believe it to be a rare phenomenon. Regardless, recovery need to be effectively managed and should be prompt and courteous in order to gain this post-recovery edge (Hocutt, et al., 2006)

In healthcare, service recovery blankets a vast and complex range of issues ranging from something as minor as waiting time in the emergency room, to more highly complex issues like those involving clinical competency (Ashil et al, 2005). Rogers et al (1994) hypothesized that those issues considered ‘minor’ from the staff’s perspective can be extremely frustrating for the customer and may therefore be seen as an indicator of quality. Clinical failures are often called ‘never events’. Never events are said to be serious, preventable incidents that would not have occurred if appropriate preventative measures were implemented by healthcare professionals (NPSA, 2010). An example of a never event was reported by Parry (2013) in the Ipswich Star and claimed that a surgical swab was left in a patient. However, the hospital took quick recovery actions, no harm came to the patient and an action plan was set up to ensure that the incident is not repeated.
Moreover, serious adverse events happen and failure to recover can lead to displacement of a patient, or worst, death. For example, incorrect medication or wrong dosage is often given to patients. An example of failure in healthcare and the effects of non-recovery is that of the Mid-Staffordshire NHS Hospital where it was reported that there were between 400 and 1,200 more deaths than were expected (BBC Health News, 2013). BBC argued that it is unclear if these patients would have survived had they received better care, however, it was clear they were let down by an organisational culture based on cost-cutting and target-chasing. Examples given were patients drinking from flower vases, untrained nurses and patients not receiving pain relief or getting it late. The hospital was then put under investigation and is now reported to be in administration.

Within healthcare, service recovery has been typically dealt with through initiatives like total quality management (TQM) and continuous quality improvement (CQI), discussing the importance of service recovery (Schweikhart et al., 1993) or focussing on service recovery from the perspective of the patient (Bendall-Lyon and Powers, 2001). For example, a model incorporating six steps in complaint management process was presented by Bendall-Lyon and Powers (2001), known for influencing the performance of service recovery and consequently patient satisfaction. Dasu and Rao (1999) came up with a model aimed at understanding customer expectations subsequent to an extremely dissatisfied service experience and any antecedents aimed at explaining customer expectations of service recovery. They found that patients used two types of expectations: the ‘will expectations’, which are predictions of the actions taken by the healthcare provider to manage the complaint; and the ‘should expectations’, referring to what the customer believe is the ideal solution to their complaints.

Those patients’ complaints that are most common are referred to as ‘loyalty factors’ (Osbourne, 1995) and are so called because of their ability to jeopardize any future relationship between the patient and his healthcare provider if they are not satisfactorily resolved. Osbourne (1995) also pointed out the importance of healthcare staff gaining the knowledge on how to effectively and appropriately deal with patients that are dissatisfied. Boshoff and Allen (2000) believe that frontline employees are very important in the service recovery process. Ashill et al (2005) added that in healthcare, the recovery service performed by frontline staff is very critical to the patient and especially the reputation of the organisation. Furthermore, Osbourne (1995) claimed that service recovery dealing with patient at the front line has the ability to reduce cost and enhance patient satisfaction and give them an understanding of their care. In order for frontline staff to be able to deal handle service recovery, Hart et al. (1990) believe it is very important to empower them. Bowen and Lawler (1992) argued that to empower employees they: must be given information on the performance of the organisation; are rewarded for their performance; are knowledgeable and skilful; and, are given decision powers influential in the direction of the organisation. Thomas and Velthouse (1990) have linked empowerment to what they refer to as ‘intrinsic task motivation’, arguing that when employees are empowered they are motivated to do their job.

Bad or poor service often results in loss of existing customers as well as potential new ones. Hocutt et al. (2006) hypothesize that a single negative service experience can potentially lead to permanent customer dissatisfaction. Ultimately, the benefits of service recovery to the organisation are directly linked to the growth and survival of the company. Reichheld and Sasser (1990) believe that retaining existing customers trumps recruiting new ones as it has significant cost benefits and can cause an increase in profit. Excellent service recovery is beneficial to the company in that it impacts customer loyalty which in turn attracts more customers due to positive word of mouth. Tax and Brown (1998) argued that the financial position of a business is heavily influenced by service recovery procedures. Similarly, Clark and Malone (2005) suggest that successfully addressing customer dissatisfaction increases customer retention and ultimately company profits.
The case study of the Ritz Hotel in Phoenix Arizona (cited in Gronroos, 2000) is an excellent case of service recovery in the hotel industry. Four executives from Europe attending a seminar at the Ritz wanted to use the pool before leaving for the airport; however, this was not possible as the pool area was booked to be used. Instead of just sending them away, the supervisor rented a limousine that took them to another hotel where they can use the pool, all expense paid by Ritz. This action therefore heightened the customers’ perception of the hotel even more and positive word-of-mouth will have a ripple effect. The Ritz Carlton Hotel was first in its industry to win the Baldrige Award in 1992 and won it again in 1999.
The Baldrige Award, believe to be “a strong predictor of long-term survival and a leading indicator of future profitability” (Garvin, 1991) have been a driving force in ensuring excellent quality because to win this award, companies have to demonstrate excellent service quality through factors including service recovery. The award encourages healthcare organisations to ‘celebrate extra effort for the customer and ‘recover’ from service errors (Baldrige Healthcare Criteria 2004). Winners of the award have all developed service recovery strategies focussing on listening to the customer complaints and recommending solutions to the problem. At Bronson Hospital, winner of the Baldrige award in 2005, it is a requirement that employees deal with customer complaint timely and effectively. They employ a complaint management database that is regularly monitored to find trends, root causes and departmental process improvements. They also empower their employees to handle complaints using a complaint management process. At Baptist Hospital Inc (2003) employees are given spending guidelines for resolving problems involving lost items, delays or those concerning physicians.
Employees also gain from service recovery having exceeded in their role in the recovery process, and also the psychological impacts that result from having being empowered and trained (Prideaux et al., 2006). With successful service recovery comes higher moral amongst staff which consequently results in better work satisfaction – all around benefiting the company through customer retention and reducing the cost of loosing valuable trained staff (Lewis and Clacher, 2001). An employee’s ability to aid in the service recovery of a failure is harvested through empowerment. Empirical research found that employees’ flexibility towards customer requests are positively influenced by empowerment (Chebat & Kollias, 2000). Moreover, Van Looy et al. (1998) noted the positive relationship between empowered employees and behaviours such as problem recognition, commitment to innovations and idea generation.

The benefits of service recovery to the customers have a lot to do with their satisfaction. Maxham (2001) argued that poor service recovery efforts can further upset and consequently alienate and already unsatisfied customer, whereas excellent service recovery may have to opposite effect on them. In healthcare, clinical service recover is a matter of life or death whilst non-clinical ones will more benefit their level of satisfaction and alter their perception.

Generational differences in service recovery are to be viewed from both the perspective of how the patient sees the provider and how the employees view their role. There are typically four generations namely the ‘matures’, ‘baby-boomers’, ‘generation-x’, and the ‘millennials or generation-y,s’. As employees ‘matures’ are said to be motivated by doing their job well, are loyal and hardworking and are known to be the last to know true labour. As patients they are called the ‘silent generation’ as they are less verbal about their emotions. On the contrary, ‘baby-boomers’ are workaholics as they feel an affiliation with the organisation. They enjoy work as it is a part of their everyday lives and prefer public recognition for doing a good job. As patients they are reluctant to seek a second opinion and like the ‘matures’ they expect to be treated with the utmost respect, greeted with a smile and be properly addressed. ‘Generation X are said to be hardworking but feels no loyalty to the organisation. Time off is critical and they love to be praised on doing a good job and are driven by career advancement. As patients they value speed above all else as they hate waiting. They are known to visit the doctor prepared with alternative treatments in mind and are usually viewed as cynics. ‘Millennials’ of ‘generation-ys’ are highly technological employees. They have no respect for hierarchy and are always seeking to be empowered. As patients they also expect speed and would choose the best technology over the best physician. They view going to the doctor as a validation of what was learned on WebMD.
Taking this knowledge into account, organisations, healthcare included, need to be mindful to understand the different working and consumption styles of the different generations and tailor their service recovery strategies to meet the individual needs. For example, where an older person (mature-generation) will be reluctant to report an aspect of service failure because it is viewed as insignificant, the more boisterous ‘generation-y’ is more likely to voice his opinion and demand action be taken immediately.
To conclude, service recovery in any industry is very important and has been widely studied. In order to employ service recovery strategies, a failure must first occur and reported by the customer. To retain customers and avoid defection, organisations need to develop effective service recovery programs. Healthcare organisations can use the customer complaints information to help increase patient satisfaction and retention. A satisfied patient will refer the service provider to friends and family whilst a dissatisfied patient can tarnish the provider’s reputation by negative word-of-mouth communication. Moreover, the diversity of the working and consuming generations can serve as a basis for implementing strategies and providing opportunities to offer excellent healthcare. An understanding of this diversity will help in shaping organisational culture. Finally, Bendal-Lyon and Powers (2001) suggested that the healthcare organisation gain an understanding of service recovery performance that will allow them to foresee problems, avert disasters and address patient’s perception of their care.
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