The Impact of IT on Hospitals

1
The Impact of IT on Hospitals

• Dr. Hsin-Ginn Hwang
• Graduate Institute of Information Management
• National Chung Cheng University
• mishgh_at_mis.ccu.edu.tw
• 0939-318-863

2
Introduction

• Hospitals are also organizations
• IT improves medical quality
• IT improves the efficiency and effectiveness of
  hospital operations

3
Facts to Remind

• IT offers new ways to change the structure of an
  existing organization or design an entirely new
  non traditional one
• IT can substitute for physical proximity and
  contact in a number of situations
• Top management has a key role to play in the
  management of information processing activities
  in the organization

4
What are Information Systems?

• Information systems exist in the context of an
  organization they do not operate in isolation

5
What are Hospitals?

• An organization is a rational coordination of
  activities of a group of people for the purpose
  of achieving some goal
• How about Hospitals?

6
Modern Organizations

• They are many factors that influence the
  structure and design of modern organizations
• Uncertainty
• Specialization
• Coordination
• Interdependence

7
Uncertainty

• Managers try to eliminate or reduce uncertainty
• Where Uncertainty comes from?
• Outside or inside of an organization?
• There is some evidence that uncertainty is most
  effectively handled by decentralizing decision
  making to management level in the organization
  with information to resolve it

8
Specialization

• Why specialization can influence the structure
  and design of modern organizations?

9
Coordination

• When there is specialization, one task of
  management is to coordinate the diverse
  specialties to achieve the goals of the
  organization
• Management must balance differing orientation and
  resolve disputes between specialized subunits

10
Interdependence

• The type of interdependence affects the amount of
  power one unit has in the organization
• Three types of mutual dependence
• Pooled interdependence
• Sequential interdependence
• Reciprocal interdependence

11
What Is Organization Flexibility?

• Flexibility is the ability to adapt when
  confronted with new circumstances
• A flexible organization defends quickly against
  threats and moves rapidly to take advantage of
  opportunities

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IT and Organizational Flexibility

• IT has the ability to change the pace of work and
  to alter time and space boundaries for work
• With properly designed systems, the organization
  can increase its ability to respond to customers,
  competitors, and the environment in general

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MIS Belief

• The purpose of employing any technology is to
  obtain an advantage over old ways of doing
  business

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Framework

• A framework provides you with a view to organize
  your thoughts and analyze a problem
• A framework is not necessary accepted by everyone

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Anthonys Framework of MIS

• MIS support management activity, that is, the
  structure of IS can be classified in terms of
  hierarchy of management planning and control
  activities (Anthony, 1965)

16
Simons Framework of DM

• The decision making stages of intelligence,
  design, and choice proposed by Simon (1965)
• Programmed and Nonprogrammed decisions

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Gorry and Scott Mortons Framework of MIS

• A framework synthesizing the work of Anthony and
  Simon is very appealing because it helps us
  classify a variety of systems (Gorry and Scott
  Moton, 1971)

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Harold Leavitts Framework for IT Applications

• An organization develops some internal structure
  so the people who work in the organization can
  perform their tasks
• People undertake these tasks so the firm can
  accomplish its mission or purpose

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Harold Leavitts Framework for IT Applications
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Contemporary Framework for IT Applications

• IT supports individuals, workgroups,
  organizations, and linkages among organizations
• The changing technology enables the organization
  to develop applications to support all the tasks
  involved in managing the firm

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Contemporary Framework for IT Applications

• A focus on the organization as the most important
  component of the study of IT
• The role of technology in supporting managerial
  tasks
• The pervasive nature of technology in the
  organization

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Decision Support, Executive IS, and Expert Systems

• Decision Support Systems
• Executive Information Systems
• Expert Systems
• Group Support Systems

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Knowledge Work Support

• Personal Computers
• Office Software
• Portable Computer
• Notebooks
• PDAs (Personal Digital Assistants)

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Supporting Groups and Cooperative Work - Groupware

• Groupware such as Lotus Notes can provide the
  coordination mechanism among individuals in
  different locations.
• Groupware support individuals in different
  locations can share information on a distributed
  network.

25
Interorganizational Systems

• Partnerships and strategic alliances are created
  and enhanced with interorganizational systems.
  (IOSs)
• IOSs can vary from e-mail connections to full
  system-to-system connections.
• IOSs make possible Virtual Components in which a
  partner substitutes for some component of your
  company. (eg. Federal Express)

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Key Technology

• Communications
• Networking
• Database

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The Basics of Information Systems

• Some Generic Types of Systems
• Transactions Processing Systems
• Decision-oriented Systems
• Communications-oriented Systems

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Transactions Processing Systems
Workstation
Input
User
Validate
Update
Output
Report
Database
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Decision-Oriented Systems
Workstation
User
Analysis and Presentation
Retrieval System
Model Management
Database
Model Base
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Communications-oriented Systems
Workstation
Workstation
Communications Link
User
User
Computer
Mail Box
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Different Types of Technology

• Simple Batch Systems
• Inquiry
• Fully On-line
• Command and Control
• Internet/Intranet
• Client-Server

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Is There Value in IT?

• Various Observers have criticized information
  technology for not providing a satisfactory
  return on investment.
• How valid is this criticism?
• The Investment Opportunities Matrix shows that
  there is not the same likelihood of a return from
  each IT investment.

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What is Value?

• Investment can be measured in
• Direct measurement Money, NPV, ROI,etc.
• Indirect measurement preventing negative return,
  keeping up with a competitor, avoiding loss in
  market share.
• Indirect measurement is hard to measure

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Implications for Management

• Why should you care about different kinds of
  technology?
• How do you adapt and use a combination of old and
  new technologies when you work in a business with
  old technologies?

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The Nature of Information

• Information can be defined as some tangible or
  intangible entity that reduces uncertainty about
  some state or event
• Information is data that has been processed into
  a form that is meaningful to the recipient and is
  of real perceived value in current or prospective
  decisions

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Characteristics of Information
Decision Type
Strategic Planning
Managerial Control
Operational Control

• Time Frame Historical
  Predictive
• Expectation Anticipated
  Surprise
• Source Largely Internal
  Largely External
• Scope Detailed
  Summary
• Frequency Real Time
  Periodic
• Organization Highly Structured
  Loosely Structured
• Precision Highly Precise
  Not Overly Precise

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From Information to Knowledge

• Knowledge can be defined as information plus
  know-how (Kogut and Zander, 1992)
• Information alone is not enough to produce
  knowledge
• We must also understand the best way to use
  information to solve a problem, contribute to a
  product or service, or make a similar
  contribution to the organization

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From Information to Knowledge

• Knowledge builds over time in the heads of
  employees in the form of past decisions,
  processes in the organization, characteristics of
  products, interests of customers, and similar
  experiences

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Explicit Knowledge

• Explicit knowledge is represented by facts.
• Textbook, Manual, Document, ,etc.

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Tacit Knowledge

• Tacit knowledge is something we understand but
  have difficulty explaining.
• Riding bicycle, cooking,,etc.

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Concepts of Decision Making

• Decisions differ in a number of ways
• These differences affect the formulation of
  alternatives and the choice among them
• They also affect the design of IS support for
  decision activities

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Decision Types

• Four dimensions of decision
• Level of knowledge of outcomes
• Level of programmability
• Criteria for the decision
• Level of decision impact

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Knowledge of Outcomes

• If the outcomes are known and the values of
  outcomes are certain
• The making of decisions under risk, when only the
  probabilities of various outcomes are known
• Decisions under uncertainty (outcomes known, but
  not the probabilities)

44
Programmed versus Nonprogrammed Decisons

• Programmed decisions are those decisions that can
  be prespecified by a set of rules or decision
  procedures
• Programmed decisions imply decision making under
  certainty because all outcomes must be known
• Programmed decisions can be delegated to low
  levels in an organization or automated

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Criteria for Decision Making

• A model of decision making which tells the
  decision maker how to make a class of decisions
  is normative or prescriptive
• Normative models have generally been developed by
  economists and management scientists, such as LP,
  Game theory, etc
• The criteria for selecting among alternatives in
  the normative model is maximization or
  optimization of either utility or expected value

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Criteria for Decision Making

• A model which describes how decision makers
  actually make decisions is descriptive
• Descriptive models attempt to explain actual
  behavior and therefore have been developed
  largely by behavioral scientists
• Satisfaction is an alternative view of decision
  making which comes from the descriptive models

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How Do Individuals Make Decisions

• Herbert Simon (1965) suggests a series of
  descriptive stages for decision making to help
  understand the decision process
• Intelligence
• Design
• Choice
• Implementation

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Intelligence

• Problem finding is conceptually defined as
  finding a difference between existing situation
  and some desire state
• The purpose of problem formulation is to
  clarify the problem, so that design and choice
  activities operate on the right problem

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Design

• The act of generating alternatives is creative,
  and creativity may be taught.

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Choice

• Decision maker selects one of the alternatives.
• The criteria of choice is different among
  individuals or organizations.

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Implementation

• Implementation is a series of executions that
  ensure the solution is carried out

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Organizational Decision Making

• How does an organization make a decision?
• Major concepts used to explain organizational
  decision making are quasi-resolution of conflict,
  uncertainty avoidance, problemistic search,
  organizational learning, and incremental decision
  making

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Quasi Resolution of Conflict

• Conflicts among different units are solved by
  three methods
• Local rationality
• Acceptable level decision rules
• Sequential attention to goals (The organization
  responds first to one goal, then to another , so
  that each conflicting goals has a chance to
  influence organizational behavior)

54
Uncertainty Avoidance

• The behavioral theory of organizational decision
  making assumes that the organization will seek to
  avoid risk and uncertainty at the expense of
  expected value
• Some legal methods used to reduce or avoid
  uncertainty are the following
• Short run feedback and reaction cycle
• Negotiated environment

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Problemistic Search

• The search for solution is problem-stimulated
  there is very little planned search for solutions
  not motivated by problems
• Search locally either close to the present
  symptom or close to the present solution
• If local search fails, expand the search first to
  organizationally vulnerable areas before moving
  to other areas

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Organizational Learning

• Organizations change their goals and revise their
  problem search procedures on the basis of
  experience

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Incremental Decision Making

• An incremental decision making in organization is
  confined to small changes from existing policy
  and procedures
• The emphasis is on correcting or improving
  existing policies and actions

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Types of Organizations

• The nature of different organization will
  influence the decision and the kind of
  information required
• Three types of Organizations
• Bureaucracy
• Charismatic
• Adaptive

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The Influence of the Organization

• Bureaucracies try to survive and to minimize
  uncertainty members of these organizations
  stress in job security
• We would expect decisions in bureaucracies to be
  conservative and require modest changes to
  existing procedures

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The Influence of the Organization

• The charismatic organization is dominated by a
  strong leader
• It is safe to say that the leader is likely to
  make the decision that subordinates then execute

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The Influence of the Organization

• The adaptive organization tries to respond
  quickly to its environment
• The organization stresses rapid response times
  and does not have a large number of layers of
  management

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The Role of CEO

• A key task of top management is formulating
  corporate strategy
• What opportunities for new directions are
  available?
• What are competitors doing?

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The Role of IT

• IT offers new ways of doing business
• IT can speed up the pace of work and increase the
  capacity of processing
• IT can alter the space and time boundaries of work

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The Value Chain

• The activities in an organization add value to
  its products or services (Porter and Millan,
  1985)
• The primary activities in the value chain include
  inbound logistics, operations outbound logistics,
  marketing and sales, and service

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The Value Chain

• Each of these activities adds value directly to
  the firms output
• Supporting these primary activities are the
  firms infrastructure, human resource management,
  technology development, and procurement

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The Value Chain

• What is the potential impact of IT on the value
  chain?
• Low-cost producer
• Differentiation
• Market niche

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Four Steps to Take Advantages of IT

• Look for ways to incorporate technology in a
  product or service
• Seek ways to use technology to connect with other
  firms
• Look for ways to use technology to make dramatic
  changes in the way your structure the
  organization
• Integrate technology with planning

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Creating and Sustaining A Competitive Edge

• Using resources to advantage
• Protecting an IT innovation
• To sustain an advantage is to overwhelm the
  competition with technological leadership

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Integrating Technology with the Business
Environment

• Managers must consider how technology affects
  their decisions and how their decisions affect
  the technology

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The Mgmt Challenge of Integrating Tech
Information
technology
Search for new
technology
(find out what
technology offers)
Manage
Seek
development of

opportunities
new technology
Technological
Manage existing
constraints
technology
Impact
Impact
Constraints
Decision making
Technology
Planning
Opportunities
Execution
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Facts

• Visions are rare and difficult to create leaders
  are frequently criticized for lack of vision
• For an organization, the vision thing is
  important, especially given the ability of
  technology to change the structure of the firm,
  the nature of its business, and the basis for
  competition

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Facts

• A fundamental responsibility for management is to
  develop a vision for the business and for the
  role of IT in achieving that vision

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Facts

• The vision should
• Describe the mission of the organization
• Identify the products and services it produces
  and the markets
• Describe plans for mergers, partnerships,
  alliances, and acquisitions

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Facts

• Firms structure is highly related with its
  strategy
• A significant responsibility of management is to
  integrate technology with all business decisions
• Integration means that the manager is aware of
  how new technology can create opportunities

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Facts

• A corporate strategic plan comes from the firms
  vision for its future activities
• This plan includes the vision
• It is a road map for bringing about the vision
• IT should be an integral part of the firms
  strategic plan

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A Framework for Managing IT
Vision for the Organization Information
Technology
IT and Organization
Structure
Corporate Strategic Plan
Integration of IT and Decision Making
Strategy
Alliances Partnership
Ongoing IT Operations
IT Infrastructure
IT Initiative
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System Concepts

• The term system is in common use.
• System concepts provide a useful framework for
  describing and understanding many organizational
  phenomena.
• Definition of a system
• General model of a system - IPO model

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System Concepts

• Subsystems
• The use of subsystems as building blocks is basic
  to analysis and development of systems
• Principles of building a system from subsystems
• Decomposition
• Simplification
• Decoupling

79
System Concepts

• Preventing system entropy
• System stress and system change
• A stress is a force transmitted by a systems
  suprasystem that causes a system to change, so
  that the suprasystem can better achieve its goals.

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Definition of A System

• Systems can be abstract or physical
• An abstract system is an orderly arrangement of
  interdependent ideas or constructs
• A physical system is a set of elements which
  operate together to accomplish an objective

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General Model of A System

• A general model of a physical system is input,
  process, and output
• The system is inside the boundary
• The environment is outside the boundary
• Each system is composed of subsystems which in
  turn are made up of other subsystems

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General Model of A System

• The interconnections and interactions between the
  subsystems are termed interfaces
• Interfaces occur at the boundary and take the
  form of inputs and outputs
• A subsystem at the lowest level is often not
  defined as the the process
• This system is termed a black box

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Subsystems

• The use of subsystems as building blocks is basic
  to analysis and development of systems (Divided
  and Conquer)
• Decomposition
• Simplification
• Decoupling

84
Decomposition

• A complex system is difficult to comprehend when
  considered as a whole
• The process of decomposition is continued with
  subsystems divided into smaller subsystems until
  the smallest subsystems are of manageable size
• The subsystems resulting from this process
  generally form hierarchical structures

85
Decomposition

• In the hierarchy, a subsystem is one element of a
  suprasystem
• Decomposition into subsystems is used both to
  analyze an existing system and to design and
  implement a new system

86
Decomposition

• The general principle in decomposition which
  assumes that system objectives dictate the the
  process is functional cohesion
• Components are considered to be part of the same
  subsystem if they perform or are related to the
  same function

87
Decomposition

• In design, the identification of functionally
  cohesive subsystems is the first step
• The boundary then needs to be clearly specified,
  interfaces simplified, and appropriate
  connections established among the subsystems

88
Simplification

• The process of decomposition could lead to a
  large number of subsystem interfaces to define
• Simplification is the process of organizing
  subsystems so as to reduce the number of
  interconnections

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Simplification

• Clusters of subsystems are established which
  interact with each other, then a single interface
  path is defined from cluster to other subsystems
  or clusters of subsystems
• Methods are established for decoupling systems so
  that the need for interconnection is reduced

90
Decoupling

• If two different subsystems are connected very
  tightly, very close coordination between them is
  required
• The solution is to decouple or loosen the
  connection so that the two process of decoupling
  and allowing each subsystem some independence in
  managing its affairs has many benefits, but it is
  not without costs

91
System Concepts and Organizations

• Organizations are open systems, since they
  receive unplanned and unscheduled inputs from
  their environment and adapt in such a way as to
  continue their existence

92
Questions Discussion