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Developing a Total Quality Management Model for Healthcare

Industry:
An Indonesian Hospital
Case Study

1 2
Jonny ,
Kriswanto
1,2Department of Accounting, Faculty of Economics and
Communication, Bina Nusantara University, Indonesia

1 2
(jonny@binus.ac.id ,
kriswanto@binus.ac.id )

Abstract – This research is aimed to develop a Total

second model, the patient is the center of the system in
Quality Management (TQM) Model for Healthcare
which he can participate more actively in his medical
Industry. In order to achieve this objective, several previous
treatment based on his needs, preference and his
studies have been reviewed in order to identify eight best
physician's medical advice.
practices of TQM implementation in healthcare industry

such as Top Management and Commitment (TMC),

However, in their development, the later model or patient-

Teamwork and Participation (TWP), Process Management
(PM), Customer Focus and Satisfaction (CFS), Resource
care model is widely accepted and adopted [29] especially
Management (RM), Organizational Behavior and Culture
after many hospitals reported many benefits from its
(OBC), Continuous Improvement (CI), Training and
implementation such as reduction of failure risk due to
Education (TE). In turn, these best practices are modeled as
quality improvement, reduced healthcare cost as the
conceptual model and tested in order to evaluate its fitness to
impacts of an improved relationship between physician
healthcare industry in Indonesia. A SEM (Structural
and patient and the effectiveness of the utilization of
Equation Modeling) -LISREL software was used to serve
diagnosis tests, prescriptions, hospitalizations and
this objective. After administering a purposive questionnaire
referrals [23].
to several related stakeholders of an Indonesian Hospital,
the LISREL software was run to see whether the model is fit
 or not. As a result, because the p-value 0.23 is larger than
In order to sustain those benefits of adopting this model,
required 0.05 then the model can be confirmed to be fit.
therefore, many healthcare organizations have required

this model as a standard for any hospital to be granted an

Keywords – Total Quality Management, Healthcare,
accreditation. At the international level, there is Joint
Hospital, Structural Equation Modeling, LISREL
Commission International (JCI) which has required all

hospitals to adopt this model in delivering their healthcare

I. INTRODUCTION
services to their patients. Meanwhile, at the national level,

the same requirement has also been required by KARS

Healthcare industry covers any institutions that cooperate
(Indonesian Commission on Accreditation of Hospital)
with other related industries to provide healthcare services
[15].
to a society. These services should be given promptly so

that the society’s health condition can be maintained and

In Indonesia, the accreditation by KARS has been
improved by means of diagnosis, treatment and
enforced as a law for all hospitals in order to obtain an
prevention of any diseases, accidents or physically and
operational permit from the government aside of its
mentally disabilities. They may be delivered in several
accreditation grant itself. This enforcement has been
stages such as primary, secondary and tertiary stages.
enacted especially after learning that there are about 1.2

million Indonesian who have gone to Singapore, Malaysia

In primary stage, the healthcare service is commonly
and other countries each year for medical treatments [5].
delivered as out-patient by a general or family physician
This means that every year Indonesians would spend
as the very front-line service of the whole healthcare
around $700 million USD or equivalent to 7.5 trillion IDR
system. If needed, any patient from this stage can be
on medical services abroad [5].
referred to the secondary or tertiary stage. In the

secondary service, the patient may be directly handled by

Although these enforcement efforts have been taken
a specialist physician. Meanwhile, in the tertiary stage, the
place, unfortunately, at the international level, among
patient would be treated in any hospital both in form of
16,500 hospitals registered worldwide [25], there are only
out-patient or in-patient service based on his medical
about 850 hospitals accredited by JCI [13], meanwhile, in
condition.
Indonesia, there are only 284 hospitals from 2,506
hospitals accredited by KARS [12]. In addition to these
In delivering the necessary healthcare services, any
figures, there is a thesis stating that although one hospital
hospital, as a tertiary healthcare institution, recognizes
has been accredited, its effectiveness is still questionable
two kinds of healthcare models such as disease- and
and therefore, the implementation of total quality
patient-care models. In the first model, the physician will
management for hospital is still recommended to ensure
be the center of the system in which he will decide any
the implementation of the patient-care model in
medical treatments for his patient based on his clinical
Indonesian hospitals.
experience and medical test results. Meanwhile, in the

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The concept of this TQM covers customer focus,

This has generated a conceptual model of a Total Quality
employee participation and continuous improvement.
Management model for healthcare industry in Indonesia
From this concept, customer focus and continuous
as depicted on the figure 1.
improvement can be directly applicable to the healthcare

sector because it is in line with the purpose of the sector

to ensure the implementation patient-care model which is

also regarded as customer focus. However, employee

participation may be new to the sector because in such a

highly skilled sector, the people in this sector are

accustomed to individual working.

Unfortunately, the urgency of its implementation can no

longer be negotiated due to the problems related to service

quality derived from hospitals can be serious and may

have wider impact on both the whole systems and their

financial matters [3]. At the international level, it was

reported that almost 44,000 to 98,000 patients in US died

due to misconduct related to medical service procedures

[32]. Meanwhile, at the national level, it was recorded that

Figure 1. Conceptual Model: Total Quality Management Model for
about 182 malpractice cases have been filed during 2012
healthcare industry in Indonesia.
[34].

From figure 1, it can be seen that there are two kinds of

variables used to develop a TQM model for healthcare

Therefore, this research is intended to develop a total

industry for Indonesian hospital such as observed and

quality management (TQM) model for healthcare

latent variables.
industry. By having this model, it can help any hospital to
improve their quality so that it can contribute to the

The previous mentioned eight TQM practices are latent

government effort to prevent Indonesian traveling abroad

variables which each of them will be assessed through

just for seeking medical services and any medical service

their observed variable.

misconduct.

Among the latent variables, there are relationship built to

II. METHODOLOGY

be tested its fitness in healthcare industry in Indonesia. In

Data Collection
its turn, TWP and TE would be tested its contribution to

CI. Then, OBC, TMC, and RM would be tested to see

In order to properly develop a Total Quality Management

their contribution to PM. Meanwhile, CI would be tested
model for healthcare industry in Indonesia, there is a need
to see its contribution to PM, then PM would be tested to
to construct a questionnaire for Indonesian healthcare
see its contribution to CFS. Finally, this CFS would be
stakeholders.
assessed its relationship to RES.

This questionnaire has been constructed based on

Sampling
previous studies. It covers at least eight best TQM
practices such as Top Management and Commitment
The study population was large, therefore, contacts with
(TMC), Teamwork and Participation (TWP), Process
the respondents had to be made in different locations.
Management (PM), Customer Focus and Satisfaction
Because there are about 8-9 elements to be tested, then the
(CFS), Resource Management (RM), Organizational
number of sampling should be at least 200 respondents
Behavior and Culture (OBC), Continuous Improvement
[11]. In order to achieve sampling uniformity, the
(CI), and Training and Education (TE).
researchers selected respondents as follows:

These eight TQM practices are to be correlated to the

Stakeholder (nos):
hospital performance covering patient satisfaction,
• Department head (50)
healthcare quality, improved performance and operational
• Doctors (50)
cost. Responses are marked on Likert scale ranging from
• Paramedical staffs (50)
strongly disagrees (1) to strongly agree (5). Quality
• Patients (50)
experts and medical professionals have reviewed the

instrument content validity during the pilot study. Many

The previous arrangement was drawn in order to maintain
suggestions were incorporated and reviewed again by the
the evenness of the voices from stakeholder. Therefore,
experts after the pilot study.
purposive sampling was also used taking into

consideration the following:

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• Willingness on the part of the hospital to allow

its staffs to divulge information and

• Willingness on the part of the respondents to

disclose data.

Members surveyed ranged from recently appointed to

senior level doctors and paramedical staff, nurses and

patients. Out of 250 questionnaires distributed and 50 of

them were returned incorrect or incomplete.

Data Analysis

The questionnaire was piloted among those involved in

service processes in healthcare institutions such as

Figure 2. Result of Model of Total Quality Management Model for

healthcare industry in Indonesia.

department heads, doctors, paramedical staff and patients.
Validity and reliability testing helped to identify patient,

From the above table, it can be concluded that the model

nurse, technician, and doctor requirements. We designed

is fit because its p-value which is 0.23238 is larger than

the questionnaire to obtain information on: top

required 0.05 to be claimed as a good fit model.

management and commitment (TMC), teamwork and
participation (TWP), process management (PM),

This means that the whole eight TQM practices can be

customer focus and satisfaction (CFS), resource

integrated as a model where top management and

management (RM), organizational behavior and culture

commitment (TMC), organizational behavior and culture

(OBC), continuous improvement (CI), training and

(OBC), and resource management (RM) have correlation

education (TE) and hospital performances (RES).

with process management (PM). Meanwhile, teamwork

and participation (TWP), and training and education (TE)

Data were subjected to comprehensive and detailed

have correlation with continuous improvement (CI).

analysis. Structural Equation Modeling was used to

Then, continuous improvement (CI) has correlation with

determine whether the model is correct based on data

customer focus and satisfaction (CFS). Finally, customer

collection and test its hypotheses.
focus and satisfaction has correlation with hospital

performances (RES).
The analysis of structural model has been simplified by
calculating the value of goodness of fit index using p-
IV. DISCUSSION

value through a software of LISREL for Windows.

The model indicates that in order any hospital can

By using LISREL for Windows, all responses are to be

promote its quality, it should promote OBC. TMC, and

inputted into the program as raw data then the conceptual
model as shown in the figure 1 is drawn into the program
RM in order to promote PM. Then, TWP and TE are
as path diagram. After that the program is run with the
needed to promote CI. By doing this, it can be hoped that
specification inputted in the data to test whether the model
CI will improve PM, in turn, PM would improve CFS and
has a good fit or not by examining the p-value.
then CFS would improve RES.

From the program report, p-value is to be examined. This

V. CONCLUSION
p-value should be greater than 0.05 in order to indicate

that the model has a good fit.

This model suggests that there are at least eight TQM

practices that the hospital should pay attention in order to

III. RESULTS
improve its quality of care. This signifies new principles

that hospitals should pay attention to when improving the

After administering the questionnaire, data are collected
hospital quality of care. These principles cover top
and inputted into the software of LISREL for Windows.
management and commitment (TMC), teamwork and
Then, a SEM's path diagram was drawn and run using the
participation (TWP), process management (PM),
software. The result of this activity is presented in the
customer focus and satisfaction (CFS), resource
following diagram.
management (RM), organizational behavior and culture

(OBC), continuous improvement (CI), training and

education (TE) and hospital performances (RES). In

which for hospital sector, TMC and TWP may play an

important role as catalyst to activate the model so that all

component of the model can work effectively to promote

the quality of the hospital.

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ACKNOWLEDGMENT
[15] Komisi Akreditasi Rumah Sakit, Accreditation Standards

for Hospitals (Standar Akreditasi Rumah Sakit), Republic

The authors would like to thank those who have

of Indonesia, 2011.
participated in the research so that the intended result can
[16] R. Kaplan, Balanced Scorecard: Translating Strategy into

Action, HBS Press, USA, 1996.

be generated especially to Bina Nusantara University

[17] M. Kozak, T. Asunakutlu, and B. Safran, “TQM

under ‘Hibah Binus 2017’, contract number:

Implementation at Public Hospitals: A Study in Turkey”,

020A/VR.RTT.IV/2017.
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Management, 2007, Vol. 2(2), pp. 193–207.

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