Expert Answer:Quest Laboratory Human Resource Managmenet Discuss

  

Solved by verified expert:If you were to begin working at “Quest,” what adjustments would you need to make in your expectations of how work is managed and how supervisors behave? Do you think you would like to work at “Quest Diagnosis Lab”? Why or why not?Please attached Article to answer question
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May 1, 2017
Quest Diagnostics (A): Improving Performance at the Call
Centers
Zeynep Ton and Cate Reavis
We were caught in a negative feedback loop. We were so focused on productivity and getting the next
call answered instead of thinking about how I can better assist this caller so it decreases the amount
of calls. There wasn’t time to think about if there was a better way.
— Jeremiah Kvas, Supervisor, National Customer
Service, Lenexa, Kansas
MaryAnn Camacho’s first day at Quest Diagnostics (Quest), the leading provider of diagnostic
services and solutions in the United States, was the first Monday in July 2015 and it was a whirlwind.
As she walked through the front door of the company’s Lenexa, Kansas, call center, she was struck
by all the people milling about. They were clearly waiting for something and most seemed nervous.
She soon learned that they were brand new customer service representatives (reps)—over 50 of
them—there for their first day of training. She was puzzled. This location only had 400 employees—
and 50 were brand new?
Camacho had been hired as the Executive Director of Quest’s National Customer Service (NCS)
organization. She would be overseeing two locations—one in Tampa, Florida, and one in Lenexa—
plus roughly 250 reps working remotely from home. Camacho’s position was new to Quest. The
company’s customer service function had been consolidated in 2013 when its 20 regional customer
service centers were pared down to two.
The consolidation process had been difficult and Quest’s leadership, most notably Jim Davis,
Executive Vice President of General Diagnostics, and Scott Jeffers, Vice President of Lab Operations
and Operational Excellence, knew that the NCS had to perform better. Labor costs were too high and
This case was prepared by Professor Zeynep Ton and Cate Reavis, Associate Director, Curriculum Development.
Copyright © 2017, Zeynep Ton and Cate Reavis. All rights reserved. This work is licensed under the Creative Commons
Attribution-Noncommercial-No Derivative Works 3.0 Unported License. To view a copy of this license visit
http://creativecommons.org/licenses/by-nc-nd/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San
Francisco, California, 94105, USA.
QUEST DIAGNOSTICS (A): IMPROVING PERFORMANCE AT THE CALL CENTERS
Zeynep Ton and Cate Reavis
employees—especially reps—were not staying on the job for long. Even worse, perhaps, customers
were waiting over two minutes on the phone just for someone to answer, reps were often unable to
give the right information in one call, and the company was losing key customers. “When patients
have a bad experience,” explained Davis, “they complain to their doctors and then the doctors, if they
hear five patients who had a bad experience at Quest, they’re going to flip their labs to the other guy.”
Camacho understood the challenges she faced. She knew Quest needed to transform its operations at
the NCS. The question was: where to start?
Company Background
Quest Diagnostics was founded in 1967 as the Metropolitan Pathology Laboratory in New York City.
It was renamed Quest Diagnostics in 1996, the year it went public.
Between 1996 and 2012, Quest grew considerably through more than a dozen acquisitions across the
United States. Acquired labs continued to operate autonomously, purchasing their own equipment,
following their own operational practices, and serving customers through their own call centers.
Several of the acquisitions were outside of Quest’s core laboratory business.
Quest enjoyed top-line growth as a result of its acquisitions and, starting in 2000, its stock began an
upward trajectory (Exhibit 1). But by 2008, its core laboratory business began to falter. Quest began
losing business to its top competitor, Laboratory Corporation (LabCorp), most notably when LabCorp
won over one of Quest’s key customers, UnitedHealthcare Insurance.
A new CEO, Steve Rusckowski, was hired in 2012 to direct a turnaround. An MIT Sloan graduate,
Rusckowski had served as CEO of Philips Healthcare, where revenue grew 50% during his six-year
tenure. At Quest, Rusckowski helped articulate the firm’s vision, goals, and strategy. The vision was
to empower better health with diagnostic insights. The three goals were (a) helping create a healthier
world, (b) building value, and (c) creating an inspiring workplace. The five-point strategy was to:
• Refocus on diagnostic information services;
• Drive operational excellence;
• Restore growth;
• Simplify the organization to drive growth and productivity; and
• Deliver disciplined capital deployment and strategically aligned accretive acquisitions.
The new strategy emphasized “Everyday Excellence”; that is, what we do everyday matters (Exhibit
2). The importance of the work Quest did was not lost on Rusckowski. As he told one journalist,
“While the diagnostic industry represents a mere 2% of healthcare costs, it provides information for
how 70% of healthcare decisions are made.”1
1
Priyanka Dayal McCluskey, “Five Things You Should Know about Steve Rusckowski,” Boston Globe, April 5, 2015.
May 1, 2017
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QUEST DIAGNOSTICS (A): IMPROVING PERFORMANCE AT THE CALL CENTERS
Zeynep Ton and Cate Reavis
Quest in 2015
With sales of $7.4 billion in 2014, Quest was the largest diagnostic-testing company by revenue in the
United States (Exhibit 3). Its services annually touched 50% of the physicians and 50% of the
hospitals in the US, as well as 30% of adult Americans. Roughly 20% of the revenues came from
patients, whose share had only been 5% in the mid-2000s.2 The remaining came from physician
offices, hospitals, insurance companies, employers, and other clients. Having contracts with
Medicare, Medicaid, and large insurance companies was crucial. If a patient had Aetna insurance and
Quest had a contract with Aetna, the patient’s doctor would likely send him or her to Quest for lab
work.
Quest offered over 3,000 diagnostic tests, ranging from simple blood tests to gene-based and
molecular testing, in its large network of regional and esoteric labs3 and in over 2,000 patient service
centers (Exhibit 4). It also offered a number of healthcare solutions for employers, including drug
testing, employee wellness services, and risk assessment services for the life insurance industry. It
employed 43,000 people, 74% of whom were frontline workers (Exhibit 5).
Competition
Quest’s largest commercial competitor was LabCorp, with 36,000 employees, 39 labs, and 1,750
patient service centers operating in 60 countries and with $6 billion in revenue and $910 million in
operating income. Quest also competed with small regional and local esoteric laboratories.
Increasingly, however, it competed with hospital-affiliated and physician-office laboratories. Despite
the added cost, more and more medical establishments were bringing testing inhouse to have more
control over specimen samples and quality of patient care.
Value Proposition
Quest offered a one-stop shop for diagnostic tests at prices that were lower than what hospitals
charged for inhouse testing. Low prices and transparency in pricing had become more important
since patients were increasingly paying out of pocket for tests (due to high deductibles or because
some tests were not covered by insurance) and were getting smarter about their options. The
company’s extensive network also made it convenient to collect and deliver specimens across the US.
Quest’s IT solutions made doing business with it seamless for both medical professionals and
patients. Physicians could use Care360, Quest’s electronic medical record portal, to order tests and
access the results and to access information about patient history that enabled them to make better
decisions about what tests to order. Physicians who needed access to the results of tests they had not
2
Patients were a relatively new customer group for Quest, resulting from a 2014 ruling granting them the right to access medical test results.
https://www.federalregister.gov/documents/2014/02/06/2014-02280/clia-program-and-hipaa-privacy-rule-patients-access-to-test-reports.
3
An esoteric lab analyzes rare substances and molecules outside the purview of routine clinical lab tests.
May 1, 2017
3
QUEST DIAGNOSTICS (A): IMPROVING PERFORMANCE AT THE CALL CENTERS
Zeynep Ton and Cate Reavis
themselves ordered could use QuestConnect. Through MyQuest, the patient portal, patients could
access their own tests results.
Specimen Lifecycle
The process for diagnostic tests began with physician-ordered specimen collection (Exhibit 5).
Depending on the medical establishment and a patient’s insurance, patients either had specimens
collected at the physician’s office or at a Quest patient service center. Approximately half of all
specimen samples were taken at patient service centers and half in physician offices or hospitals.
Each specimen was kept in a bar-coded glass tube (Exhibit 6).
Quest’s logistics operation, which included 3,400 vehicles and 26 planes, was responsible for
collecting samples from physicians’ offices, hospitals, and Quest patient service centers and
delivering them to the company labs where they were tested. Quest’s lab operations team included
650 medical doctors and PhDs. Once testing was complete, the diagnostic team uploaded the results
to the patient and physician portals.
Completed work orders were sent to Quest’s revenue services group, which was responsible for
billing the medical office clients, insurance companies and for billing patients for whatever was not
covered. This group processed 210 million bills annually, of which 50 million were sent to patients.
About 30% of the time, patients did not pay their bills at all.
Quest’s two National Customer Service centers (NCS) communicated with physicians, known
internally as “clients,” and with patients throughout the specimen life cycle. Major services offered
through the centers included lab results, available online, via fax, and by phone; personal notification
of lab results with priority; lab test additions online, via fax, and by phone; Care360, QuestConnect,
and MyQuest features and live help; complaint initiation, escalation, and resolution; receiving and
routing employee kudos; and routing to other departments such as billing.
The NCS organizations were open 24x7x365 and averaged 55,000 calls a day, or 20 million calls a
year. Seventy percent were inbound requests for test results. This worried Davis: “We segment our
calls and the largest number are still what we call results-only calls. Those are the ones we’re really,
really trying to eliminate. Because my own belief is that if the customer has to pick up the phone—I
call it a failure on our part. It’s a defect. If the customer has to call us to get results, it’s a defect.”
Outbound calls were limited to communicating critically important, time-sensitive test results—
known as critical values—to physicians.
An Obstacle to Operational Excellence: Employee Turnover
To drive operational excellence, Quest developed the Quest Management System (QMS), which
included the company’s own approaches to process management, project management, change
May 1, 2017
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QUEST DIAGNOSTICS (A): IMPROVING PERFORMANCE AT THE CALL CENTERS
Zeynep Ton and Cate Reavis
management, and continuous improvement. QMS included modules for various operational
approaches such as process mapping and standardization, root-cause problem solving, and frontlinedriven process improvement.
In 2013, Rusckowski hired Jim Davis to lead Quest’s operations. Davis had spent more than a decade
in GE’s aircraft engine and medical device divisions. A graduate of MIT Sloan, Davis also had an
applied math degree from MIT and an aeronautical engineering degree from the University of
Michigan. At MIT Sloan, where Davis had been exposed to lean production systems, he internalized
the importance of standardizing and improving processes to improve quality, speed, and costs. Under
his leadership, Quest centralized procurement and began standardizing patient services, specimen
processing, and logistics.
One of the problems Davis identified as a key to improvement was high employee turnover across the
network, particularly in the customer-facing groups: “We had high employee turnover in our patient
services centers. We also had it in logistics, which, by the way, is customer-facing… Our logistics
people go to doctor’s offices, pick up specimens, and they see the staff. They build relationships and
those relationships matter.” Turnover was especially problematic for the NCS.
Davis’s team found that taking into account the cost of recruiting, onboarding, training, and time to
full productivity, turnover was costing Quest between $7,000 and $10,000 per departing employee.
With thousands of people leaving every year, that was a $50-70 million annual loss. Not only that, but
the constant churn was undermining customer service. Once Davis’s team quantified the cost of the
problem, Davis noted “It didn’t take a lot to get Steve’s and the head of HR’s attention on this.”
Spring 2015: Improve National Customer Service (NCS) Performance Now!
In the spring of 2015, Davis hired Scott Jeffers as VP of Lab Operations and Operational Excellence.
Jeffers recalled his first week: “Jim said ‘Welcome to Quest. Your number-one priority is to fix our
call centers, so get after it.’”
In 2013, the call centers had been consolidated from 20 regional customer service centers—which had
been co-located with Quest labs—into two: one in one in Lenexa, Kansas, and one in Tampa, Florida.
The NCS suffered from high labor costs, largely due to the low productivity of inexperienced reps.
Sixty percent of reps left in their first year, costing Quest up to $10.5 million a year. Every day, Davis
received calls from members of his sales team who were furious that they had lost a customer because
the customer couldn’t get anyone at the NCS to answer the phone or, when they did, the
representative couldn’t answer the question and transferred them to someone else. (In fact, some
clients would immediately ask to speak to a supervisor, assuming that the rep would not be able to get
them the information they needed quickly.)
May 1, 2017
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QUEST DIAGNOSTICS (A): IMPROVING PERFORMANCE AT THE CALL CENTERS
Zeynep Ton and Cate Reavis
The NCS had been operating without a leader in place for six months. The head of logistics had been
serving as an interim head. To fill the position, Davis and Jeffers recruited MaryAnn Camacho, whom
they both knew from their days at GE Healthcare. (See Exhibit 7 for bios.) The first thing Davis
wanted from Camacho was to have the phones answered quickly and by the right people.
Nationalizing Customer Service in 2013
The Lenexa and Tampa locations were chosen primarily for their low cost of living and the fact that
each had an established call center industry. Tampa already had a Quest regional call center. Apart
from reducing costs, the consolidation would enable Quest to invest in systems to improve call center
performance. The regional call center reps had been using a system called the Quest Laboratory
System (QLS), which was a system for the lab but which had a module—though not a user-friendly
one—for client services. But each regional location had made its own modifications to QLS: there
was a Great Lakes QLS and a California QLS, for example, and they did not speak to one another.
Quest encouraged the reps in the 20 regional centers to move to either Tampa or Lenexa; turnover at
the regional call centers had only been in the low teens, so many of the reps were highly experienced.
Because customer service centers were co-located with the labs, these reps felt themselves to be part
of the labs’ work culture. In fact, some of them had come from the lab side so they already had the
technical background. However, most chose not to move. Moreover, when they found out that Quest
was planning to consolidate, they began looking for new jobs, which only increased the haste with
which Quest had to consolidate the increasingly understaffed regional centers. The rush to consolidate
also left the company without enough time to create one simple system for all the reps to use when
answering calls.
Lenexa would eventually employ 400 call reps and 25 supervisors and serve the West, Midwest, and
North regions. Tampa had 200 call reps and 14 supervisors serving the East, South, and Southwest
regions. Each supervisor led a team of up to 15 reps. Those teams were known internally as “pods.”
Each pod served either clients or patients. Client pods served a specific region whereas patient pods
served the entire United States. In addition, there were approximately 250 highly experienced reps
and 10 supervisors who worked remotely from home. The average tenure of that group was 14 years
and during the consolidation process, it was they who kept the customer service operation “above
water.”
Building the NCS Workforce
Hiring In 2014, with consolidation underway, the NCS was under pressure to hire a full complement
of reps in Lenexa. At Tampa, 50% of the reps and supervisors came from the regional call center
there. Supervisors, who did most of the hiring, looked for people comfortable with answering over
100 calls per shift, multitasking with different screens, using systems to find information, and reading
and communicating policies and procedures—in other words, people with call center experience.
They hired many of the new reps from the call centers of other companies, such as MCI and AT&T.
May 1, 2017
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QUEST DIAGNOSTICS (A): IMPROVING PERFORMANCE AT THE CALL CENTERS
Zeynep Ton and Cate Reavis
A few of the supervisors had come from the former regional call centers, but most were new to the
company.
Training New reps spent six weeks in the classroom learning medical terminology, how to find
information on the various diagnostic tests that Quest provided, how to navigate the company’s
technology system, and how to handle inbound and outbound calls from physicians, hospitals, and
patients. They were also trained on the specific processes and technology systems used in their
particular region; not all regions used QLS and many lab processes were not standardized.
After the classroom training, each new rep was supposed to “nest” with an experienced colleague to
get hands-on coaching in customer service. One week each was devoted to inbound and outbound
calls. But if the call center was understaffed, the nesting didn’t always happen. Reps had to pass a
test at the end of their training to demonstrate their mastery of regulation required competencies and
were re-tested after six months on the job to ensure that the training had stuck. Reps who did not pass
had to do a remedial training. On average, it took a rep 90 days after training to become productive.
Roughly 80% of the company’s training hours were spent onboarding new reps. The rest were spent
uptraining; that is, giving reps additional knowledge so that they could complete any call without
having to transfer it to someone else.
Compensation and performance management Starting pay was $13/hour, slightly higher than what
other call centers paid. After their first year, reps who performed well received a 2.5% raise. They
were measured on “speed to answer”—the average amount of time a caller had to wait on hold—and
on calls completed per hour. Attendance was also important. A rep with too many “occurrences”—
that is, an absence of up to five consecutive days—was fired. Supervisors were salaried employees
and were measured on the productivity of their team.
Working at the NCS
Reps sat with their pods, forming a square around their supervisor and a technical rep, who both had a
360-degree view. A typical day included answering up to 1 …
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