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Int. J. Critical Accounting, Vol. 8, No. 1, 2016 79

The impact of lean healthcare practice on healthcare

performance: the mediating role of supply chain
innovation in Malaysian healthcare industry

Nurul Fadly Habidin*

Department of Management and Leadership,
Faculty of Management and Economics,
Universiti Pendidikan Sultan Idris,
35900 Tanjung Malim, Perak, Malaysia
Email: fadly@fpe.upsi.edu.my
*Corresponding author

Nurul Aifaa Shazali, Naimah Ali and

Nur Afni Khaidir
Departments of Accounting and Finance,
Faculty of Management and Economics,
Universiti Pendidikan Sultan Idris,
35900 Tanjung Malim, Perak, Malaysia
Email: nurulaifaa89@yahoo.com
Email: naimah_ali89@yahoo.com
Email: nurafnikhaidir@yahoo.com

Osman Jusoh
Department of Management and Leadership,
Faculty of Management and Economics,
Universiti Pendidikan Sultan Idris,
35900 Tanjung Malim, Perak, Malaysia
Email: osman@upsi.edu.my

Abstract: Recently, organisations must look into quality improvement

initiative tools for improving organisational performance. Effective quality
improvement strategy such as lean management practices has a potential to
provide improvement and effectiveness in healthcare industry. It gives a secure
supply chain innovation and organisational performance among healthcare
industry. This study investigates the relationship between lean healthcare
practice, supply chain innovation and healthcare performance in the Malaysian
healthcare industry. The relationships proposed in the framework were tested
using structural equation modelling (SEM). Further, the result indicates that
lean healthcare practice can assist to excellences in supply chain innovation and
improved healthcare performance. Moreover, supply chain innovation also
gives a positive impact on healthcare performance.

Copyright 2016 Inderscience Enterprises Ltd.

80 N.F. Habidin et al.

Keywords: lean healthcare practice; employee involvement; customer focus;

organisational culture; leadership; supply chain innovation; SCI; healthcare
performance; HP; quality initiative; structural equation modelling; SEM;
healthcare industry.

Reference to this paper should be made as follows: Habidin, N.F.,

Shazali, N.A., Ali, N., Khaidir, N.A. and Jusoh, O. (2016) The impact of lean
healthcare practice on healthcare performance: the mediating role of supply
chain innovation in Malaysian healthcare industry, Int. J. Critical Accounting,
Vol. 8, No. 1, pp.7993.

Biographical notes: Nurul Fadly Habidin is a Lecturer at the Universiti

Pendidikan Sultan Idris, where he teaches industrial management, management
accounting and business engineering. His main research interests are lean, Six
Sigma, quality/business engineering and continuous/performance process
improvement.

Nurul Aifaa Shazali is a Full Masters student of Management Accounting at

the Universiti Pendidikan Sultan Idris. Her main research interest is lean
practice in the healthcare industry.

Naimah Ali is a Full Masters student of Management Accounting at the

Universiti Pendidikan Sultan Idris. Her main research interest is customer
relation management in the healthcare industry.

Nur Afni Khaidir is a Full Masters student of Management Accounting at the

Universiti Pendidikan Sultan Idris. Her main research interest is Six Sigma in
the healthcare industry.

Osman Jusoh is a Lecturer at the Universiti Pendidikan Sultan Idris, where he

teaches entrepreneurship. His main research interests are management and
entrepreneurship.

1 Introduction

Healthcare is one of the important parts that may influence Malaysian economy. It is such
a key part of human welfare that a society and its institutions are willing to perform a
quality service. Healthcare industry was concerned with a quality and efficiency to
deliver a good service to their customers. This is because, the healthcare industry needs to
deal with various problem such as increase demand for service, demographics, waiting
time concern, rising cost of service delivery, government funding constraints, quality
concerns, lack of quality personnel, productivity and also morale issue (Villeneuve,
2011).
Currently, service environment requires an organisation to choose the best quality
initiative for their performance achievement goals. The example of the quality initiative
are lean, Six Sigma, and total quality management. In this paper, lean has been selected
to see the potential in Malaysia healthcare industry. Lean practice (LP) is a tool for
quality improvement which has been used by many organisations. Originally, LP is
designed as a management tool for creating a continuous improvement, improving
activities and process through eliminating waste. Snyder and McDermott (2009) stated
 The impact of lean healthcare practice on healthcare performance 81

that, lean is a common sense strategy to enhance process as well as a technique to

increase process efficiency for problem finding and solving. LP aim to generate more
value with less resource (Grove et al., 2010) for achieving a continuous improvement
with key elements of flow, value and customer pull (Jasti et al., 2012). The success of LP
in the manufacturing allows healthcare industry to adopt this practice for process
improvement. It is suitable for service industry because lean improves the speed of
delivery, quality and flexibility (Snyder and McDermott, 2009). Other than that, LP is
used by healthcare organisation to reduce waste and medical error (Jimmerson et al.,
2005) and give added value for the customer. Reductions in errors can give high benefits
in terms of time, cost, patient welfare, staff motivation and productivity (Breen and
Crawford, 2005).
In order to ensure the success of LP implementation, the healthcare performance (HP)
should be design and measures. It is because; a majority of research on the lean scope is
based on the relationship between implementation of lean and performance (Shah and
Ward, 2003). Performance can be described with various words such as business
performance, organisational performance, firm performance, innovation performance,
quality performance, customer satisfaction (Khaidir et al., 2012). It also can be measured
as the financial aspect, non-financial aspect or both (Kaplan and Norton, 1992). For the
example, Sauza (2009) mentioned performance in LP includes of reducing a wasteful
activity such as interruption, delays and error for improving the flow of patient,
information or goods. Therefore, LP is afforded in achieving an excellent improvement in
performance by evaluating the operation step by step, creates new solutions to improve
operations, increase efficiency, and reduce expenses.
In reality, it is not easy to manage this strategy. It has been a big challenge for many
organisations around the world are not being able to achieve a good performance for this
strategy. DelliFraine et al. (2010) found that there is a significant gap in the LP on
improving a healthcare quality. To fill the gap, the healthcare industry needs to have a
strong combination of lean management strategy and supply chain innovation (SCI) for
achieving a higher improvement in HP. For achieving a multiple excellence in the
process improvement, LP is used to maximise the efficiency in their supply chains and
eliminate non-value-adding activities and costs. In todays competitive environment,
healthcare organisations must be able to deliver high-quality services in shorter cycle
times (Scott, 2011). Waring and Bishop (2010) suggest that technology is able to achieve
a lean success in making both efficiency and effectiveness improvement in healthcare.
This therefore increases value-added processes, which results in improving HP (Scott,
2011). In line with this, to meet high improvement and achievement, the SCI is
introduced to become one of the important tools in healthcare industries as a mediating to
achieve a high performance in the healthcare industry.

2 Literature review

2.1 Lean healthcare practice

In recent years, most studies have emphasised the importance of LP strategy management
within manufacturing industry, public sector and service industry. Generally, LP has been
defined as a set of principles and techniques that drive organisations to continually add
value to the product they deliver by enhancing process steps that are necessary, relevant,
82 N.F. Habidin et al.

and valuable while eliminating those that fail to add value (Dickson et al., 2009). In
addition, LP also can be described with a various name such as lean production, lean
manufacturing, total production system and found in the healthcare industry as a lean
service, lean hospital and lean healthcare. All of them are known as a multi-dimensional
strategy for management practice including just-in-time, quality systems, work teams and
supplier management in an integrated system (Shah and Ward, 2003). Based on Sauza
(2009) survey, they pointed out that LP in healthcare implementation was giving
attention in USA (57%), UK public sector (29%), Australia (4%) and in the international
scenario (9%). Therefore, by using LP tools such as value stream mapping, 5S and visual
controls are beneficial in eliminating waste from processes (Hagg et al., 2007). A service
organisation with global demands of service quality has paid attention to lean
philosophies, principles, tools and technique. Waring and Bishop (2010) addressed that
LP might not be easy to achieve in making both efficiency and effectiveness
improvement in healthcare. Table 1 shows the critical success factor of LP.
Table 1 Critical success factor of LP

Authors Critical success factor of lean practice

Anvari et al. (2010) Management commitment and organisational structure
Holden (2011) Employee involvement, management support and preparedness for
change.
Alaskari et al. (2012) Top management, changes in organisational culture, effective
leadership.
Al-Najem et al. (2012) Top management, leadership, empowerment, training, supplier and
customer relation, departmental relation and teamwork.
Habidin et al. (2012) Leadership, employee involvement, quality information and analysis,
supplier relationship and customer relationship.
Kundu and Manohar Leadership, management support, top management commitment,
(2012) organisational culture, training and skill building, financial capability
and measurement framework.

Based on the reviewing and relevancy in service and healthcare industry, four elements of
LP construct are used in this study. The elements are including leadership, employee
involvement, organisational culture and customer focus.

2.1.1 Leadership
One of the important elements in LP implementation is a leadership. Leadership
involvement can be considered as a main driver for any changes made by the
organisation. Leadership involvement consists of overseeing relationship between
process improvement goals and cost recovery, working together with staff to settle the
problems and barriers, securing buy-in from key stakeholders, manage resource
effectively and coordinating across different departments (Sobek, 2011). Based on
Worley and Doolen (2006) study, the negative impact of LP performance comes from
management team which are did not require participation in LP and failed to provide a
consistent education effort accessible to employee. The previous study also emphasised
the important role of committed leadership and top management in the success of quality
initiative (Abdullah et al., 2008; Achanga et al., 2006; Ali et al., 2013; Habidin et al.,
2012; Khaidir et al., 2013; Worley and Doolen, 2006). According to Mann (2009), the
 The impact of lean healthcare practice on healthcare performance 83

success of LP comes from a leadership practice and behaviour that contribute 80% and
the rest comes from lean tools. Abdullah et al. (2008) also supported that a strong and
committed leadership in an organisation is important for the successful quality initiative.
They suggest that, the leader must focus in term of customer and employee.
Mann (2009) also considers leadership as establishing governance arrangements that
cross divisional boundaries, supporting a thorough, long-term vision of the organisations
value-producing processes, and holding everyone accountable for meeting LP
commitments. Sobek (2011) state that the strong affects on the LP is a leadership
behaviour. This is because; leadership behaviours can help the improvement of both
leaders leadership capability and encourage employees to work better to improve their
commitment and satisfaction (Jing and Avery, 2008). In addition, Aragn-Correa et al.
(2007) revealed that leadership is very useful for organisational learning since it has a
strong and significant influence that emphasises the positive on its performance. More
that, leadership leads to employee effectiveness in work, satisfaction, extra effort and
dependability and positively linked with employee performance (Pradeep and Prabhu,
2011). Therefore, leadership must provide employees with more resources such as time
and material to allow an employee to successfully participate in the LP implementation
(Worley and Doolen, 2006). Besides that, leadership behaviour, skill and attitude may
also influence the work environment towards achieving the organisation objective.

2.1.2 Organisational culture

Developing an organisational culture is critical for the implementation of the LP. This is
because; everyone in the organisation needs to be participating and trained in the lean
concepts, as well as the planning, design, implementation and evaluation of the changes.
A strong organisational culture gives an impact on employee. According to Shahzad
et al., (2012), organisational culture may influence an employees decision and
behaviour. Moreover, Boan and Funderburk (2003) had proved that element in
organisational culture is beneficial to an organisations ability to rapidly changing
business demands, remain competitive and sustain in a high level of performance.
Organisational culture not only enhance the environment of work culture in the LP but
also make an average individual performance thus impact on the employees job
performance (Shahzad et al., 2012). Several empirical studies in healthcare industry
revealed that organisational culture has a positive relationship with HP (Acar and Acar,
2012; Davies et al., 2007; Jacobs et al., 2013). Culture also can make a mindset change
that potential to create a goal in a work environment and lead to a change in attitude,
open minded to assist an organisations goal when implementing LP.

2.1.3 Employee involvement

Employee involvement is also well determined as an important factor in lean healthcare
practice. This is because, employee is the most important aspects should be considered
and as the majority in every organisation. Employee involvement means the involvement
of hospital staff, doctor and nurse in the LP. According to Poksinska (2010) rather than
just taking care of the patience, it is better for all healthcare employees to find out the
ways to handle the patience such as LP. By involving the employee in LP, it does not
only make them more efficient but also improve their service to external customers.
Thus, the employee must include the concepts, tools, and skills required for adapting LP
84 N.F. Habidin et al.

to the patient care environment (Johnson et al., 2012). Therefore, customer involvement
can increase their performance through enhanced quality, improve speed of delivery and
flexibility in meeting ever-changing demands while removing wasteful activities (Snyder
and McDermott, 2009) in turn leads to employee and customer performance (Radnor and
Walley, 2008). Therefore, employees must to be encouraged to find a solution related to
the waste problem, quality delivery and medical error while delivering a service.

2.1.4 Customer focus

Healthcare sector reorganised customer as an important part to achieve their objective
when delivering the service. Habidin et al. (2012) consider customer based on customer
need and satisfaction. Customer focus contributes positively to financial performance
such as lower cost per case, decrease adverse events, higher employee retention rates,
reduced operating cost, decreased malpractice claims and increased market share
(Charmel and Frampton, 2008). Customer focus not only recognised service excellence
but as well help a quality initiative to achieve a business performance. A study by Pinho
(2008) proved that customer orientation had contributed the impact of innovation on
organisational performance. Several studies on quality initiative in healthcare industry
proposed that requirement from customer in searching for organisation performance in
healthcare services (Ali et al., 2013; Habidin et al., 2013; Khaidir et al., 2013; Shazali
et al., 2012). Coinciding with that, healthcare organisations need to be concerned about
their customer because every customer has a different needs and requirement based on
their illness and background.

2.2 Supply chain innovation

The service supply chain described as a business dealing that cover with supply of spare
parts, third party providers, finance, insurance, retail and governmental services (Arlbjorn
et al., 2011). Their whole supply chain has to be made competitive although the
organisations began to understand that it is not sufficient to enhance the efficiency
(Li et al., 2006b). The innovation for better quality service, SC efficiency, and customer
satisfaction based on core competencies is really needed to achieve competitive
advantage (Lee et al., 2011). This is because; competitive advantage can lead to achieve a
business excellence in economic performance, customer satisfaction and loyalty, and
relationship effectiveness (Li et al., 2006). They also addressed that, competitive
advantage includes of providing organisation to have more capabilities compare to its
competitors such as lower price, higher quality, higher dependability and shorter delivery
time in turn increase an overall organisational performance (Li et al., 2006). Healthcare
industry must remain in competitive advantage especially for private hospital to attract
more customers.
However, Jauhar et al. (2012) found that most organisations start to understand and
accept the difficulty of creating an integrated relationship with their suppliers and
customers, as well as all other stakeholders. Therefore, SCI should introduce as a tool for
making SC efficiency and achieve higher performance of SCI. According to Arlbjorn
et al. (2011), SCI has been defined as a change (incremental or radical) within the supply
chain network, supply chain technology, or supply chain process that can take place in a
business function to increase a new value creation for the stakeholder. Innovation in SC
must look deeper among practitioners for achieving an organisational objective. Through
 The impact of lean healthcare practice on healthcare performance 85

quality delivery, SCI is designed to concern with smoothness, economically driven

operations and maximising value for the end customer (Jauhar et al., 2012).
Previous research Patterson et al. (2003) have noted that organisation that has greater
volumes of transaction, more geographically dispersed operation, more supply chain
partners and more information to manage should implement an information technology to
improve organisational performance such as operational efficiency and reduce cost. It is
designed to change SC networks and processes based on reduce non-value adding time
spent and support alternative ways of working (Mehrotra, 2010) and enhance a patient
care (Kumar et al., 2008). Previous studies addressed that technology can assist
organisation to achieve a multiple benefits through SC in terms of reduced cycle times in
supply chains (Jayaram et al., 2000), give advantages in process costs, lead-times, and
more frequent orders thus reduced inventory costs (Trkman and Groznik, 2006).
Therefore, it assists a significant role in improving healthcare supply chains (De Vries
and Huijsman, 2011). Letangule and Letting (2012) found that employee training,
immaterial motivation and process control have positive effects on technological
innovation. In overall, the technological innovation in SC hospital can give triple benefits
in terms of improve productivity, better integration, reduce transaction time, reduce cycle
time, increase customer service and reduce supply costs.
Besides, technological innovation supply chain management gives a strong emphasis
on the integration of process (De Vries and Huijsman, 2011). Healthcare managers are
starting to look at an innovation as a ways for contain costs without sacrificing quality.
To obtain a reduction in costs, hospitals manager should to evaluate their activities and
associated costs, and eliminate non-value-added activities (Kumar et al., 2008). They are
consists on healthcare physical products such as pharmaceuticals, medical devices, health
aids and flow of patients (Su et al., 2011). Kumar et al. (2008) also reported that redesign
in process SC in Singapore hospital provides a more efficient solution with fewer staff
and obtain in a cost reduction of 60%.

2.3 Healthcare performance

The era of globalisation, most of the organisation around the world are try to adopt a
variety of quality initiatives for improve their performance. LP is one of the popular
quality initiative was adopted in most of healthcare organisation for improve their service
performance. Most of the healthcare organisation realises that in order to assist best
results in this quality initiatives, LH practice must to be assessed for its achievement.
Historically, the organisation always measure performance in some ways as a benchmark
for the success by implementing a popular improvement initiative. Performance
measurement can be used as an instrument to promote the achievement of health system
objectives and to measure and control the quality and efficiency of care-providing teams
(van der Geer et al., 2009).
A number of previous studies have measured LP performance using a financial and
non-financial performance for achieving business objective. The main objective of LP is
primarily to optimise cost, quality and customer service performance (Alsmadi et al.,
2012). Therefore, financial performance is one of the measurements in HP. Li and Collier
(2000) defined financial hospital performance as an operating profit, return on assets and
return on investment. In the other hand, LP can influence employee and work
environment. According to Poksinska (2010), by adopting an LP management strategy,
86 N.F. Habidin et al.

employee can enhance attention to waste and more productive attitude to solve the
problem. Furthermore, LP outcome produces a significant effect on productivity, speed
and quality (Radnor and Walley, 2008). Thus, it can give a multiple benefit on patient
performance. For example, reduce a waiting time for patients and optimised a patient
satisfaction and loyalty with the quality of care they will receive. In line with the above
literature, three performance measurements such as financial performance, customer
performance and employee performance will be used to measure HP.

3 Research hypotheses

The LH practice framework is built on this study to propose that LP has a positive and
direct impact on the overall HP. LP is expected to increase the healthcare financial
performance, improve customer performance and SCI performance efforts and to
enhance employee performance. To understand the relationship of each LP construct on
HP in Malaysian healthcare industry, the following hypotheses were set up to be tested.
Abdullah et al. (2008) reported that management commitment, customer focus, and
employee involvement are significantly has a relationship to organisational performance.
The findings also revealed that this factor gives a high impact on quality improvement
practice and also gives a positive significant effect on organisational performance. They
are expected to improve HP through financial, customer and employee performance.

3.1 Relationship between LH and HP

Most of the research in lean scope is focused on LP and its performance. Prior studies
have indicated that implementing LP in the healthcare industry has a major impact on
HP. Alsmadi et al. (2012) reported that there a positive relationship between LP and
organisational performance in both manufacturing and service sector. Prior studies
indicated that LP allowed employee to find ways to improve the process (Radnor and
Walley, 2008), more empowered to make changes and improve care (Dickson et al.,
2009) thus enhance a patient safety (Gowen et al., 2006). A study by Koning et al. (2006)
found that LP can control the increasing cost for healthcare, improve quality and
providing better service quality in healthcare. However, Erfan (2010) in their study on
healthcare sector in Libya revealed that LP had achieved significant improvement in the
overall performance which allowed be more productive, flexible, smooth and with high
quality service.
Moreover, from the Institute of Healthcare Improvement, two healthcare
organisations in the USA showed positive impact on productivity, cost, quality and
timely delivery of services after applying LP through organisation. A LP also supports a
positive relationship in business financial performance such as profitability, market share,
return on sale and return on asset (Agus and Hajinoor, 2012). Collar et al. (2012) found
that application of LP in operating room and surgical service increase the efficiency and
morale in the operating room, sustained resident education, and provide financial gains
when scaled to an entire academic surgical suite. In addition, the analyses showed that in
terms of cost reduction and service improvements, LP can be used by the public sector to
be more effective if the assumptions for implementing LP exist (Arlbjorn et al., 2011).
Therefore, based on previous study, H1 was proposed:
 The impact of lean healthcare practice on healthcare performance 87

H1 There is a positive and direct significant relationship between LP and HP in

Malaysian healthcare industry.

3.2 Relationship between LH and SCI

LP has an effect on the SCI efficiency which eliminates waste, non-value adding
activities and costs along the chain. Hong et al. (2010) has presented the relationship
between LP and mass customisation performance. Their finding showed that LP has a
direct significant relationship with mass customisation performance (E-Commerce use,
E-Procurement, ERP use). So and Sun (2011) who makes an examination of relationship
between electronic-enabled supply chain integration and the adoption of lean have
identified that electronic-enabled supply chain integration positively influences the
perceived relative advantage of LP and consequently leads to its long-term. Therefore,
this discussion discovers that the LP has a strong positive relationship with the SCI
efforts. Therefore, based on previous study, H2 was proposed:
H2 There is a positive and direct significant relationship between LP implementation
and SCI in Malaysian healthcare industry.

3.3 Relationship between SCI and HP

Previously, innovation has positively and significantly influenced on organisational
performance (Aragn-Correa et al., 2007; Projogo and Sohal, 2006). SCI is an integral
part of providing a competitive advantage and essential for organisational sustainability.
Clearly, result by Li and Collier (2000) support this assumption that adopting information
technology in hospital has a significant direct relationship to hospital financial
performance. A few researchers on SCI also found that there are a significant relationship
of SCI and organisational performance. Based on Lee et al. (2011) finding, they revealed
that SCI had support for achieving an efficient and have a direct relationship on
organisational performance in the healthcare industry.
The research conducted by Breen and Crawford (2005) concluded that by using
e-commerce such as electronic data interchange (EDI) in pharmacy hospital achieved a
multiple benefits for HP included of better supplier relationships, improved accuracy of
orders, reduction in costs, savings in time, improved handling of invoices and notification
of products being out of stock. They findings suggest that technological innovation in
supply chain hospital is positively related to employee performance. This is because
technology can help employees to improve productivity and lead to an enriched working
environment by replacing a tedious office task, replace repetitive and labour-intensive
tasks such as repeat ordering and faxing and ensure that experienced staff is used in a
more productive manner (Breen and Crawford, 2005). Prior study also found that there
are a strong relationship between technological innovations and performance (Letangule
and Letting, 2012; Li et al., 2006b). Therefore, based on previous study, H3 was
proposed:
H3 There is a positive and direct significant relationship between SCI and HP in
Malaysian healthcare industry
88 N.F. Habidin et al.

3.4 Relationship between LP, SCI, and HP

Several previous studies of quality initiatives and performance focused on a number of
mediating variables which consists competitive advantage (Li et al., 2006b), innovation
(Mushtaq et al., 2011; Pinho, 2008), strategic control system (Habidin, 2012), customer
orientation (Pinho, 2008). Most of the quality initiative effort adopts innovation as a
mediating to achieve performance. An example, Mushtaq et al. (2011) explored the
relationship TQM, innovation and organisation financial performance through
non-financial measures. A study by Hong et al. (2010) investigated the effects of specific
supply chain information technologies (IT) for e-commerce, e-procurement, and
enterprise resource planning (ERP), when implementing LP to achieve mass
customisation performance. As a result, they found that there are positive relationship
between LPs and mass customisation performance (E-Commerce use, E-Procurement,
ERP use). Therefore, in the case of this study, LH practice is significant and intermediate
between SCI and HP relationship. Therefore, based on previous study, H4 was proposed:
H4 The impact of LP implementation on HP increases with a mediating of SCI in
Malaysian healthcare industry.

3.5 A proposed research model

LP and SCI are two driving forces of todays healthcare industry excellent. However, the
previous research based on the relationship between LP, SCI and HP in healthcare
industry is hard to find. In line with that, this study is attempts to fill this gap. To
understand the relationship between LP, SCI, and HP in Malaysia healthcare industry, the
following hypotheses will be used and tested. Figure 1 shows the proposed research
model.

Figure 1 A proposed research model

FP
LP
H1
HP
OC LHP CP

EI H2 H4
EP
CF H3
SCI

TI PI

Notes: LHP = lean healthcare practice, LP = leadership, OC = organisational culture,

EI = employee involvement, CF = customer focus, SCI = supply chain innovation,
TI = technological innovation, PI = process innovation, HP = healthcare
performance, FP = financial performance, CP = customer performance,
EP = employee performance.
 The impact of lean healthcare practice on healthcare performance 89

4 Methodology

Healthcare industry around the world has implemented process improvement strategies
from the manufacturing industry for achieving a service excellence. Therefore, the study
is going to use LP as quality initiatives for healthcare industry. LP was chosen as a
strategic method because it gained popularity in the manufacturing and service sector as a
business excellence for achieving a higher performance. This study uses a quantitative
survey in the Malaysian healthcare industry. The population of this study comprised on
healthcare industry in Malaysia. So, the samples were selected from the list of healthcare
industry in Malaysia. Healthcare industry was chosen because it is struggling to improve
operational efficiency, quality of care and enhancing process efficiency.
By adopting this study, a set of questionnaire are created to collect the data. A set of
survey questionnaire was carefully designed to ensure most of the issues concerning LH
practice, SCI and HP were included. To ensure the accuracy and the relevancy all the
items, the final draft of the questionnaire was sent to the experts involving international
university academicians, consultant, as well as healthcare practitioners. Then, the
questionnaire that has been made will distribute to the manager in Malaysian hospital.
The preliminary data and the descriptive statistics which include the means, standard
deviations, and frequencies are analysed using the statistical Package for the Social
Sciences (SPSS) version 17. Structural equation modelling (SEM) technique was used to
identify the causal interrelationship between the different constructs of the suggested
model of the research and utilised to perform the required statistical analysis of the data
from the survey. According to Agus and Hajinoor (2012), SEM allows investigating
simultaneous linkages and relative strength of integration among variables. Exploratory
factor analysis, reliability analysis and confirmatory factor analysis to test for construct
validity, reliability, and measurements loading were performed. Having analysed the
measurement model, the structural model was then tested and confirmed. SEM using
AMOS 20.0 will use to test the measurement model.

5 Conclusions

This study investigated the structural relationship between LP, SCI and HP in Malaysian
healthcare industries. To meet a high demand on service quality, Malaysian healthcare
industry must implement a quality management initiative to improve their performance
for both financial and non-financial performance. The implementation of management
improvement initiative on the scope indicated that by implementing LP and SCI was very
applicable in a process and work setting in the healthcare industry. This initiative was
very suitable and effective to be used as a ways to reduce medical error, escalating costs,
and significant to achieve a great achievement in the healthcare industry. It is also
beneficial for healthcare industry since LH practice and SCI can help to upgrade the
services. It is because, LP and supply chain are the most important drivers for the
healthcare industry to improve their performance. However, based on a review of
academic and practitioner literature on the relationship of LH practice and SCI it is hard
to explore in order to achieve the HP. Besides, the attention of the combination of LP and
supply chain approach in evaluating the efficiency and effectiveness in healthcare
industry is still limited. Therefore, this study assists hospital managers, policy maker to
90 N.F. Habidin et al.

find the best quality management for achieving their best performance. On top of that, the
contribution for academic researchers and practitioners is to give essential guidelines for
healthcare industry to implement LP, SCI to improve HP.

Acknowledgements

The researches would like to acknowledge the Ministry of Higher Education (MOHE) for
the financial funding of this research thought Exploratory Research Grant Scheme
(ERGS), and Research Management Centre (RMC), UPSI for Research University Grant
(RUG).

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