The competitive priorities are interrelated, with excellent quality laying the foundation for performance in the other competitive priorities, and with targeted improvement initiatives. Taking an integrated approach, the book puts the tools and techniques of operations improvement in the context of healthcare so that readers learn how to increase the effectiveness and efficiency of tomorrow's healthcare system.
From the Preface: Collectively, the chapters in this book address application domains including inpatient and outpatient services, public health networks, supply chain management, and resource constrained settings in developing countries. Many of the chapters provide specific examples or case studies illustrating the applications of operations research methods across the globe, including Africa, Australia, Belgium, Canada, the United Kingdom, and the United States.
Chapters review operations research methods that are most commonly applied to health care operations management including: queuing,. Hospitals are large and complex organizations, yet they function largely without sophistication and technology inherent in other large businesses.
In a time when well over half of all hospitals report negative operating margins, driving down costs through logistics and the supply chain is one of the most important yet overlooked areas for cost improvements. Hospitals and other healthcare systems spend more time and money on their supply chain than on physicians and doctors salaries combined.
This is one of the. This book examines the design of two care pathways to establish how key principles associated with systems thinking, quality improvement, and supply chain management can improve the design of these services. It incorporates the features and functions of Microsoft Excel where appropriate in its coverage of supply chain strategy, process design and analysis of health care operations, managing health care operations quality, and planning and controlling health care operations.
The book illustrates leading edge concepts and techniques such. This Briefs Series book illustrates in depth a concept of healthcare management engineering and its domain for hospital and clinic operations. Predictive and analytic decision-making power of management engineering methodology is systematically compared to traditional management reasoning by applying both side by side to analyze 26 concrete operational management problems adapted from hospital and clinic practice.
The problem types include: clinic, bed and operating rooms capacity; patient flow; staffing and scheduling; resource allocation and optimization; forecasting of patient volumes and seasonal. Today's challenging healthcare landscape--with its complex web of reimbursement systems, workforce challenges, and governmental regulations--requires a platform for addressing issues and trends. Savvy healthcare managers know how to integrate and deploy strategies to produce significant operational improvements and increase effectiveness throughout an entire healthcare enterprise.
Healthcare Operations Management explores the core principles of effective organizational operations and explains how they can be used to tackle healthcare-specific challenges, such as gaps in quality of care. Through an integrated approach, the authors. We follow with a history of the field of management science and operations improvement chapter 2.
Next, we discuss two of the most influential environmental changes facing healthcare today: evidence-based medicine and value-based purchasing, or simply value purchasing chapter 3.
In part II, Setting Goals and Executing Strategy, chapter 4 highlights the importance of tying the strategic direction of the organization to operational initiatives. This chapter outlines the use of the balanced scorecard technique to execute and monitor these initiatives toward achieving organizational objectives.
Typically, strategic initiatives are large in scope, and the tools of project management chapter 5 are needed to successfully manage them. Indeed, the use of project management tools can help to ensure the success of any size project. Strategic focus and project management provide the organizational foundation for the remainder of this book. The next part of the book, Performance Improvement Tools, Techniques, and Programs, provides an introduction to basic decision-making and problem-solving processes and describes some of the associated tools chapter 6.
Most performance improvement initiatives e. Good decisions and effective solutions are based on facts, not intuition. Chapter 7 provides an overview of data collection processes and analysis techniques to enable fact-based decision making. Chapter 8 builds on the statistical approaches of chapter 7 by presenting the new tools of advanced analytics and big data. Six Sigma, Lean, simulation, and supply chain management are specific philosophies or techniques that can be used to improve processes and systems.
The Six Sigma methodology chapter 9 is the latest manifestation of the use of quality improvement tools to reduce variation and errors in a process. The Lean methodology chapter 10 is focused on eliminating waste in a system or process. The fourth section of the book, Applications to Contemporary Healthcare Operations Issues, begins with an integrated approach to applying the various tools and techniques for process improvement in the healthcare environment chapter We then focus on a special and important case of process improvement: patient scheduling in the ambulatory setting chapter Supply chain management extends the boundaries of the hospital or healthcare system to include both upstream suppliers and downstream customers, and this is the focus of chapter The need to bend the healthcare cost inflation curve downward is one of the most pressing issues in healthcare today, and the use of operations management tools to achieve this goal is addressed in chapter Part V, Putting It All Together for Operational Excellence, concludes the book with a discussion of strategies for implementing and maintaining the focus on continuous improvement in healthcare organizations chapter Many features in this book should enhance student understanding and learning.
Most chapters begin with a vignette, called Operations Management in Action, that offers a real-world example related to the content of that chapter. Throughout the book, we use a fictitious but realistic organization, Vincent Valley Hospital and Health System, to illustrate the various tools, techniques, and programs discussed.
Each chapter concludes with questions for discussion, and parts II through IV include exercises to be solved. We include abundant examples throughout the text of the use of various contemporary software tools essential for effective operations management. Readers will see notes appended to some of the exhibits, for example, that indicate what software was used to create charts, graphs, and so on from the data provided. Healthcare leaders and managers must be experts in the application of these tools and stay current with the latest versions.
Just as we ask healthcare providers to stay up-to-date with the latest clinical advances, so too must healthcare managers stay current with basic software tools. A number of people contributed to this work. Dan McLaughlin would like to thank his many colleagues at the University of St. Thomas Opus College of Business. Specifically, Dr. Ernest Owens provided guidance on the project management chapter, and Dr. Michael Sheppeck assisted on the human resources implications of operations improvement.
Dan would also like to thank the outstanding professionals at Hennepin County Medical Center in Minneapolis, Minnesota, who provided many of the practical and realistic examples in this book. They continue to be invaluable healthcare resources for all of the residents of Minnesota. John Olson would like to thank his many colleagues at the University of St.
Attributing much of his understanding of healthcare analytics to working with the highly professional staff of the MHA, he wishes to acknowledge Rahul Korrane, Tanya Daniels, Mark Sonneborn, and Julie Apold now with Optum as true agents for change in the US healthcare system. The dedicated employees of the Veterans Administration have helped John embrace the challenges that confront healthcare today—in particular Christine Wolohan, Lori Fox, Susan Chattin, Eric James, Denise Lingen, and Carl Marty Young of the continuous improvement group, who are helping to create an organization of excellence.
John acknowledges their dedication to serving US veterans and the amazing, high-quality service they deliver. John and Dan also want to thank the skilled professionals of Health Administration Press for their support, especially Janet Davis, acquisitions editor, and Joyce Dunne, who edited this third edition.
Finally, this book still contains many passages that were written by Julie Hays and are a tribute to her skill and dedication to the field of operations management. This book's Instructor Resources include PowerPoint slides; an updated test bank; teaching notes for the end-of-chapter exercises; Excel files and cases for selected chapters; and new case studies, for most chapters, with accompanying teaching notes.
Each of the new case studies is one to three pages long and is suitable for one class session or an online learning module. For the most up-to-date information about this book and its Instructor Resources, visit ache. This book's Instructor Resources are available to instructors who adopt this book for use in their course. For access information, please e-mail hapbooks ache. Case studies, exercises, tools, and web links to resources are available at ache. The challenges and opportunities in today's complex healthcare delivery systems demand that leaders take charge of their operations.
A strong operations focus can reduce costs, increase safety—for patients, visitors, and staff alike—improve clinical outcomes, and allow an organization to compete effectively in an aggressive marketplace. In the recent past, success for many organizations in the US healthcare system has been achieved by executing a few critical strategies: First, attract and retain talented clinicians.
Next, add new technology and specialty care services. Finally, find new methods to maximize the organization's reimbursement for these services. In most organizations, new services, not ongoing operations, were the key to success. However, that era is ending. Payer resistance to cost increases and a surge in public reporting on the quality of healthcare are forces driving a major change in strategy. Although portions of this law may be repealed or changed, the general direction of health policy in the United States has been set.
To succeed in this new environment, a healthcare enterprise must focus on making significant improvements in its core operations. This book is about improvement and how to get things done. It offers an integrated, systematic approach and set of contemporary operations improvement tools that can be used to make significant gains in any organization. These tools have been successfully deployed in much of the global business community for more than 40 years and now are being used by leading healthcare delivery organizations.
This chapter outlines the purpose of the book, identifies challenges that healthcare systems currently face, presents a systems view of healthcare, and provides a comprehensive framework for the use of operations tools and methods in healthcare. Excellence in healthcare derives from four major areas of expertise: clinical care, population health, leadership, and operations.
Although clinical expertise, the health of a population, and leadership are critical to an organization's success, this book focuses on operations—how to deliver high-quality health services in a consistent, efficient manner. Many books cover operational improvement tools, and some focus on using these tools in healthcare environments. So why have we devoted a book to the broad topic of healthcare operations? Because we see a need for organizations to adopt an integrated approach to operations improvement that puts all the tools in a logical context and provides a road map for their use.
An integrated approach uses a clinical analogy: First, find and diagnose an operations issue. Second, apply the appropriate treatment tool to solve the problem. The field of operations research and management science is too deep to cover in one book. In Healthcare Operations Management , only those tools and techniques currently being deployed in leading healthcare organizations are covered, in part so that we may describe them in enough detail to enable students and practitioners to use them in their work.
Each chapter provides many references for further reading and deeper study. We also include additional resources, case studies, exercises, and tools on the companion website that accompanies this book.
This book is organized so that each chapter builds on the previous one and is cross-referenced. However, each chapter also stands alone, so a reader interested in Six Sigma can start in chapter 9 and then move to the other chapters in any order he wishes. This book does not specifically explore quality in healthcare as defined by the many agencies that have as their mission to ensure healthcare quality, such as The Joint Commission, the National Committee for Quality Assurance, the National Quality Forum, and some federally funded quality improvement organizations.
However, the systems, tools, and techniques discussed here are essential to completing the operational improvements needed to meet the expectations of these quality assurance organizations. Health spending is projected to grow 1. As a result, the health share of GDP is expected to rise from In addition, healthcare spending is placing increasing pressure on the federal budget.
Despite the high cost, the value delivered by the system has been questioned by many policymakers. For example, unexplained quality variations in healthcare were estimated in to result in 44, to 98, preventable deaths every year IOM And those problems persist.
A study of hospitals in North Carolina showed a high rate of adverse events, unchanged over time even though hospitals had sought to improve the safety of inpatient care Landrigan et al. Clearly, the pace of quality improvement is slow. Across all measures, results were similar, although the median rate of change was slightly higher at 2. The IOM panel concluded that the knowledge to improve patient care is available, but a gap—a chasm—separates that knowledge from everyday practice.
The panel summarized the goals of a new health system in terms of six aims, as described in exhibit 1. Although this seminal work was published more than a decade ago, its goals still guide much of the quality improvement effort today. Many healthcare leaders are addressing these issues by capitalizing on proven tools employed by other industries to ensure high performance and quality outcomes. For major change to occur in the US health system, however, these strategies must be adopted by a broad spectrum of healthcare providers and implemented consistently throughout the continuum of care—in ambulatory, inpatient, acute, and long-term care settings—to undergird population health initiatives.
The payers for healthcare must engage with the delivery system to find new ways to partner for improvement. In addition, patients need to assume strong financial and self-care roles in this new system.
The ACA and subsequent health policy initiatives provide many new policies to support the achievement of these goals. Although not all of the IOM goals can be accomplished through operational improvements, this book provides methods and tools to actively change the system toward accomplishing several aspects of these aims.
A federal agency that is part of the Department of Health and Human Services. It provides leadership and funding to identify and communicate the most effective methods to deliver high-quality healthcare in the United States.
The healthcare arm of the National Academy of Sciences; an independent, nonprofit organization providing unbiased and authoritative advice to decision makers and the public. While the current US health system presents numerous challenges, opportunities for improvement are emerging as well. A number of major trends provide hope that significant change is possible.
The following trends represent this groundswell:. Informatics systems are maturing, and big data and analytics tools are becoming ever more powerful. Supply chains and the relationships among health plans, healthcare systems, and individual providers are changing through mergers, partnerships, and acquisitions.
Primary care is being redesigned with new provider models and new tools, such as telemedicine and mobile applications. Medicine itself is undergoing rapid change with the adoption of precision medicine tools, such as pharmacogenomics, to individualize patient treatments.
A new emphasis on population health accountability and management will lead to healthier environments and lifestyles. The use of evidence-based medicine EBM for the delivery of healthcare in the United States is the result of 40 years of work by some of the most progressive and thoughtful practitioners in the nation.
The movement has produced an array of care guidelines, care patterns, and shared decision-making tools for caregivers and patients. The impact of EBM on care delivery can be powerful. Rotter and colleagues reviewed 27 studies worldwide including 11, patients and assessed the use of clinical pathways. Comprehensive resources are available to healthcare organizations that wish to emphasize EBM.
For example, the National Guideline Clearinghouse NGC is a comprehensive database of more than 4, evidence-based clinical practice guidelines and related documents. The IOM Roundtable on Value and Science-Driven Healthcare has set a "goal that by the year , 90 percent of clinical decisions will be supported by accurate, timely, and up-to-date clinical information and will reflect the best available evidence " IOM , 4; emphasis in original.
To achieve this end, the IOM Roundtable recommends a sophisticated set of processes and infrastructure, which it describes as follows IOM , Care that is effective and efficient stems from the integrity of the infrastructure for learning. Keeping pace with technological innovation compels more than a head-to-head and time-to-time focus.
In short, EBM is the conscientious and judicious use of the best current evidence in making decisions about the care of individual patients. The conscientious and judicious use of the best current evidence in making decisions about the care of individual patients. Healthcare delivery has been slow to adopt information technologies, but many organizations have now implemented electronic health record EHR systems and other automated tools.
Although implementation of these systems has sometimes been organizationally painful, EHRs are now becoming mature enough to have a substantial positive impact on operations. In addition, data science computer engineering has evolved to provide significant new tools in the following areas:. Consumers are assuming new roles in their own care through the use of health education and information and by partnering effectively with their healthcare providers. Personal maintenance of wellness though a healthy lifestyle is one essential component.
Understanding one's disease and treatment options and having an awareness of the cost of care are also important responsibilities of the consumer. Patients are becoming good consumers of healthcare by finding and considering price information when selecting providers and treatments. Many employers now offer high-deductible health plans with accompanying health savings accounts HSAs. This type of consumer-directed healthcare is likely to grow and increase pressure on providers to deliver cost-effective, customer-sensitive, high-quality care.
In addition, the ACA provides new tools for employers to motivate their employees financially to engage in healthy lifestyles. The healthcare delivery system of the future will support and empower active, informed consumers.
A personal monetary account that can only be used for healthcare expenses. The funds are not taxed, and the balance can be rolled over from year to year. HSAs are normally used with high-deductible health insurance plans. In general, the consumer patient is well informed about healthcare prices and quality and makes personal buying decisions on the basis of this information. The health savings account is frequently included as a key component of consumer-directed healthcare.
To participate in the improvement of healthcare operations, healthcare leaders must understand the series of interconnected systems that influence the delivery of clinical care exhibit 1.
In the patient care microsystem , the healthcare professional provides hands-on care to the patient. Elements of the clinical microsystem include. Because common conditions e. Therefore, in many cases, the organization and functioning of the microsystem can be optimized. Process improvements can be made at this level to ensure that the most effective, least costly care is delivered.
In addition, the use of EBM guidelines can help ensure that the patient receives the correct treatment at the correct time. The organizational infrastructure also influences the effective delivery of care to the patient.
Ensuring that providers have the correct tools and skills is an important element of infrastructure. The EHR is one of the most important advances in the clinical microsystem for both process improvement and the wider adoption of EBM. Another key component of infrastructure is the leadership displayed by senior staff. Without leadership, progress and change do not occur. Finally, the environment strongly influences the delivery of care. Key environmental factors include market competition, government regulation, demographics, and payer policies.
An organization's strategy is frequently influenced by such factors e. Many of the systems concepts regarding healthcare delivery were initially developed by Avedis Donabedian. These fundamental contributions are discussed in depth in chapter 2. Elements in each layer of this system interact. Peter Senge provides a useful theory for understanding the interaction of elements in a complex system such as healthcare.
In his model, the structure of a system is the primary mechanism for producing an outcome. For example, the presence of an organized structure of facilities, trained professionals, supplies, equipment, and EBM care guidelines leads to a high probability of producing an expected clinical outcome. No system is ever completely stable.
Each system's performance is modified and controlled by feedback exhibit 1. Senge , 75 defines feedback as "any reciprocal flow of influence. In systems thinking it is an axiom that every influence is both cause and effect. This improved performance leads to enhanced financial performance and profitability for the organization, and increased profits provide additional funds for higher salaries, and the cycle continues.
Another frequent example in healthcare delivery is patient lab results that directly influence the medication ordered by a physician. A third example is a financial report that shows an over-expenditure in one category that prompts a manager to reduce spending to meet budget goals. A more complete definition of a feedback-driven operational system includes an operational process, a sensor that monitors process output, a feedback loop, and a control that modifies how the process operates.
Feedback can be either reinforcing or balancing. Reinforcing feedback prompts change that builds on itself and amplifies the outcome of a process, taking the process further and further from its starting point. The effect of reinforcing feedback can be either positive or negative. For example, a reinforcing change of positive financial results for an organization could lead to increases in salaries, which would then lead to even better financial performance because the employees are highly motivated.
In contrast, a poor supervisor could cause employee turnover, possibly resulting in short staffing and even more turnover. Balancing feedback prompts change that seeks stability. A balancing feedback loop attempts to return the system to its starting point. The human body provides a good example of a complex system that has many balancing feedback mechanisms.
For example, an overheated body prompts perspiration until the body is cooled through evaporation. The clinical term for this type of balance is homeostasis. A treatment process that controls drug dosing via real-time monitoring of the patient's physiological responses is an example of balancing feedback. Inpatient unit staffing levels that determine where in a hospital patients are admitted is another.
All of these feedback mechanisms are designed to maintain balance in the system. A confounding problem with feedback is delay. Delays occur when interruptions arise between actions and consequences. In the midst of delays, systems tend to overshoot and thus perform poorly. For example, an emergency department might experience a surge in patients and call in additional staff.
When the surge subsides, the added staff stay on shift but are no longer needed, and unnecessary expense is incurred. As healthcare leaders focus on improving their operations, they must understand the systems in which change resides.
Every change will be resisted and reinforced by feedback mechanisms, many of which are not clearly visible. Taking a broad systems view can improve the effectiveness of change. Many subsystems in the total healthcare system are interconnected. These connections have feedback mechanisms that either reinforce or balance the subsystem's performance. Exhibit 1. Each process has both reinforcing and balancing feedback.
This general systems model can be converted to a more quantitative system dynamics model, which is useful as part of a predictive analytics system. This concept is addressed in more depth in chapter 8. The five-part framework of this book illustrated in exhibit 1. An organization needs to understand the environment, develop a strategy, and implement a system to effectively deploy this strategy. At the same time, the organization must become adept at using all the tools of operations improvement contained in this book.
These improvement tools can then be combined to attack the fundamental challenges of operating a complex healthcare delivery organization. The introductory chapters provide an overview of the significant environmental trends healthcare delivery organizations face.
Progressive organizations tend to review these publications carefully, as they can use this information in response to external forces by identifying either new strategies or current operating problems that must be addressed.
Business has aggressively used operations improvement tools for the past 40 years, but the field of operations science actually began many centuries ago. Chapter 2 provides a brief history. Healthcare operations are increasingly driven by the effects of EBM and pay for performance; chapter 3 offers an overview of these trends and how organizations can effect change to meet current challenges and opportunities.
A key component of effective operations is the ability to move strategy to action. Chapter 4 shows how the use of the balanced scorecard and strategy maps can help accomplish this aim. Change in all organizations is challenging, and the formal methods of project management chapter 5 can deliver effective, lasting improvements in an organization's operations. Once an organization has its strategy implementation and change management processes in place, it needs to select the correct tools, techniques, and programs to analyze current operations and develop effective adjustments.
Chapter 6 outlines the basic steps of problem solving, which begins by framing the question or problem and continues through data collection and analyses to enable effective decision making. Chapter 7 introduces the building blocks for many of the advanced tools used later in the book. This chapter may serve as a review or reference for readers who already have good statistical skills.
Closely related to statistical thinking is the emerging science of analytics. With powerful new software tools and big data repositories, the ability to understand and predict organizational performance is significantly enhanced. Chapter 8 is new to this edition and presents several tools that have become available to healthcare analysts and leaders since publication of the second edition. Some projects require a focus on process improvement. Six Sigma tools chapter 9 can be used to reduce variability in the outcome of a process.
Lean tools chapter 10 help eliminate waste and increase speed. This part of the book demonstrates how these concepts can be applied to some of today's fundamental healthcare challenges. Process improvement techniques are now widely deployed in many organizations to significantly improve performance; chapter 11 reviews the tools of process improvement and demonstrates their use in improving patient flow.
Scheduling and capacity management continue to be major concerns for most healthcare delivery organizations, particularly with the advent of advanced-access scheduling, a concept promoted by the Institute for Healthcare Improvement and discussed in chapter Specifically, the chapter demonstrates how simulation can be used to optimize scheduling.
Chapter 13 explores the optimal methods for acquiring supplies and maintaining appropriate inventory levels. Chapter 14 outlines a systems approach to improving financial results, with a special emphasis on cost reduction—one of today's most important challenges. In the end, any operations improvement will fail unless steps are taken to maintain the gains; chapter 15 contains the necessary tools to do so.
The chapter also provides a detailed algorithm that helps practitioners select the appropriate tools, methods, and techniques to effect significant operational improvements. It demonstrates how our fictionalized case study healthcare system, Vincent Valley Hospital and Health System VVH , uses all the tools presented in the book to achieve operational excellence.
In this way, a future is envisioned in which many of the tools and methods contained in the book are widely deployed in the US healthcare system. Woven throughout the chapters are examples featuring VVH, a fictitious but realistic health system.
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