ISE 491 Healthcare Process Improvement

Outline

Overview of Healthcare Management Historical Background Nature of Healthcare Services Decision Making Process Model Healthcare Manager & Responsibilities Distinctive Characteristics of Healthcare

Services

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Healthcare Management is...

The management of processes or health systems that provide care to patients.

The use of decision tools to manage and improve processes.

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Healthcare Management Requires Decisions in: Forecasting Capacity planning Staffing & Scheduling Managing medical supplies Quality Control Motivating employees And more . . .

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Management Decisions

Scientific Management Techniques (1910s) – Frederic W. Taylor: work/labor - observe, measure, analyze, improve Taylor known as the Father of Scientific Management

Standardization – Frank & Lillian Gilbreth Psychological Effects of Work Conditions – Henry Gannt Quantitative Inventory Management (1915) – F.W. Harris Quality Control & Sampling (1930s) – W. Shewhart Operations Research/Management Science (1950s) Linear Programming, Queuing Models Management Information Systems (1970s) TQM/CQI (1980s) Supply Chain Management, Reengineering (1990s)

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Historical Background / Development of Decision Techniques

Nature of the Healthcare Industry 1

Combines medical technology and human touch, administers care around the clock from newborns to critically ill

More than 580,000 establishments make up the health services industry

Nearly 77% of all health services establishments are offices of physicians, dentists, or other health care practitioners.

Hospitals constitute 1.3 percent of all health service establishments, but they employ 34.8% of all health workers.

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Source: U.S. Department of Labor Bureau of Labor statistics (2006), www.bls.gov/oco/cg/cgs035.htm#nature

Nature of the Healthcare Industry 2

The largest industry in 2006, health care provides 13.6 million jobs for wage and salary workers and about 438,000 jobs for the self-employed.

7 of the 20 fastest growing occupations are health care related.

Health care will generate 3 million new wage and salary jobs between 2006 and 2016, more than any other industry.

Most workers have jobs that require less than 4 years of college education, but health diagnosing and treating practitioners are among the most educated workers. .

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Source: U.S. Department of Labor Bureau of Labor statistics (2006), www.bls.gov/oco/cg/cgs035.htm#nature

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Table 1.2 Distribution of Health Providers and Health Workers in Health Services: in 2006, and Expected Growth

Provider typePercent of Providers

Percent ofEmployment Employment

(in 000)

Percentchange,

2006-2016

Hospitals, public and private 1.3 39.9 5,438 13.0

Nursing and residential care facilities

11.5 21.3 2,901 23.7

Offices of physicians 36.7 15.8 2,154 24.8

Offices of dentists 20.7 5.8 784 22.4

Home healthcare services 3.3 6.4 867 55.4

Offices of other health practitioners 19.3 4.2 571 28.3

Outpatient care centers 3.4 3.6 489 24.3

Other ambulatory healthcare services

1.4 1.6 216 32.3

Medical and diagnostic laboratories 2.3 1.5 202 16.8

Source: U.S. Department of Labor (2006) www.bls.gov/oco/cg/cgs035.htm#nature.

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Transformation of Poor Health to Good Health

Look at the difference between the cost of inputs and the value of outputs

Inputs Land Labor Capital

Transformation/Conversion

process

Outputs Services

Control

Feedback

FeedbackFeedback

Value added

The essence of healthcare operations is to add value.

Sickpatient

Treatedpatient

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The Healthcare Process is:

Inputs Processing OutputsDoctors, nurses Examination Healthy

patientsHospital SurgeryMedical Supplies MonitoringEquipment MedicationLaboratories Therapy

Decision Making is the Key…

There are two groups of decisions: System Design-- capacity, location,

departmental arrangements, product and service planning, acquisition and placement of equipment

System Operations-- personnel, inventory, scheduling, product management, and quality measurement and assurance

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Who is the Healthcare Manager?

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•Upper Level• CEO?• COO?• CFO?• CNO?

•Operational Decisions Mid-Level Manager•Strategic Decisions: Upper-Level Managers and Executives

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Decision Hierarchy

StrategicStrategic

TacticalTactical

OperationalOperational

Broad Scope:Product SelectionNew ConstructionLocation DecisionsTechnology Choices

Moderate Scope:Staffing levelsSupply ChainEquipment SelectionFinancial Resource Allocation

Narrow Scope:SchedulingControlling QualityInventory Replenishment

Employment Potential for Healthcare Managers

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Table 1.3. Health Services by Occupation in 2006, and Projected Growth.Health services occupation Employment

(in 000)Percentchange,

2006-2016

Management, business, and financial occupations 579 21.3

………Top Executives 98 11.6

Professional and Related Occupations 5955 21.3

Service Occupations 4334 27.1

Office and administrative support occupations 2446 14.4

All health service occupations 13,621 21.7

Source: U.S. Department of Labor (2006) www.bls.gov/oco/cg/cgs035.htm#nature.

Distinctive Characteristics of Healthcare Services

Patient is a participant in the process (the patient’s condition is both the input and the output)

Production and consumption occur simultaneously (poor care cannot be recalled)

Perishable capacity Site selection is dictated by patient location Capacity is labor intensive Example: operating rooms staffed but not used

Intangible nature of healthcare outputs (patient opinions about service quality are formed over time)

Heterogeneous nature of healthcare requires a high level of judgment

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The End