ISE 491 Healthcare Process Improvement

Ozcan Ch1: Quantitative Methods in Health Care Management Outline Overview of Healthcare Management Historical Background Nature of Healthcare Services Decision Making Process Model Healthcare Manager & Responsibilities Distinctive Characteristics of Healthcare Services Ozcan Ch1: Quantitative Methods in Health Care Management 2009

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. Ozcan Ch1: Quantitative Methods in Health Care Management 2009

Ozcan Ch1: Quantitative Methods in Health Care Management Management Decisions Healthcare Management Requires Decisions in: Forecasting Capacity planning Staffing & Scheduling Managing medical supplies Quality Control Motivating employees And more . . . Ozcan Ch1: Quantitative Methods in Health Care Management 2009

Ozcan Ch1: Quantitative Methods in Health Care Management Historical Background / Development of Decision Techniques 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) Ozcan Ch1: Quantitative Methods in Health Care Management 2009

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. Source: U.S. Department of Labor Bureau of Labor statistics (2006), www.bls.gov/oco/cg/cgs035.htm#nature Ozcan Ch1: Quantitative Methods in Health Care Management 2009

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. . Source: U.S. Department of Labor Bureau of Labor statistics (2006), www.bls.gov/oco/cg/cgs035.htm#nature Ozcan Ch1: Quantitative Methods in Health Care Management 2009

Ozcan Ch1: Quantitative Methods in Health Care Management Table 1.2 Distribution of Health Providers and Health Workers in Health Services: in 2006, and Expected Growth Provider type Percent of Providers Percent of Employment Employment (in 000) Percent change, 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. Ozcan Ch1: Quantitative Methods in Health Care Management 2009

Transformation of Poor Health to Good Health Sick patient Treated patient Inputs Land Labor Capital Transformation/ Conversion process Outputs Services Control Feedback Value added The essence of healthcare operations is to add value. Look at the difference between the cost of inputs and the value of outputs Ozcan Ch1: Quantitative Methods in Health Care Management 2009

The Healthcare Process is: Inputs Processing Outputs Doctors, nurses Examination Healthy patients Hospital Surgery Medical Supplies Monitoring Equipment Medication Laboratories Therapy Ozcan Ch1: Quantitative Methods in Health Care Management 2009

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 Ozcan Ch1: Quantitative Methods in Health Care Management 2009

Who is the Healthcare Manager? Upper Level CEO? COO? CFO? CNO? Operational Decisions Mid-Level Manager Strategic Decisions: Upper-Level Managers and Executives Ozcan Ch1: Quantitative Methods in Health Care Management 2009

Decision Hierarchy Strategic Tactical Operational Broad Scope: Product Selection New Construction Location Decisions Technology Choices Strategic Moderate Scope: Staffing levels Supply Chain Equipment Selection Financial Resource Allocation Tactical Narrow Scope: Scheduling Controlling Quality Inventory Replenishment Operational Ozcan Ch1: Quantitative Methods in Health Care Management 2009

Employment Potential for Healthcare Managers Table 1.3. Health Services by Occupation in 2006, and Projected Growth. Health services occupation Employment (in 000) Percent change, 2006-2016 Management, business, and financial occupations 579 21.3 ………Top Executives 98 11.6 Professional and Related Occupations 5955 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. Ozcan Ch1: Quantitative Methods in Health Care Management 2009

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 Ozcan Ch1: Quantitative Methods in Health Care Management 2009

Ozcan Ch1: Quantitative Methods in Health Care Management The End Ozcan Ch1: Quantitative Methods in Health Care Management 2009