1. Chapter 8
Health Care Processes

2. Learning Objectives
Have a perspective on the unique operations and supply management (OSM) challenges faced in health care.
Understand how selected OSM concepts and approaches can be applied to hospitals.
Understand important health care terminology as it relates to OSM decisions.

3. The Nature of Health Care Operations
Health care operations management: the design, management, and improvement of the system that deliver health care services
Health care as a service
Extensive customer contact
Wide variety of providers
Life or death as outcomes
Key focus is on hospitals
Hospital: a facility whose staff provides services relating to observation, diagnosis, and treatment of patients
LO 1

4. Factors that Set Hospital Operations Apart from Others
Key operators are highly trained professionals
Generate requests for service
Deliver the service
Relationship between prices and performance is not direct
No single line of command
Balance of power between groups
Product specifications are often subjective and vague
Not a commodity that can be stocked
Resource-oriented service organization
LO 1

5. Classification of Hospitals
General hospital/emergency room
Specialty
Psychiatric
Rehabilitation
(American Hospital Association classification)
LO 1

6. Hospital Product-Process Framework
LO 1

7. Hospital Layout and Care Chains
The layout sets the physical constraints on operations
The goal of layout is to move patients and resources to minimize wait and transport time
A general rule is to separate patient and guest traffic from staff traffic
Principal element is the nursing station
Flow of work through a hospital is called a care chain
LO 2

8. Characteristics of Processes/Care Chain in a Typical General Surgery Unit
LO 2

9. Care Chain Diagram of Hip Replacement Surgery
LO 2

10. Scheduling Efficiency
A major distinction among health care processes is the extent to which resources can be scheduled efficiently
Emergency situation must be dealt with immediately
Inherently inefficient
Elective procedures can be scheduled to achieve efficient use of resources
LO 2

11. Steps Resource use and schedule complexity are effected by:
The number of steps
The time of each step
Whether the care chain has a definite end
Complexity is also increased by:
The need for rapid diagnostics
Extensive consultation
The need to work with other specialties
Decoupling points: steps in the process where waiting takes place
LO 2

12. Tracking of Work Flow Using RFID
Radio frequency identification: uses electronic tags that can store, send, and receive data over wireless frequencies
Used to track the location of:
Patients
Medical staff
Physical assets
LO 3

13. Benefits of RFID Patient flow Physical assets
Improvement of patient check-in process
Tighter links between patient and medical records
Physical assets
Pinpoint location of equipment
Save time rounding up equipment
LO 2

14. Capacity Planning
Capacity planning: matching an organization’s resources to demand
Resource requirements is a function of:
Number of patients
Length of stay
Capacity is measured in terms of multiple resources including
Beds
Clinics
Treatment rooms
Doctors
Nurses
And more
LO 2

15. Developing a Capacity Plan
Starting point is determining the effective capacity of a resource Effective capacity = Design capacity X Utilization
Subsequent steps:
Forecasting patient demand
Translating this demand into capacity requirements
Determining the current capacity level
Calculating the gap between demand and capacity
Developing a strategy to close the gap
LO 2

16. Workforce Scheduling Nurse shift scheduling Operating room scheduling
Largest component of hospital workforce
Schedules can be classified as either:
Cyclical schedule
The work is planned for four-to-six weeks
Nurses work a fixed schedule
Flexible schedule
Several types are used
Most common is 8-hour days and an average of 40 hours per week
Operating room scheduling
Typically largest revenue-generating center
LO 2

17. Quality Management and Process Improvement
TQM approaches have been used for decades
Hospitals are well suited because so much of health care involves precise measurements
Six Sigma and Lean concepts are being instituted in many hospitals
LO 2

18. Gap Errors and Bottlenecks
Gap errors: information mistakes that arise when a task is transferred between people
Handoffs are a significant source of serious patient harm
One successful approach to managing handoffs is a checklist technique for communicating information
Bottleneck: part of the system that has the smallest capacity
Frequently result from departments optimizing their own throughput
LO 3

19. Service Quality
Hospitals have been raising their level of customer service
Improved customer service saves money
Fewer malpractice suits
Reduction in no-shows
Lower nurse turnover
LO 2

20. Health Care Supply Chain
LO 2

21. Physician-Driven Service Chains
Computerized physician order entry (CPOE) systems are widely used for prescriptions
Experts propose broadening their application to include scheduling all resources needed to treat patients
The admission order triggers a series of follow-up events that are automatically entered into the system
LO 2

22. Inventory Management
Average inventory for a medium size hospital is $3.5 million
Represents
5-15 percent of current assets
2-4 percent of total assets
Largest working capital requirement
Hospital inventory systems can be broken down into two categories
Push systems
Fixed-order quantity systems
Fixed-time-period systems
Pull systems
LO 2

23. Safety Stock
A major distinction between health care inventory management and other businesses is safety stock
The standard calculation of safety stock is based on trading off the cost of carrying additional inventory with the cost of being out of stock
This is much trickier in a hospital when the cost of a stockout might be death
For critical items, backup contingency plans such as borrowing from a nearby hospital are often developed
LO 2

24. Mayo Clinic Performance Management and Measurement System
LO 3

25. Trends in Health Care Evidence-based medicine (EBM)
Integrated medical care
Electronic medical records
Health information exchanges (HIE)
Computer-assisted diagnostics
Remote diagnostics
Robots
LO 3