1. ISE 491 Healthcare Process Improvement

2. 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

3. 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

4. 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

5. 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

6. 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),
Ozcan Ch1: Quantitative Methods in Health Care Management
2009

7. 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),
Ozcan Ch1: Quantitative Methods in Health Care Management
2009

8. 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,
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)
Ozcan Ch1: Quantitative Methods in Health Care Management
2009

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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,
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)
Ozcan Ch1: Quantitative Methods in Health Care Management
2009

15. 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

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