1. Chapter 6. Reengineering
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

2. Outline Reengineering vs. Other Methods
Work Design in Health Care Organizations
Work Design
Job Design
Work Measurement-Standard Times
Stopwatch Time Studies
Standard and Predetermined Times
Work Measurement Using Work Sampling
Determination of Sample Size
Development of Random Observations Schedule
Training Observers
Work Simplification
Flow Chart
Work Distribution Chart
Flow Process Chart
Worker Compensation
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

3. Reengineering vs. Other Methods
Healthcare managers have often sought organizational change, restructuring, and downsizing. Although those methods may improve the financial base of the organization or productivity at least temporarily by “cutting the fat,” namely by reducing the staff across the board, yet they create other problems. In particular, reducing staff can lead to major problems in the quality of care.
Two other contemporary and popular methods that aim to improve both performance and the quality are total quality management (TQM) and continuous quality improvement (CQI) which are geared to make incremental changes over time.
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

4. Reengineering vs. Other Methods
Reengineering is a methodology intended to overcome the difficulty in realizing TQM/CQI performance over a long duration, as well as the myopic conduct of organizational change, restructuring and downsizing.
To reengineer the system, healthcare managers must be able to understand work-design, jobs, job measurement, process activities, and reward systems – all well known concepts of industrial engineering. With that knowledge, they can recognize the bottlenecks in the old system, identify unnecessary and repetitive tasks, and eliminate them in the reengineered system of care.
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

5. Importance and Purpose
Human resources represents over 40% of healthcare facility budgets
Productivity and satisfaction of staff involves an understanding of the work environment
Work must be designed so that employees are happy, organizational productivity is high, and costs are minimized
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

6. Work Design- A Systems Perspective
External
Factors
Work
Measurement
Time Study
Predetermined
Standard
Work Sampling
Job Design
Who?
How?
Where?
Job Simplification
Worker
Compensation
Time Based
Output Based
Incentive Plans
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

7. Job Design Who does what, how, and where?
Consistent with organizational goals
Write it down!
Understand and communicate it
Involve employees and management
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

8. Frederick Winslow Taylor
Developed Scientific Management Approach
Focused on time studies
Conflicts between labor and management occurred because management had no idea how long jobs actually took
For what types of jobs would this
approach work best? Are there
Healthcare applications?
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

9. Efficiency School-- Logical and Systematic
Best for simple, repetitive routine, and separable tasks
Healthcare Examples:
lower level administrative duties
division of labor
standardized forms and paperwork
robots in laboratories
automation of routine tasks
Not good for judgmental/unpredictable tasks
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

10. Advantages and Disadvantages of Specialization
Management
Employees
Advantages
a. Simplifies training
b. Higher productivity
c. Low wage costs
a. Low education/skill
b. Minimum responsibilities
c. Little mental effort needed
Disadvantages
Difficult to motivate
quality
b. Worker dissatisfaction,
absenteeism, high turn-
over, disruptive tactics,
poor attention to quality
a. Monotonous and boring
b. Limited opportunities for
advancement
c. Little control over work
d. Little opportunity for self-
fulfillment
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

11. Behavioral School Satisfaction of Wants/Needs
Intrinsic and extrinsic motivators
Specialization leads to monotony and worthlessness
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

12. Socio-technical School Approach
Behavioral School
(Human Focus)
Efficiency School
(Technical Focus)
Socio-technical School
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

13. How can jobs be improved?
Job enlargement-- give workers a larger portion of the total task (horizontal loading-- additional work at same level of skill and responsibility)
Job enrichment-- increasing responsibility for planning and coordinating tasks (vertical loading)
Job rotation-- workers periodically exchange jobs
What are examples of each?
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

14. Work Measurement Using Time Standards
Time standards are important in establishing productivity measures, determining staffing level and schedules, estimating labor costs, budgeting, and designing incentive systems
A time standard represents the amount of time needed for the average worker to do a specific job working under typical conditions
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

15. The First Step. . . The amount of time it should take a qualified
worker to complete a specified task, working at
a sustainable rate, using given methods and
equipment, raw materials, and workplace
arrangements is called a standard time.
A Standard time can be developed through:
Stop-watch studies
Historical times
Predetermined data
Work sampling
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

16. Stopwatch Time Studies
Take time over a number of trials (cycles)
Workers should be educated regarding the process to avoid suspicion and avoid the Hawthorn Effect
Number of cycles to time (i.e., sample size)
variability in observed times
desired accuracy
desired level of confidence for the estimate
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

17. Determining Sample Size
Accuracy desired may be explained by the percentage
of the mean of the observed time. For instance, the goal
may be to achieve an estimate within 10 percent of the
actual mean. The sample size is then determined by:
n =
z s
a x ( ) 2
where:
z = number of std. dev.
needed for desired
confidence
s = sample std. dev.
a = desired accuracy
x = sample mean
Desired
Confidence Z-value
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

18. An Alternative Formula
Desired accuracy may be expressed as an amount (e.g.,
within one minute of the true mean). The formula for
sample size becomes:
n = zs e ( ) 2
where
e = Accuracy or
maximum error
acceptable
To make an initial estimate of sample size, you should
take a small number of observations and then compute
the mean and std. dev. to use in the formula for n.
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

19. An Example
A time study analyst wishes to estimate the time required
to perform a certain job. A preliminary study yielded a
mean of 6.4 minutes and a standard deviation of 2.1 min.
The desired confidence level is 95 percent. How many
observations will be needed (including those already taken)
if the desired maximum error is:
a) +/- 10 percent?
b) one-half minute?
n = zs ax ( ) 2
n = zs e ( ) 2 a) b) 2 2 (
1.96(2.1)
.10(6.4) ) (
1.96(2.1)
0.5 )
= 41.36
= 67.77 =
n =
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

20. Determining the Standard Time
Observed Time-- average of observed times
OT = åxi/n
Normal Time-- observed time adjusted for worker performance
NT = OT * PR (where PR = performance standard measured for the entire job)
NT = å(Ej*PRj) (where PR is measured element by element)
PR equals 1 for the average worker; PR< 1 is for a slower worker
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

21. ST = NT * AF
Standard time equals normal time multiplied by an allowance factor
Allowance Factor
accounts for personal delays, unavoidable delays, and/or rest breaks
AFjob = 1+A, where A= allowance percentage based on job time
AFday = 1/(1-A), where A = allowance percentage based on work day
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

22. 1. Basic-low (personal, fatigue, standing) 11
Table 6.1 Typical Allowance Percentages for Varying Healthcare Delivery Working Conditions
Allowance Level
Percent
1. Basic-low (personal, fatigue, standing) 11
2. Basic-moderate (basic-low and mental strain) 12
3. Basic-high (basic-moderate and slightly uncomfortable heat/cold or humidity 14
4. Medium-low (basic high and awkward position) 16
5. Medium-moderate (medium-low and lifting requirements up to 20 lbs.) 19
6. Medium-high (medium-moderate and loud noise) 21
7. Extensive-low (medium-high and tedious nature of work) 23
8. Extensive-medium (extensive-low and with complex mental strain) 26
9. Extensive-high (extensive-medium and lifting requirement up to 30 lbs.) 28
Source: Adapted from B.W. Niebel, 1988.
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

23. The Allowance Factor Compute the allowance factor if:
The allowance is 20 percent of job time.
The allowance is 20 percent of work time.
A) AF = 1 + A = 1.20, or 120%
B) AF = 1/(1-A) = 1/(1-.2) = 1.25 = 125%
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

24. An Example Obs Time (min) Obs Time 1 4.20 6 4.18 2 4.15 7 4.14
The following observed times have been collected with a performance rating of Using an allowance factor of 15% of job time, determine the appropriate standard time.
Preliminary Calculations:
n=9
PR =1.10
A = 1.15
Obs Time (min) Obs Time
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

25. The Solution Now, what do: OT, NT and ST represent?
A. OT = 37.35/9 = 4.15 minutes
B. NT = OT x PR = 4.15 x 1.10 = minutes
C. ST = NT x (1+A) = x 1.15 = 5.25 minutes
Now, what do: OT, NT and ST represent?
Obs. Time (min) Obs. Time
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

26. What are the problems with time studies?
Subjective performance ratings and allowances
Only observable jobs can be studied
Highly costly -- best for repetitive tasks
Disrupts worker routine
May cause worker resentment
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

27. Other Methods Historical/Standard Elemental Times
Firms collect data on standard job elements
Put these data together to determine job times
Less costly and disruptive
Limited applications in healthcare
Predetermined Standards
Obtained from trade publications
Need no performance of allowance factor
Operations are not interrupted
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

28. Work Measurement Using Work Sampling
Technique for estimating the proportion of time that a worker or machine spends on various activities
Observers make brief observations of a worker or a machine at random intervals over a period of time and simply note the nature of the activity
Purpose:
To estimate percentage of unproductive or idle time for repetitive jobs
To estimate the percentage of time spent on various tasks for non-repetitive jobs
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

29. Work Sampling Steps 1) Determine the sample size
2) Train the observers,
3) Develop random sample schedule
4) Take observations, and re-compute the
desired sample size several times if initial
estimates are not reliable
5) Determine the estimated proportion of time
spent on specified activity
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

30. Step 1: Sample Size
The goal of work sampling is to obtain an estimate that provides a specified confidence not differing from the true value by more than a specified error
CI = confidence interval,
e = error,
z = number of standard deviations needed to achieve desired confidence,
sample proportion (number of occurrences divided by sample size),
n = sample size.
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

31. Sample Size, cont.
Example 6.1: A hospital administrator wants an estimate of X-ray idle time that has a 95.5 percent confidence of being within 4 percent of the actual percentage. What sample size should be used?
e = z = 2.00
n = (z/e)2p(1-p)
Desired
Confidence Z-value
When p is unknown, a
preliminary estimate of
sample size can be obtained
using p = 0.5. Then after 20
observations, a new estimate
can be obtained.
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

32. Solution: Given: e = 0.04; z = 2.00 (see Appendix A);
= 0.5 (preliminary).
= 0.5: n = (2.00/0.04)2 * .50 * (1-.50) = 625 observations.
If for 20 observations, it is observed that the x-ray was breaking down on average 1 time, the revised estimate is then
= 1/20 = 0.05.
The revised estimate of sample size is:
= 0.05, n = (2.00/0.04)2 x .05 x (1-..05) = or 119 observations.
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

33. Step 2: Train Observers
A comprehensive training program of three steps should be standardized for all data collectors. Data collectors should be first educated as to the study’s goals, protocol, collection procedures, and data submission procedures, and the guidelines for their behavior. Then, the observers should be trained in data collection. Training may include sessions using videotaped activities for practice in identifying and recording actual nursing services. In the third phase, observers participate with a project member, in explaining the nature of the project to those who will be observed, in the observation setting.
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

34. Step 3: Random Observation Schedule
Need random number for day, hour, and minute, with the number of digits needed for each number equaling the number of days in the study, hours per day, and minutes per hour.
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

35. Table 6.6 Random Numbers 1 2 3 4 5 6 7 8 9 10
Random number generator formula: =RAND()*1000 ((generated using Excel))
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

36. Example 6.3: A nursing manager wants to observe the time a nurse spends in direct and in indirect care over a 5-day period, on a unit where the shift is 8 hours.
Solution:
A one digit number will be needed for the day, one digit for the hour, and two digits for the minute.
Using Table 6.4, starting from row 4, column 3, we obtain the random number
The first number is 5. Thus, we determine the day (in this case, the fifth day of the week, Friday).
We move to the next number, 9, for the hour; but since activity is performed 8 hours daily, we discard that number, and move to the next one, 8. If we assume that the shift starts at 7:00 AM, the number 8 represents 2:00 PM.
The minutes are derived from the next two digits, 30. Put together, the first observation is made on the fifth day, 30 minutes into the 8th hour of work, or at 2:30 PM.
This procedure is repeated for each observation to be taken. Then the observations should be sorted chronologically by day, hour and minute.
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

37. Example 6.4: The chief of the hospital maintenance technicians wants to estimate the proportion of time that technicians spend in a part of the maintenance process. The maintenance office is open 9 hours, starting at 8:00 AM, every day of the week. 20 observations will be taken during a month-long investigation. Determine the random observation times and develop an observation schedule, assuming that the serial number of a dollar bill starts with 25.
Solution:
Since we know the starting point in Table 6.4 is the 2nd row and 5th column, the random number is
Next we need to choose the reading direction of the succeeding random numbers: either by moving to the right on the same row, and when the row is finished, going down one row and moving from left to right; or by going down on the same column, and when the column is finished moving to the next column right and reading from bottom to top.
For this case, we choose to read in the same column, going down. For days, read two digits from left to right – select two-digit number, if higher than 31, then move to the next digit to make a two-digit day observation, and so on.
Within eight digit numbers, if there are not enough digits to identify day, hour and minutes for the observation, discard that random number and select the next one.
For hours, read single digit numbers from left to right, discard 0 and assign 1=8:00 A.M., 2=9:00 A.M., and so on.
For minutes, read two digit numbers and discard numbers 60 or over. Prepare a chronological list of the observation time results by day, hour and minute, to be given to the data collection team.
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

38. Table 6.7 Development of the Schedule for a Work Sampling Study
Observation
Random Number
Day
Hour
Minute
Notes
discarded 1 22
7=2 PM 27 2 30
4=11 AM 00 3 25
6=1 PM 01 4 29
3=10 AM 07 5 15
2=9 AM 05 6 46 7 16
9=4 PM 52 8
1=8 AM 33 9 18 48 10 08
5=12 PM
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

39. Table 6.8 Final Work Sampling Schedule
Observation
Day
Time 18 04
8:28 AM 17
9:21 AM 13 07
8:04 AM 6
9:46 AM 10 08
12:15 PM 14
2:36 PM 15 11
10:13 AM 12
4:08 PM 16
11:42 AM 5
9:05 AM 7
4:52 PM 9
10:48 AM 19
12:08 PM 1 22
2:27 PM 3 25
1:01 PM 20 26
2:14 PM 8 27
8:33 AM
1:59 PM 4 29
10:07 AM
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

40. Table 6.4 Abridged Patient Care Tasks in a Nursing Unit
Professional
Non-Professional
Direct
Indirect
1. Ace bandage application *
2. Admit – patient orientation
3. Assist to/from bed, chair
4. Bed bath
5. Bed change – empty
6. Bed change - occupied
7. Bed pan
8. Blood pressure
9. Catheterization of bladder
10. Census count
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

41. Table 6.5 Work Sampling Data Collection Form for Nursing Unit
Unit: 4 West
Observer: CL
Date: 11/02/05
Shift: AM
Time: 10:04
Observed
Staff
Name& Title
Prof.
Direct
Non-Prof.
Indirect
In Communication with
On Break
Patient
Physician
G. Smith, RN √
V. Black, RN
E. Mason, RN
Z. Sander, RN
P. Bills, RN
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

42. Work Sampling Steps
4) Take observations, and re-compute the desired sample size several times if initial estimates are not reliable
5) Determine the estimated proportion of time spent on specified activity
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

43. Advantages of Work Sampling
Observations less susceptible to short term fluctuations
Little or no work disruption
Workers are less resentful
Less costly and time-consuming
Many studies can be conducted simultaneously
Useful for non-repetitive tasks
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

44. Disadvantages of Work Sampling
Less detail on elements/tasks of a job
Workers may alter patterns
Often no record of method used by worker
Observers may fail to adhere to random observation schedule
Not useful for short, repetitive tasks
Much time required to move from observation area to observation area to ensure randomness
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

45. Nobody likes to do things the hard way! Work Simplification
Work Simplification-- process of changing work methods:
Eliminate unnecessary parts of work
Combine and rearrange parts of work
Simplify work when possible
Work Simplification Tools
Flow Chart
Work Distribution Chart
Flow Process Chart
Layout Chart
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

46. Figure 6.4 Commonly Used Flow Chart Symbols
Start/Terminate
On page connector
Process
Off page connector
Decision
Document
Preparation
Manual
Operation
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

47. Figure 6.5 Flow Chart for Emergency Room Specimen Processing
Initial Process
After Improvement
Patient
Entry
Patient
Entry
Triage:
need blood?
Triage:
need blood? No
end No
end
Yes
Nurse draws
blood
Nurse draws
blood
MD orders
lab
MD orders
lab
IS order
entry
IS entry
label & package
Lab
Label &
package
Lab
Results
arrive in ER
(end)
Accession &
analysis
Verification
Accession &
analysis
IS double
entry MD
terminates
lab order
(end)
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

48. The Work Distribution Chart
Shows what a department does to identify each of its major activities and to pinpoint the contribution of each employee to those activities
Must be specific!
Spotting Trouble
Which activities consume the most time?
Are tasks evenly distributed?
Is there under-specialization?
Are employees assigned too many unrelated tasks?
Are talents utilized efficiently?
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

49. Table 6.9 Partial Work Distribution Chart for Nursing Unit
Activity
Hours
Nurse Manager
Nurse I
Nurse II
Patient admissions 12
Coordination with Admissions Dept. 8 2
Communications 16
Physicians and patient family
Patient family 4
Direct patient care 48
Medication administration 20
Indirect patient care
Monitor charts
Meals 6
Update Charts
Discharge planning 14
Scheduling & Adm.
Miscellaneous 10
Supervisory
meeting
Sessions with
trainees
Emergency coverage
TOTAL
120 40
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

50. Flow Process Chart
Records a procedure in a graphic form, using a sort of shorthand to simplify and unify the record
Ensures every significant detail of the work process in its proper sequence is recorded
Highlights inconsistencies and redundancies
Can eliminate, combine, change (sequence, place, person), or improve activities
Operation
Inspect
Store
Move
Delay
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

51. Figure 6.3 Flow Process Chart for Emergency Room Specimen Processing
OPERATION
MOVE
INSPECT
DELAY
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

52. Now the important part! Worker Compensation
Compensation schemes:
Time based-- most common in healthcare
Output based-- more difficult to operationalize, yet pay is related to efforts
Incentive Systems
Profit sharing plans-- receive % of profits
Gain sharing plans-- receive a % of the value (i.e., cost savings) realized through increases in productivity
Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan

53. The End Chapter 6: Quantitatve Methods in Health Care Management
Yasar A. Ozcan