1. ISE 491 Healthcare Process Improvement

2. 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 Management2009 2

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 Management2009 3

4. 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 Management2009 4 Management Decisions

5. 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 Management2009 5 Historical Background / Development of Decision Techniques

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. Ozcan Ch1: Quantitative Methods in Health Care Management2009 6 Source: U.S. Department of Labor Bureau of Labor statistics (2006), www.bls.gov/oco/cg/cgs035.htm#nature

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.. Ozcan Ch1: Quantitative Methods in Health Care Management2009 7 Source: U.S. Department of Labor Bureau of Labor statistics (2006), www.bls.gov/oco/cg/cgs035.htm#nature

8. Ozcan Ch1: Quantitative Methods in Health Care Management2009 8 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 private1.339.95,43813.0 Nursing and residential care facilities 11.521.32,90123.7 Offices of physicians36.715.82,15424.8 Offices of dentists20.75.878422.4 Home healthcare services3.36.486755.4 Offices of other health practitioners19.34.257128.3 Outpatient care centers3.43.648924.3 Other ambulatory healthcare services 1.41.621632.3 Medical and diagnostic laboratories2.31.5 20216.8 Source: U.S. Department of Labor (2006) www.bls.gov/oco/cg/cgs035.htm#nature.

9. Ozcan Ch1: Quantitative Methods in Health Care Management2009 9 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 Value added The essence of healthcare operations is to add value. Sick patient Treated patient

10. Ozcan Ch1: Quantitative Methods in Health Care Management2009 10 The Healthcare Process is: InputsProcessingOutputs Doctors, nursesExamination Healthy patients HospitalSurgery Medical SuppliesMonitoring EquipmentMedication LaboratoriesTherapy

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 Management2009 11

12. Who is the Healthcare Manager? Ozcan Ch1: Quantitative Methods in Health Care Management2009 12 Upper Level CEO? COO? CFO? CNO? Operational Decisions Mid-Level Manager Strategic Decisions: Upper-Level Managers and Executives

13. Ozcan Ch1: Quantitative Methods in Health Care Management2009 13 Decision Hierarchy Strategic Tactical Operational Broad Scope: Product Selection New Construction Location Decisions Technology Choices Moderate Scope: Staffing levels Supply Chain Equipment Selection Financial Resource Allocation Narrow Scope: Scheduling Controlling Quality Inventory Replenishment

14. Employment Potential for Healthcare Managers Ozcan Ch1: Quantitative Methods in Health Care Management2009 14 Table 1.3. Health Services by Occupation in 2006, and Projected Growth. Health services occupationEmployment (in 000) Percent change, 2006-2016 Management, business, and financial occupations57921.3 ……… Top Executives 9811.6 Professional and Related Occupations595521.3 Service Occupations433427.1 Office and administrative support occupations244614.4 All health service occupations13,62121.7 Source: U.S. Department of Labor (2006) www.bls.gov/oco/cg/cgs035.htm#nature.

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 Management2009 15

16. Ozcan Ch1: Quantitative Methods in Health Care Management2009 16 The End