1. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 1

2. Chapter 14 Holding the Gains

3. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 3 Holding the Gains Types of projects to select –Backlogs –Revenue less than expense –Poor outcomes Engage support departments Tools –HR planning –Managerial accounting –Feedback and control

4. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 4 Project identified Decrease staffing? Plan for maintaining staff Pool or redeploy Eliminate vacant position FTEs needed in other department? Vacant position? Lay off No Yes No Human Resources Planning

5. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 5 Holding the Gains Managerial Accounting Understand the source of revenue –Per member per month (PMPM) –Diagnosis-related group (DRG) (case mix adjusted) –Unit of service—relative value unit (RVU) –Retail Determine costs –Fixed –Variable –Overhead—allocation methodology Conduct cost-volume-profit analysis (CVP)

6. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 6 BasePI ProjectBasePI Project Test volume1,0001,5001,0001,050 Revenue/test150 Total revenue150,000225,000150,000157,500 Costs Variable cost/unit38 Fixed costs85,000 120,0080,000 Overhead20,000 Total cost143,000162,000178,000139,900 Profit7,00063,000(28,000)17,600 Backlogged Financial Loss CVP—Examples

7. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 7 Holding the Gains—Control Run Chart for Birthing Center Patient Satisfaction

8. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 8 Process Management Plan Answer request for appointment Log on to info system Current New Caller status Enroll caller Make appointment Monitoring Response plan

9. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 9

10. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 10 Levels of Operational Excellence Level 1 –There are no organized operations monitoring or improvement efforts at this level. –Quality efforts are aimed at compliance and the submission of data to regulatory agencies. Level 2 –Organization has begun to use operations data for decision making. –There are pockets of process improvement activities in which process mapping and PDCA or rapid prototyping are used. –Evidence-based medicine (EBM) guidelines are used in some clinical activities.

11. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 11 Levels of Operational Excellence Level 3 –Senior management has identified operations improvement efforts as a priority. –Organization conducts operations improvement experiments, uses a disciplined project management methodology, and maintains a comprehensive Balanced Scorecard. –Some P4P bonuses are received, and the organization obtains above-average scores on publicly reported quality measures. Level 4 –Organization engages in multiple process improvement efforts, using a combination of project management, Six Sigma, Lean, and simulation tools. –A significant number of employees have been trained in the advanced use of these tools, and these individuals lead process improvement projects. –EBM guidelines are used comprehensively, and all P4P bonuses are achieved.

12. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 12 Levels of Operational Excellence Level 5 –Operational excellence is the primary strategic objective of the organization. –Operations improvement efforts are underway in all departments, led by departmental staff who have been trained in advanced tools. –The organization uses real-time simulation to control patient flow and operations. –The organization develops and publishes new EBM guidelines and best practices for administrative operations. –The organization scores in the top 5 percent of any national ranking of quality and operational excellence.

13. Healthcare Operations Management © 2008 Health Administration Press. All rights reserved. 13 The Future Ambulatory care model— EBM based Emergency and inpatient care model—EBM based Predicted resource needs:  Facilities  Staff  Supplies Clinical operations Real-time data Real-time control Supply chain system Demand prediction system: Volume—clinical conditions Staff scheduling system

14. End of Chapter 14