ISE 468 Healthcare Process Improvement Dr Joan Burtner

ISE 468 Healthcare Process Improvement Dr. Joan Burtner, CQE Associate Professor of Industrial Engineering and Industrial Management

Chapter 1 Outline l l l l Overview of Healthcare Management Historical Background Nature of Healthcare Services Decision Making Process Model Healthcare Manager & Responsibilities Distinctive Characteristics of Healthcare Services Ozcan: Quantitative Methods. . . Ch 1 part 2 2013 2

Nature of the Healthcare Industry 1 ü ü 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 percent 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 percent of all health workers. Source: U. S. Department of Labor Bureau of Labor Statistics (2006), www. bls. gov/oco/cg/cgs 035. htm#nature Ozcan: Quantitative Methods. . . Ch 1 part 2 2013 3

Nature of the Healthcare Industry 2 ü ü 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), www. bls. gov/oco/cg/cgs 035. htm#nature Ozcan: Quantitative Methods. . . Ch 1 part 2 2013 4

Table 1. 2 Distribution of Health Providers and Health Workers in Health Services: in 2006, and Expected Growth Percent of Providers Percent of Employment Hospitals, public and private 1. 3 Nursing and residential care facilities Employment (in 000) Percent change, 2006 -2016 39. 9 5, 438 13. 0 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 3. 3 6. 4 867 55. 4 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 Provider type Home healthcare services Offices of other health practitioners Source: U. S. Department of Labor (2006) www. bls. gov/oco/cg/cgs 035. htm#nature. Ozcan: Quantitative Methods. . . Ch 1 part 2 2013 5

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, 2006 -2016 579 21. 3 98 11. 6 5, 955 4, 334 2, 446 13, 621 21. 3 27. 1 14. 4 21. 7 Management, business, and financial occupations Top Executives Professional and Related Occupations Service Occupations Office and administrative support occupations All health service occupations Source: U. S. Department of Labor (2006) www. bls. gov/oco/cg/cgs 035. htm#nature. Ozcan: Quantitative Methods. . . Ch 1 part 2 2013 6

Transformation of Poor Health to Good Health Sick patient Treated patient Value added Inputs Land Labor Capital Transformation/ Conversion process Outputs Services Feedback Control Feedback The essence of healthcare operations is to add value. Look at the difference between the cost of inputs and the value of outputs Ozcan: Quantitative Methods. . . Ch 1 part 2 2013 7

The Healthcare Process is: Inputs Doctors, nurses Hospital Medical Supplies Equipment Laboratories Processing Examination Surgery Monitoring Medication Therapy Ozcan: Quantitative Methods. . . Ch 1 part 2 Outputs Healthy patients 2013 8

Decision Making is the Key… There are two groups of decisions: Ø System Design-- capacity, location, departmental arrangements, product and service planning, acquisition and placement of equipment Ø System Operations-- personnel, inventory, scheduling, product management, and quality measurement and assurance Ozcan: Quantitative Methods. . . Ch 1 part 2 2013 9

Decision Hierarchy Broad Scope: Product Selection New Construction Location Decisions Technology Choices Strategic Tactical Operational Ozcan: Quantitative Methods. . . Ch 1 part 2 Moderate Scope: Staffing Levels Supply Chain Equipment Selection Financial Resource Allocation Narrow Scope: Scheduling Controlling Quality Inventory Replenishment 2013 10

Distinctive Characteristics of Healthcare Services ü Patient is a participant in the process (the ü Production and consumption occur simultaneously (poor care cannot be recalled) Perishable capacity ü patient’s condition is both the input and the output) ü ü ü Site selection is dictated by patient location Capacity is labor intensive Example: operating rooms staffed but not used ü Intangible nature of healthcare outputs (patient ü Heterogeneous nature of healthcare requires a high level of judgment opinions about service quality are formed over time) Ozcan: Quantitative Methods. . . Ch 1 part 2 2013 11

The End Ozcan: Quantitative Methods. . . Ch 1 part 2 2013 12