02 Jul Talk about your thoughts and solutions to create ‘balance’
Discussion Assignment 2
4242 unread replies.4242 replies.
To be posted at the top of each discussion question/assignment:
Here are the overarching general instructions for every discussion assignment in this course.
- By day three 6/28/2023 of the discussion week, each student should make an initial post responding to the initial discussion question. Students should be sure the post meets the minimum length/word count requirements.
- If the day three deadline is not met, students will receive an automatic 5-point deduction in their grade for the discussion assignment in focus. To avoid being late, students are encouraged to set reminders on their smartphones regarding the discussion assignment due dates.
- By day seven 7/2/2023 of the discussion week, each student should post a minimum of two responses to other students’ initial posts. For example, student A must post a response to student B and student C. Again, students should be sure the response meets the minimum length/word count requirements. Also, the responses should have depth that helps to carry on the discussion. A simple “I agree” or “good job” (or anything similar to that) will garner zero points.
*Note discussions close after day 7 of their corresponding week, and there is no way to add posts after the discussion’s week has closed.
*Remember to write posts in MS Word prior to inputting the details into Canvas; this helps to assure points aren’t lost because of obvious grammatical errors. Also, students can use the MS “word count” tool to make sure their posts meet the minimum length requirements. However, please do not upload a document as your post; this makes it very cumbersome to view your input. Please, embed the actual posts into the Canvas module.
- Read Chapter 12 which focuses on scheduling and capacity management
- Read this article about how the current healthcare worker shortageLinks to an external site. (https://www.healthcaredive.com/news/lawmakers-fixes-healthcare-workforce-shortages/642994/) and this one about excess U.S. health spendingLinks to an external site. (https://www.healthaffairs.org/do/10.1377/hpb20220909.830296/#:~:text=Administrative%20spending%20accounts%20for%2015,of%20administrative%20spending%20is%20wasteful.)
- Make the initial post by day 3; it must be in an uploaded (or embedded) audio or video format. Text is not allowed for the initial post.
- Talk about your thoughts and solutions to create "balance" in the health worker space. Note we don't want to be wasteful, but we do want to make sure there are enough people in place so we achieve a high level of quality.
- In your opinion and based on artificial intelligence advances, what are there some health-focused jobs just no longer needed (why or why not)?
- Follow up on at least two (but more can be replied to) of your classmates' initial posts. Each reply should be at least 50 words. Provide feedback on why you agree or respectfully need more details about the students' provided resolutions. Be sure not to just say "I agree." Instead, add context and explain why one agrees. If you need more details, explain why/how you came to these inquiring questions.
- The students the profit the most from this assignment, usually interact with students throughout the week instead of just making the minimum required posts.
Daniel B. McLaughlin John R. Olson
Healthcare Operations Management T h i r d E d i T i o n
AUPHA/HAP Editorial Board for Graduate Studies
Nir Menachemi, PhD, Chairman Indiana University
LTC Lee W. Bewley, PhD, FACHE University of Louisville
Jan Clement, PhD Virginia Commonwealth University
Michael Counte, PhD St. Louis University
Joseph F. Crosby Jr., PhD Armstrong Atlantic State University
Mark L. Diana, PhD Tulane University
Peter D. Jacobson, JD University of Michigan
Brian J. Nickerson, PhD Icahn School of Medicine at Mount Sinai
Mark A. Norrell, FACHE Indiana University
Maia Platt, PhD University of Detroit Mercy
Debra Scammon, PhD University of Utah
Tina Smith University of Toronto
Carla Stebbins, PhD Des Moines University
Cynda M. Tipple, FACHE Marymount University
Health Administration Press, Chicago, Illinois
Association of University Programs in Health Administration, Washington, DC
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Copyright © 2017 by the Foundation of the American College of Healthcare Executives. Printed in the United States of America. All rights reserved. This book or parts thereof may not be reproduced in any form without written permission of the publisher.
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Library of Congress Cataloging-in-Publication Data Names: McLaughlin, Daniel B., 1945– author. | Olson, John R. (Professor), author. Title: Healthcare operations management / Daniel B. McLaughlin and John R. Olson. Description: Third edition. | Chicago, Illinois : Health Administration Press; Washington, DC : Association of University Programs in Health Administration, [2017] | Includes bibliographical references and index. Identifiers: LCCN 2016046001 (print) | LCCN 2016046925 (ebook) | ISBN 9781567938517 (alk. paper) | ISBN 9781567938524 (ebook) | ISBN 9781567938531 (xml) | ISBN 9781567938548 (epub) | ISBN 9781567938555 (mobi) Subjects: LCSH: Medical care—Quality control. | Health services administration—Quality control. | Organizational effectiveness. | Total quality management. Classification: LCC RA399.A1 M374 2017 (print) | LCC RA399.A1 (ebook) | DDC 362.1068— dc23 LC record available at https://lccn.loc.gov/2016046001
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Health Administration Press Association of University Programs A division of the Foundation of the American in Health Administration College of Healthcare Executives 1730 M Street, NW One North Franklin Street, Suite 1700 Suite 407 Chicago, IL 60606-3529 Washington, DC 20036 (312) 424-2800 (202) 763-7283
To my wife, Sharon, and daughters, Kelly and Katie, for their love and support throughout my career.
—Dan McLaughlin
To my father, Adolph Olson, who passed away in 2011. Your strength as you battled cancer inspired me to change and educate others about our healthcare system.
—John Olson
The first edition of this book was coauthored by Julie Hays. During the final stages of the completion of the book, Julie unexpectedly died. As Dr. Christopher Puto, dean of the Opus College of Business at the University of St. Thomas, said, “Julie cared deeply about students and their learning experience, and she was an accomplished scholar who was well respected by her peers.” This book is a final tribute to Julie’s accomplished career and is dedicated to her legacy.
—Dan McLaughlin and John Olson
vii
BRIEF CONTENTS
Preface …………………………………………………………………………………………xv
Part I Introduction to Healthcare Operations
Chapter 1. The Challenge and the Opportunity …………………………….3
Chapter 2. History of Performance Improvement ………………………..17
Chapter 3. Evidence-Based Medicine and Value-Based Purchasing ….45
Part II Setting Goals and Executing Strategy
Chapter 4. Strategy and the Balanced Scorecard …………………………..71
Chapter 5. Project Management ……………………………………………….97
Part III Performance Improvement Tools, Techniques, and Programs
Chapter 6. Tools for Problem Solving and Decision Making ………..135
Chapter 7. Statistical Thinking and Statistical Problem Solving ……..167
Chapter 8. Healthcare Analytics ……………………………………………..203
Chapter 9. Quality Management: Focus on Six Sigma …………………221
Chapter 10. The Lean Enterprise ………………………………………………255
Part IV Applications to Contemporary Healthcare Operations Issues
Chapter 11. Process Improvement and Patient Flow …………………….281
Chapter 12. Scheduling and Capacity Management ………………………323
Chapter 13. Supply Chain Management ……………………………………..345
Chapter 14. Improving Financial Performance with Operations Management ………………………………………………………..369
viii Brief Contents
Part V Putting It All Together for Operational Excellence
Chapter 15. Holding the Gains …………………………………………………391
Glossary …………………………………………………………………………………….411 Index ………………………………………………………………………………………..419 About the Authors ………………………………………………………………………..437
ix
DETAILED CONTENTS
Preface …………………………………………………………………………………………xv
Part I Introduction to Healthcare Operations
Chapter 1. The Challenge and the Opportunity …………………………….3 Overview ………………………………………………………………..3 The Purpose of This Book ………………………………………….3 The Challenge ………………………………………………………….4 The Opportunity ……………………………………………………..6 A Systems Look at Healthcare …………………………………….8 An Integrating Framework for Operations Management
in Healthcare ……………………………………………………..12 Conclusion …………………………………………………………….15 Discussion Questions ………………………………………………15 References ……………………………………………………………..15
Chapter 2. History of Performance Improvement ………………………..17 Operations Management in Action …………………………….17 Overview ………………………………………………………………17 Background……………………………………………………………18 Knowledge-Based Management …………………………………20 History of Scientific Management ………………………………22 Project Management ……………………………………………….26 Introduction to Quality ……………………………………………27 Philosophies of Performance Improvement ………………….34 Supply Chain Management ……………………………………….38 Big Data and Analytics …………………………………………….40 Conclusion …………………………………………………………….41 Discussion Questions ………………………………………………41 References ……………………………………………………………..42
Chapter 3. Evidence-Based Medicine and Value-Based Purchasing ….45 Operations Management in Action …………………………….45
x Detai led Contents
Overview ………………………………………………………………45 Evidence-Based Medicine …………………………………………46 Tools to Expand the Use of Evidence-Based Medicine …..54 Clinical Decision Support …………………………………………59 The Future of Evidence-Based Medicine and Value
Purchasing …………………………………………………………62 Vincent Valley Hospital and Health System and Pay for
Performance ………………………………………………………63 Conclusion …………………………………………………………….64 Discussion Questions ………………………………………………64 Note …………………………………………………………………….64 References ……………………………………………………………..65
Part II Setting Goals and Executing Strategy
Chapter 4. Strategy and the Balanced Scorecard …………………………..71 Operations Management in Action …………………………….71 Overview ………………………………………………………………71 Moving Strategy to Execution …………………………………..72 The Balanced Scorecard in Healthcare ……………………….75 The Balanced Scorecard as Part of a Strategic
Management System ……………………………………………76 Elements of the Balanced Scorecard System …………………76 Conclusion …………………………………………………………….93 Discussion Questions ………………………………………………93 Exercises ……………………………………………………………….94 References ……………………………………………………………..94 Further Reading ……………………………………………………..95
Chapter 5. Project Management ……………………………………………….97 Operations Management in Action ……………………………97 Overview ………………………………………………………………97 Definition of a Project ……………………………………………..99 Project Selection and Chartering ……………………………..100 Project Scope and Work Breakdown …………………………107 Scheduling …………………………………………………………..113 Project Control …………………………………………………….117 Quality Management, Procurement, the Project
Management Office, and Project Closure ………………120 Agile Project Management ……………………………………..124 Innovation Centers ………………………………………………..125
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The Project Manager and Project Team …………………….126 Conclusion …………………………………………………………..129 Discussion Questions …………………………………………….129 Exercises ……………………………………………………………..129 References ……………………………………………………………130 Further Reading ……………………………………………………130
Part III Performance Improvement Tools, Techniques, and Programs
Chapter 6. Tools for Problem Solving and Decision Making ………..135 Operations Management in Action …………………………..135 Overview …………………………………………………………….135 Decision-Making Framework …………………………………..136 Mapping Techniques ……………………………………………..138 Problem Identification Tools …………………………………..143 Analytical Tools …………………………………………………….153 Implementation: Force Field Analysis ……………………….162 Conclusion …………………………………………………………..163 Discussion Questions …………………………………………….163 Exercises ……………………………………………………………..164 References ……………………………………………………………165
Chapter 7. Statistical Thinking and Statistical Problem Solving ……..167 Operations Management in Action …………………………..167 Overview: Statistical Thinking in Healthcare ………………167 Foundations of Data Analysis …………………………………..169 Graphic Tools ……………………………………………………….169 Mathematical Descriptions ……………………………………..174 Probability …………………………………………………………..178 Confidence Intervals and Hypothesis Testing ……………..185 Simple Linear Regression………………………………………..192 Conclusion …………………………………………………………..198 Discussion Questions …………………………………………….199 Exercises ……………………………………………………………..199 References ……………………………………………………………201
Chapter 8. Healthcare Analytics ………………………………………………203 Operations Management in Action …………………………..203 Overview …………………………………………………………….203 What Is Analytics in Healthcare? ………………………………203 Introduction to Data Analytics ………………………………..205
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Data Visualization …………………………………………………209 Data Mining for Discovery ……………………………………..214 Conclusion …………………………………………………………..217 Discussion Questions …………………………………………….218 Note …………………………………………………………………..218 References …………………………………………………………..219
Chapter 9. Quality Management—Focus on Six Sigma ……………….221 Operations Management in Action …………………………..221 Overview …………………………………………………………….221 Defining Quality …………………………………………………..222 Cost of Quality ……………………………………………………..223 The Six Sigma Quality Program ……………………………….225 Additional Quality Tools ………………………………………..240 Riverview Clinic Six Sigma Generic Drug Project ……….245 Conclusion …………………………………………………………..250 Discussion Questions …………………………………………….250 Exercises ……………………………………………………………..250 References ……………………………………………………………253
Chapter 10. The Lean Enterprise ………………………………………………255 Operations Management in Action …………………………..255 Overview …………………………………………………………….255 What Is Lean? ………………………………………………………256 Types of Waste ……………………………………………………..257 Kaizen …………………………………………………………………259 Value Stream Mapping …………………………………………..259 Additional Measures and Tools ………………………………..261 The Merging of Lean and Six Sigma Programs …………..274 Conclusion …………………………………………………………..276 Discussion Questions …………………………………………….276 Exercises ……………………………………………………………..277 References ……………………………………………………………277
Part IV Applications to Contemporary Healthcare Operations Issues
Chapter 11. Process Improvement and Patient Flow …………………….281 Operations Management in Action …………………………..281 Overview …………………………………………………………….281 Problem Types ……………………………………………………..282 Patient Flow …………………………………………………………283
xiiiDetai led Contents
Process Improvement Approaches ……………………………284 The Science of Lines: Queuing Theory …………………….292 Process Improvement in Practice ……………………………..304 Conclusion …………………………………………………………..318 Discussion Questions …………………………………………….319 Exercises ……………………………………………………………..319 References ……………………………………………………………320 Further Reading ……………………………………………………321
Chapter 12. Scheduling and Capacity Management ………………………323 Operations Management in Action …………………………..323 Overview …………………………………………………………….323 Hospital Census and Rough-Cut Capacity Planning ……324 Staff Scheduling ……………………………………………………326 Job and Operation Scheduling and Sequencing Rules ….330 Patient Appointment Scheduling Models …………………..334 Advanced-Access Patient Scheduling …………………………337 Conclusion …………………………………………………………..341 Discussion Questions …………………………………………….341 Exercises ……………………………………………………………..341 References ……………………………………………………………342
Chapter 13. Supply Chain Management ……………………………………..345 Operations Management in Action …………………………..345 Overview …………………………………………………………….345 Supply Chain Management ……………………………………..346 Tracking and Managing Inventory ……………………………347 Demand Forecasting ……………………………………………..349 Order Amount and Timing …………………………………….354 Inventory Systems …………………………………………………362 Procurement and Vendor Relationship Management ……364 Strategic View ………………………………………………………364 Conclusion …………………………………………………………..365 Discussion Questions …………………………………………….366 Exercises ……………………………………………………………..366 References ……………………………………………………………368
Chapter 14. Improving Financial Performance with Operations Management ………………………………………………………..369 Operations Management in Action …………………………..369 Overview: The Financial Pressure for Change …………….369
xiv Detai led Contents
Making Ends Meet on Medicare and the Pressure of Narrow Networks ……………………………………………..370
Conclusion …………………………………………………………..386 Discussion Questions …………………………………………….386 Exercises ……………………………………………………………..387 Note …………………………………………………………………..387 References ……………………………………………………………387
Part V Putting It All Together for Operational Excellence
Chapter 15. Holding the Gains …………………………………………………391 Overview …………………………………………………………….391 Approaches to Holding Gains ………………………………….391 Which Tools to Use: A General Algorithm …………………397 Data and Statistics …………………………………………………404 Operational Excellence …………………………………………..405 The Healthcare Organization of the Future ……………….407 Conclusion …………………………………………………………..408 Discussion Questions …………………………………………….408 Case Study …………………………………………………………..409 References ……………………………………………………………410
Glossary …………………………………………………………………………………….411 Index ………………………………………………………………………………………..419 About the Authors ………………………………………………………………………..437
xv
PREFACE
This book is intended to help healthcare professionals meet the challenges and take advantage of the opportunities found in healthcare today. We believe that the answers to many of the dilemmas faced by the US healthcare system, such as increasing costs, inadequate access, and uneven quality, lie in organizational operations—the nuts and bolts of healthcare delivery. The healthcare arena is filled with opportunities for significant operational improvements. We hope that this book encourages healthcare management students and working profession- als to find ways to improve the management and delivery of healthcare, thereby increasing the effectiveness and efficiency of tomorrow’s healthcare system.
Many industries outside healthcare have successfully used the programs, techniques, and tools of operations improvement for decades. Leading health- care organizations have now begun to employ the same tools. Although numer- ous other operations management texts are available, few focus on healthcare operations, and none takes an integrated approach. Students interested in healthcare process improvement have difficulty seeing the applicability of the science of operations management when most texts focus on widgets and production lines rather than on patients and providers.
This book covers the basics of operations improvement and provides an overview of the significant trends in the healthcare industry. We focus on the strategic implementation of process improvement programs, techniques, and tools in the healthcare environment, with its complex web of reimburse- ment systems, physician relations, workforce challenges, and governmental regulations. This integrated approach helps healthcare professionals gain an understanding of strategic operations management and, more important, its applicability to the healthcare field.
How This Book Is Organized
We have organized this book into five parts:
1. Introduction to Healthcare Operations 2. Setting Goals and Executing Strategy 3. Performance Improvement Tools, Techniques, and Programs
xvi Preface
4. Applications to Contemporary Healthcare Operations Issues 5. Putting It All Together for Operational Excellence
Although this structure is helpful for most readers, each chapter also stands alone, and the chapters can be covered or read in any order that makes sense for a particular course or student.
The first part of the book, Introduction to Healthcare Operations, begins with an overview of the challenges and opportunities found in today’s healthcare environment (chapter 1). We follow with a history of the field of management science and operations improvement (chapter 2). Next, we discuss two of the most influential environmental changes facing healthcare today: evidence-based medicine and value-based purchasing, or simply value purchasing (chapter 3).
In part II, Setting Goals and Executing Strategy, chapter 4 highlights the importance of tying the strategic direction of the organization to operational initiatives. This chapter outlines the use of the balanced scorecard technique to execute and monitor these initiatives toward achieving organizational objec- tives. Typically, strategic initiatives are large in scope, and the tools of project management (chapter 5) are needed to successfully manage them. Indeed, the use of project management tools can help to ensure the success of any size project. Strategic focus and project management provide the organizational foundation for the remainder of this book.
The next part of the book, Performance Improvement Tools, Tech- niques, and Programs, provides an introduction to basic decision-making and problem-solving processes and describes some of the associated tools (chapter 6). Most performance improvement initiatives (e.g., Six Sigma, Lean) follow these same processes and make use of some or all of the tools discussed in chapter 6.
Good decisions and effective solutions are based on facts, not intuition. Chapter 7 provides an overview of data collection processes and analysis tech- niques to enable fact-based decision making. Chapter 8 builds on the statistical approaches of chapter 7 by presenting the new tools of advanced analytics and big data.
Six Sigma, Lean, simulation, and supply chain management are specific philosophies or techniques that can be used to improve processes and systems. The Six Sigma methodology (chapter 9) is the latest manifestation of the use of quality improvement tools to reduce variation and errors in a process. The Lean methodology (chapter 10) is focused on eliminating waste in a system or process.
The fourth section of the book, Applications to Contemporary Health- care Operations Issues, begins with an integrated approach to applying the various tools and techniques for process improvement in the healthcare environ- ment (chapter 11). We then focus on a special and important case of process improvement: patient scheduling in the ambulatory setting (chapter 12).
xviiPreface
Supply chain management extends the boundaries of the hospital or healthcare system to include both upstream suppliers and downstream custom- ers, and this is the focus of chapter 13. The need to “bend” the healthcare cost inflation curve downward is one of the most pressing issues in healthcare today, and the use of operations management tools to achieve this goal is addressed in chapter 14.
Part V, Putting It All Together for Operational Excellence, concludes the book with a discussion of strategies for implementing and maintaining the focus on continuous improvement in healthcare organizations (chapter 15).
Many features in this book should enhance student understanding and learning. Most chapters begin with a vignette, called Operations Management in Action, that offers a real-world example related to the content of that chapter. Throughout the book, we use a fictitious but realistic organization, Vincent Valley Hospital and Health System, to illustrate the various tools, techniques, and programs discussed. Each chapter concludes with questions for discussion, and parts II through IV include exercises to be solved.
We include abundant examples throughout the text of the use of various contemporary software tools essential for effective operations management. Readers will see notes appended to
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