ISE 468 ETM 568 Healthcare Process Improvement

1. ISE 468 ETM 568 Healthcare Process Improvement Dr. Joan Burtner, CQE Associate Professor of Industrial Engineering and Industrial Management

2. Chapter 1 Outline Overview of Healthcare Management Historical Background Nature of Healthcare Services Decision Making Process Model Healthcare Manager & Responsibilities Distinctive Characteristics of Healthcare Services 2015

3. 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 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/cgs035.htm#nature 2015

4. Nature of the Healthcare Industry 2 Source: U.S. Department of Labor Bureau of Labor statistics (2006), www.bls.gov/oco/cg/cgs035.htm#nature • 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. . 2015

5. Table 1.2 Distribution of Health Providers and Health Workers in Health Services: in 2006, and Expected Growth Source: U.S. Department of Labor (2006) www.bls.gov/oco/cg/cgs035.htm#nature. 2015

6. Employment Potential for Healthcare Managers Table 1.3. Health Services by Occupation in 2006, and Projected Growth. Source: U.S. Department of Labor (2006) www.bls.gov/oco/cg/cgs035.htm#nature. 2015

7. Value added Inputs Outputs Transformation/ Land Conversion Labor Services process Capital Feedback Control Feedback Feedback Transformation of Poor Health to Good Health Sick patient Treated patient The essence of healthcare operations is to add value. Look at thedifference between the cost of inputs and the value of outputs 2015

8. Inputs Processing Outputs Doctors, nurses Examination Healthy patients Hospital Surgery Medical Supplies Monitoring Equipment Medication Laboratories Therapy The Healthcare Process is: 2015

9. 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 2015

10. Decision Hierarchy Broad Scope: Product Selection New Construction Location Decisions Technology Choices Strategic Moderate Scope: Staffing Levels Supply Chain Equipment Selection Financial Resource Allocation Tactical Narrow Scope: Scheduling Controlling Quality Inventory Replenishment Operational 2015

11. Distinctive Characteristics of Healthcare Services - 1 • 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) • Intangible nature of healthcare outputs (patient opinions about service quality are formed over time) 2015

12. Distinctive Characteristics of Healthcare Services -2 • Perishable capacity • Site selection is dictated by patient location • Capacity is labor intensive • Example: operating rooms staffed but not used • Heterogeneous nature of healthcare requires a high level of judgment 2015