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HEALTHCARE OPERATIONS MANAGEMENT

Bob Castleman CPIM, CIRM, CSCP, C.P.M.

HEALTHCARE OPERATIONS MANAGEMENT


HEALTHCARE OVERVIEW HEALTHCARE ISSUES OPERATIONS MANAGEMENT IN HOSPITALS LINKING WITH HOSPITALS

HOSPITAL OPERATIONS MANAGEMENT


Healthcare is the most changing and the most regulated industry today. You must know operations management. Quality is critical throughout the process.

HEALTHCARE - OVERVIEW
Pre-1940s, healthcare was provided in the home. Hospitals were a place to die. Hospitals then became centralized in city centers and the population came to the hospital. Todays healthcare is:
moving with the population creating clinics: hospital / freestanding, surgical / nonsurgical, usually specialized and dispersed Seeing primary hospitals sought for critical care, major surgery and no pay patients

OVERVIEW - US HOSPITALS (2005)


5000 Hospitals (5900 in 1981) 850,000 Beds (1million in 1981) 4,500,000 Employees
26% are nurses

$500 Billion Revenue

OVERVIEW Key Resources


New FACILITIES are getting smaller, specialized, and dispersed. There is a growing shortage of SKILLED EMPLOYEES. TECHNOLOGY is advancing rapidly CT, MRI, Robotics, EMR (electronic medical records). INFORMATION SYSTEMS infrastructure is a growing focus.

ISSUES IN HEALTHCARE
SHRINKING REVENUE
Reimbursement has shifted from Retrospective (cost plus) to Prospective (set fee for a diagnosis DRG)

ISSUES IN HEALTHCARE
REVENUE P4P: Pay for Performance incentive for better outcomes EBM: Evidence Based Medicine scientific validation of procedures Bundling: payments (hospital and physician share) Gain sharing: hospital and physician share savings Never Events: will not be reimbursed for avoidable errors

ISSUES - Resources
There is a shortage of DOCTORS
Many Americans do not have a primary physician especially in rural areas and compounded by loss of insurance A shortage of 50K physicians by 2010 A shortage of 200K physicians by 2020

ISSUES - Resources
There is a shortage of NURSES
In 2005, 115K were needed 2004 - 2014, an additional 1.2 million nurses will be needed By 2020, the shortage may be one million More nurses are leaving the profession than are entering Nursing schools are turning away qualified applicants due to a lack of instructors

ISSUES - Other
COSTS OF ADVANCING TECHNOLOGY expensive technology is now the expectation of the patient, physician, employee, GOVERNMENT & OVERSIGHT REPORTING 8 indicators which must be reported for each patient

ISSUES - Operations
MANAGING DECENTRALIZED FACILITIES womens, urology, spinal, bariatric, minor medical, etc. RESOURCE TRACKING AND MANAGEMENT
Capital equipment location and utilization Consumable inventory location and amount

ISSUES - Operations
IMPROVE OPERATIONAL EFFICIENCY
Flows: caregiver, support, lab, physician, housekeeping, visitors Processes - routings Scheduling resource utilization Wait Times ED, at resources

OPERATIONS MANAGEMENT IN HOSPITALS


Growing focus on Hospital Management Terms being taught are APICS friendly
Materials management Supply chain management CPFR S&OP Process / value stream mapping De-bottlenecking LEAN / JIT / 6 sigma / DMAIC

OPERATIONS MANAGEMENT IN HOSPITALS


Local Examples (from interviews)
Managing limited resources surgeons/ORs Managing inventories in a distributed structure clinics Employee education of cost / revenue and process improvement consumable charges Resource utilization scheduling clinic surgery suites Reduced product variety for price leveraging stents Process flow and improvement - reduce wait times in the ED (emergency department)

LINKING WITH HOSPITALS


Healthcares self-perception: peoples lives and health, were different Trends, issues and drivers Roles and environment administration, physician, nurse, support Terminology, operations and processes Make contact with a friend (of a friend, of a friend, )

LINKING WITH HOSPITALS


TERMS
Exchange cart: inventory stocked on a cart for a specific work center for a defined period of time. A replacement cart is delivered and replaces the cart in place (orthopedic floor exchanged twice weekly). Par: inventory location and targeted product mix / quantities for a fixed location Case management / manager: a diagnosis (hip replacement, heart catherization, child birth) has process steps to follow, monitored by a manager a routing with timelines (for selected patients)

LINKING - Terms
Service line a grouping of closely related product lines (orthopedic, womens services, ) Diagnostic Related Group (DRG) standardized reimbursement charges reimbursed for a medical condition and related codes Charge Description Master (CDM) price list for material or service charged to the patient

LINKNG - Terms
Prospective payment reimbursement amount for treatment or illness classifications regardless of costs incurred Evidence Based Medicine scientific validation of proven result JCAHO (Joint Commission on Accreditation of Hospital Operations) a key auditing group on hospital processes, operations and documentation. Can dictate corrective action and de-certifying hospital for lack of correction

OPERATIONS MANAGEMENT IN HEALTHCARE


American Hospital Association (AHA)
aha.org

Association of Healthcare Resources and Materials Management (AHRMM)


ahrmm.org

Health Industry Group Purchasing Association (HIGPA)


higpa.org

Institute of Supply Management (ISM)


ism.org

A plethora of local and regional organizations

OPERATIONS MANAGEMENT IN HEALTHCARE


References:
American Hospital Association web-site Hospitals & Health Networks, American Hospital Association Interviews by Bob Castleman (various) Langebeer, James R. II,, Health Care Operations Management, Sudbury, MA., Jones and Bartlett Publishing Materials Management In Health Care, American Hospital Association MX: Business Strategies for Medical Technology Executives, Canon Communications, LLC

HEALTHCARE OPERATIONS MANAGEMENT


Bob Castleman CPIM, CIRM, CSCP, C.P.M., CMfgT rcastleman@comcast.net 901 854 0198 901 277 6684