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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. • Today’s healthcare is: • moving with the population • creating clinics: hospital / freestanding, surgical / non-surgical, 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 – women’s, 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 • Healthcare’s self-perception: people’s lives and health, “we’re 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, women’s 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 • firstname.lastname@example.org • 901 854 0198 • 901 277 6684