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HEALTHCARE OPERATIONS MANAGEMENT Bob Castleman CPIM, CIRM, CSCP, C.P.M.

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Presentation on theme: "HEALTHCARE OPERATIONS MANAGEMENT Bob Castleman CPIM, CIRM, CSCP, C.P.M."— Presentation transcript:

1 HEALTHCARE OPERATIONS MANAGEMENT Bob Castleman CPIM, CIRM, CSCP, C.P.M.

2 HEALTHCARE OPERATIONS MANAGEMENT HEALTHCARE OVERVIEW HEALTHCARE ISSUES OPERATIONS MANAGEMENT IN HOSPITALS LINKING WITH HOSPITALS

3 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.

4 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 / non- surgical, usually specialized and dispersed –Seeing primary hospitals sought for critical care, major surgery and no pay patients

5 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

6 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.

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

8 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

9 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

10 ISSUES - Resources There is a shortage of NURSES –In 2005, 115K were needed – , 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

11 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

12 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

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

14 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

15 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)

16 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, …)

17 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)

18 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

19 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

20 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

21 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

22 HEALTHCARE OPERATIONS MANAGEMENT Bob Castleman CPIM, CIRM, CSCP, C.P.M., CMfgT


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