Presentation is loading. Please wait.

Presentation is loading. Please wait.

Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 1 Chapter 3. Decision Making in Healthcare Facilities What should I do?

Similar presentations


Presentation on theme: "Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 1 Chapter 3. Decision Making in Healthcare Facilities What should I do?"— Presentation transcript:

1 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 1 Chapter 3. Decision Making in Healthcare Facilities What should I do?

2 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 2 Outline   Decision Process   What Causes Poor Decisions?   The Decision Level & Decision Milieu   Decision Making under Uncertainty – –Payoff Table – –Methods   Decision Making under Risk – –EVM, EOL, EVPI – –Decision Tree Approach – –Rollback Procedure   What if Payoff Values are Cost?   Decision Analysis with Non-Monetary Values & Multiple- Attributes – –Dominance – –Minimum Attribute Satisfaction – –Most Important Attribute

3 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 3 The Decision Process   Identification of the problem and its nature   Specification of objectives and decision criteria   Development of alternatives   Analysis and comparison of alternatives   Selection of the best alternative   Implementation of the choice   Controlling and monitoring the results

4 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 4 What Causes Poor Decisions? Mistakes in the Decision Process Bounded Rationality: is the limits imposed on decision making by costs, human abilities and errors, time, technology, and the tractability of data. Suboptimization: is characterized by Decisions are often departmentalized as separate organizational units compete for scarce resources. Individual departments often seek solutions that benefit their own department, but not necessarily the healthcare organization as a whole.

5 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 5 Decision Theory represents a general approach to decision making which is suitable for a wide range of operations management decisions, including: capacity, service design, location planning, equipment selection, etc.

6 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 6 The Decision Level & Decision Milieu Certainty-- Known values for parameters of interest Uncertainty-- Impossible to assess the likelihood of various possible future events Risk-- Certain parameters have probabilistic outcomes Certainty-- Known values for parameters of interest Uncertainty-- Impossible to assess the likelihood of various possible future events Risk-- Certain parameters have probabilistic outcomes

7 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 7 Certainty Certainty rarely exists, especially in health care decisions. But if it does, simply choose the best available option (highest profit/least cost).

8 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 8 Decision Making under Uncertainty  Maximin-- best of the worst (pessimist)  Maximax-- best of the best (optimist)  Hurwitz-- allows you to adjust the probabilities/weighing between maximin and maximax or pessimist vs. optimist  Laplace-- best average payoff  Minimax Regret-- best of the worst regrets

9 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 9 Table 3.1 Payoff Table Alternative\State of Nature S1S1 S2S2 …….SnSn A1A1 O 11 O 12 …….O 1n A2A2 O 21 O 22 …….O 2n …………….….. AmAm O m1 O m2 …….O mn Decision Tools

10 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 10 Example 3.1: A major imaging center is not able to meet the increased demand from patients for MRIs. The administration is willing to explore the possibilities by evaluating such alternatives as adding one or two additional units or out sourcing to other image centers and earning a commission of $30.00 per MRI. A feasibility analysis showed that three major demand chunks could occur in the future, summarized as 500, 750 and 1000 additional MRI requests. The financial analysis of the potential business summarizes profits/losses under additional MRI demand chunks in a payoff table shown in Table below. Alternatives 500 Cases750 Cases1000 Cases Buy One MRI Unit-15* Buy Two MRI Units Outsource * in $ 000s

11 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 11 Maximin Solution * in $ 000s Alternatives500 Cases750 Cases1000 CasesWorst Buy One MRI Unit-15* Buy Two MRI Units Outsource

12 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 12 Maximax Solution * in $ 000s Alternatives500 Cases750 Cases1000 CasesBest Buy One MRI Unit-15* Buy Two MRI Units Outsource

13 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 13 Hurwitz Solution For optimism with α = 0.5. Then the HV value for the three alternatives would be: HV (Buy one MRI unit) =.5(300,000)+(.5)(-15,000) = 142,500. HV (Buy two MRI units)=.5(725,000)+(.5)(-150,000)= 287,500. HV (Outsource) =.5(40,000)+(.5)(15,000) = 27,500. αHVDecision Alternative ,000*Buy Two MRI Units.5287,500Buy Two MRI Units.4200,000Buy Two MRI Units Buy Two MRI Units.2460,600Buy One MRI Unit.248,000Buy One MRI Unit.117,500Outsource 015,000Outsource

14 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 14 Opportunity Losses (Regrets) * in $ 000s Alternatives500 Cases750 Cases1000 CasesWorst Buy One MRI Unit30*0425 Buy Two MRI Units Outsource

15 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 15 Laplace Strategy * in $ 000s Probability1/3 Expected Value Alternatives500 Cases750 Cases1000 Cases Buy One MRI Units-15* Buy Two MRI Units Outsource

16 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 16 Expected Value Model Once the healthcare manager has assessed the probability distribution, computation of the expected values for each alternative is straightforward, as follows: EMV(A i ) = Σ j p j O ij

17 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 17 Payoff Table for EMV * in $ 000s Probability.2.6.2Expected Value Alternatives500 Cases750 Cases1000 Cases Buy One MRI Unit-15* Buy Two MRI Units Outsource

18 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 18 Expected Opportunity Loss The probabilities can also be incorporated into the regrets (or opportunity losses) calculated earlier. In this way the healthcare manager can assess the expected losses and try to minimize them with proper decision. Calculations of expected opportunity loss follow the formula: EOL(A i ) = Σ j p j R ij

19 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 19 Expected Opportunity Loss * in $ 000s Probability.2.6.2Expected Opportunity Loss Alternative500 Cases 750 Cases 1000 Cases Buy One MRI Unit30* Buy Two MRI Units Outsource

20 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 20 Expected Value of Perfect Information (EVPI) EVUC = Σ j p j (Best O ij given S j ) EVPI = EVUC-EMV Probability Alternatives500 Cases750 Cases1000 Cases Buy One MRI Unit-15* Buy Two MRI Units Outsource * in $ 000s

21 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 21 Expected Value of Perfect Information (EVPI) EVUC = Σ j p j (Best O ij given S j ) EVUC = (.2*15000) + (.6*200000) + (.2*725000) = EVPI = EVUC-EMV EMV = $177,000 EVPI = $268,000 – $177,000 = $91,000

22 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 22 What if Payoffs are Costs? Alternatives500 Cases750 Cases1000 Cases Buy One MRI Unit2,050*2,0752,100 Buy Two MRI Units4,0504,0754,100 Outsource51015 * in $ 000s

23 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 23 Regret Table Using Costs Alternatives500 Cases750 Cases1000 Cases Buy One MRI Unit2,050-5=2,045*2,075-10=2,0652,100-15=2,085 Buy Two MRI Units4,050-5=4,0454,075-10=4,0654,100-15=4,085 Outsource5-5=010-10=015-15=0 * in $ 000s

24 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 24 Decision Tools-- The Decision Tree Decision Node Event Node Event Node Event Node Actions Action A Action B Action C Outcomes Events Outcome 1 Outcome 4 Outcome 7 Outcome 2 Outcome 5 Outcome 8 Outcome 3 Outcome 6 Outcome 9

25 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 25 Buy One MRI Unit Buy Two MRI Units Outsource 500 Cases, p= Cases, p= Cases, p= Cases, p= Cases, p= Cases, p= Cases, p= Cases, p= Cases, p=.2 -$15* $300 $200 -$150 $100 $725 $15 $22.5 $40 Figure 3.1 Decision Tree * in $000

26 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan Buy One MRI Unit Buy Two MRI Units Outsource 500 Cases, p= Cases, p= Cases, p= Cases, p= Cases, p= Cases, p= Cases, p= Cases, p= Cases, p=.2 -$15* $300 $200 -$150 $100 $725 $15 $22.5 $40 ║ ║ * in $000 Analysis of the Decision Tree: Rollback Procedure

27 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 27 Multi-attribute Decisions ó ó Dominance Procedure: compares a pair of alternatives attribute by attribute. ó ó Minimum Attribute Satisfaction Procedure: satisfactory levels are set for each alternative ó attributes are ranked in order of importance ó Most Important Attribute Procedure: attributes are ranked in order of importance ó combines two or more of the above procedures. ó Combination: combines two or more of the above procedures.

28 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 28 Decision Analysis with Non-Monetary Values and Multiple Attributes Attributes* \ Alternative CardinalMcKessonOwens & Minor Importance Ranking Minimum Acceptable Level Availability7771>= 7 Reliability of IT Technology 7572>= 6 Quality of Products 8983>= 7 Cost in $000 per year 23,74924,19523,6885<=25,000 On Time Delivery97%95%97%4>=95% * Attributes are scored on a 1-10 scale (with the exception of those associated with costs and on-time-delivery percentage), score of 10 being most favorable.

29 Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 29 The End


Download ppt "Chapter 3: Quantitatve Methods in Health Care Management Yasar A. Ozcan 1 Chapter 3. Decision Making in Healthcare Facilities What should I do?"

Similar presentations


Ads by Google