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Ozcan: Chapter 6 Reengineering (Overview) Dr. Joan Burtner, Certified Quality Engineer Associate Professor of Industrial Engineering and Industrial Management

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 2 Chapter 6 Topics Work Design in Health Care Organizations Work Design Job Design Work Measurement-Standard Times Stopwatch Time Studies Standard and Predetermined Times Work Measurement Using Work Sampling Determination of Sample Size Work Simplification Flow Chart Work Distribution Chart Flow Process Chart Worker Compensation

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 3 What is Reengineering (Ozcan Interpretation)? Reengineering is a methodology intended to overcome the difficulty in realizing TQM/CQI performance over a long duration, as well as the myopic conduct of organizational change, restructuring and downsizing. To reengineer the system, healthcare managers must be able to understand work-design, jobs, job measurement, process activities, and reward systems – all well known concepts of industrial engineering. With that knowledge, they can recognize the bottlenecks in the old system, identify unnecessary and repetitive tasks, and eliminate them.

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 4 Importance of Work Design Human resources (manpower) represents over 40% of healthcare facility budgets Human resource management issues Productivity and satisfaction of staff involves an understanding of the work environment Work must be designed so that employees are happy, organizational productivity is high, and costs are minimized

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 5 Work Design- A Systems Perspective Work Design Work Measurement Time Study Predetermined Standard Work Sampling Job Design Who? How? Where? Job Simplification Worker Compensation Time Based Output Based Incentive Plans External Factors Source: Ozcan Figure 6.1

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 6 Frederick Winslow Taylor Developed scientific management approach Focused on time studies Asserted that conflicts between labor and management occurred because management had no idea how long jobs actually took

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 7 Socio-technical School Approach Efficiency School (Technical Focus) Behavioral School (Human Focus) Socio-technical School

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 8 How can jobs be improved? – Behavioral School Job enlargement-- give workers a larger portion of the total task (horizontal loading-- additional work at same level of skill and responsibility) Job enrichment-- increasing responsibility for planning and coordinating tasks (vertical loading) Job rotation-- workers periodically exchange jobs (limited applicability in healthcare)

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 9 Work Measurement Using Time Standards Time standards are important in establishing productivity measures, determining staffing level and schedules, estimating labor costs, budgeting, and designing incentive systems A time standard represents the amount of time needed for the average worker to do a specific job working under typical conditions

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 10 Standard Time Development The amount of time it should take a qualified worker to complete a specified task, working at a sustainable rate, using given methods and equipment, raw materials, and workplace arrangements is called a standard time. Standard time can be developed through: Stop-watch studies Historical times Predetermined data Work sampling

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 11 Stopwatch Time Studies Take time over a number of trials (cycles) Workers should be educated regarding the process to avoid suspicion and avoid the Hawthorne Effect Number of cycles to time (i.e., sample size) variability in observed times desired accuracy desired level of confidence for the estimate

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 12 Desired Confidence Z-value Determining Sample Size Accuracy desired may be explained by the percentage of the mean of the observed time. For instance, the goal may be to achieve an estimate within 10 percent of the actual mean. The sample size is then determined by: where: z = number of std. dev. needed for desired confidence s = sample std. dev. a = desired accuracy x = sample mean

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 13 An Alternative Formula Desired accuracy may be expressed as an amount (e.g., within one minute of the true mean). The formula for sample size becomes: where e = Accuracy or maximum error acceptable To make an initial estimate of sample size, you should take a small number of observations and then compute the mean and std. dev. to use in the formula for n.

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 14 Example 6.1 A heath care analyst wishes to estimate the time required to perform a certain job. A preliminary stopwatch study yielded a mean of 6.4 minutes and a standard deviation of 2.1 min. The desired confidence level is 95 percent. How many observations will be needed (including those already taken) if the desired maximum error is: a) +/- 10 percent? b) one-half minute? a) b)

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 15 Determining the Standard Time – Normal Time Observed Time-- average of observed times OT = x i /n Normal Time-- observed time adjusted for worker performance NT = OT * PR (where PR = performance standard measured for the entire job) NT = (E j *PR j ) (where PR is measured element by element) PR equals 1 for the average worker; PR< 1 is for a slower worker

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 16 Allowance Factor Standard time equals normal time multiplied by an allowance factor ST = NT * AF Allowance Factor accounts for personal delays, unavoidable delays, and/or rest breaks AF job = 1+A, where A= allowance percentage based on job time AF day = 1/(1-A), where A = allowance percentage based on work day

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 17 Table 6.1 Typical Allowance Percentages for Varying Healthcare Delivery Working Conditions Allowance LevelPercent 1. Basic-low (personal, fatigue, standing)11 2. Basic-moderate (basic-low and mental strain)12 3. Basic-high (basic-moderate and slightly uncomfortable heat/cold or humidity Medium-low (basic high and awkward position)16 5. Medium-moderate (medium-low and lifting requirements up to 20 lbs.)19 6. Medium-high (medium-moderate and loud noise)21 7. Extensive-low (medium-high and tedious nature of work)23 8. Extensive-medium (extensive-low and with complex mental strain)26 9. Extensive-high (extensive-medium and lifting requirement up to 30 lbs.)28 Source: Adapted from B.W. Niebel, 1988.

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 18 Allowance Factor Computations Compute the allowance factor if: The allowance is 20 percent of job time. The allowance is 20 percent of work day. A) AF = 1 + A = 1.20, or 120% B) AF = 1/(1-A) = 1/(1-.2) = 1.25 = 125%

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 19 What are the problems with time studies? Subjective performance ratings and allowances Only observable jobs can be studied Highly costly -- best for repetitive tasks Disrupts worker routine May cause worker resentment

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 20 Other Methods Historical/Standard Elemental Times Firms collect data on standard job elements Put these data together to determine job times Less costly and disruptive Limited applications in healthcare Predetermined Standards Obtained from trade publications Need no performance of allowance factor Operations are not interrupted

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide Technique for estimating the proportion of time that a worker or machine spends on various activities Observers make brief observations of a worker or a machine at random intervals over a period of time and simply note the nature of the activity Purpose: To estimate percentage of unproductive or idle time for repetitive jobs To estimate the percentage of time spent on various tasks for non-repetitive jobs Work Measurement Using Work Sampling

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide Work Sampling Steps 1) 1) Determine the sample size 2) Train the observers, 3) Develop random sample schedule 4) Take observations, and re-compute the desired sample size several times if initial estimates are not reliable 5) Determine the estimated proportion of time spent on specified activity

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 23 Estimating Required Sample Size CI = confidence interval, e = error, z = number of standard deviations needed to achieve desired confidence, sample proportion (number of occurrences divided by sample size), n = sample size. The goal of work sampling is to obtain an estimate that provides a specified confidence not differing from the true value by more than a specified error

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 24 Advantages of Work Sampling Observations less susceptible to short term fluctuations Little or no work disruption Workers are less resentful Less costly and time-consuming Many studies can be conducted simultaneously Useful for non-repetitive tasks

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 25 Disadvantages of Work Sampling Less detail on elements/tasks of a job Workers may alter patterns Often no record of method used by worker Observers may fail to adhere to random observation schedule Not useful for short, repetitive tasks Much time required to move from observation area to observation area to ensure randomness

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 26 Work Simplification Work Simplification-- process of changing work methods: Eliminate unnecessary parts of work Combine and rearrange parts of work Simplify work when possible Work Simplification Tools Flow Chart Work Distribution Chart Flow Process Chart Layout Chart

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 27 Process Decision Start/Terminate Preparation Document Manual Operation Figure 6.4 Commonly Used Flow Chart Symbols Off page connector On page connector

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 28 Patient Entry Figure 6.5 Flow Chart for Emergency Room Specimen Processing Triage: need blood? Nurse draws blood MD orders lab IS order entry Label & package Verification Lab Accession & analysis IS double entry MD terminates lab order (end) Patient Entry Triage: need blood? Nurse draws blood MD orders lab IS entry label & package Lab Accession & analysis Results arrive in ER (end) Initial ProcessAfter Improvement Yes end No end No

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 29 The Work Distribution Chart Shows what a department does to identify each of its major activities and to pinpoint the contribution of each employee to those activities Spotting Trouble Which activities consume the most time? Are tasks evenly distributed? Is there under-specialization? Are employees assigned too many unrelated tasks? Are talents utilized efficiently?

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 30 Flow Process Chart Records a procedure in a graphic form, using a sort of shorthand to simplify and unify the record Ensures every significant detail of the work process in its proper sequence is recorded Highlights inconsistencies and redundancies Can eliminate, combine, change (sequence, place, person), or improve activities Operation Move Inspect Delay Store

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 31 OPERATIONMOVEINSPECTDELAY Figure 6.3 Flow Process Chart for Emergency Room Specimen Processing

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Ozcan Ch. 6ISE 491 Fall 2009 Dr. Burtner Slide 32 Worker Compensation Compensation schemes: Time based-- most common in healthcare Output based-- more difficult to operationalize, yet pay is related to efforts Incentive Systems Profit sharing plans-- receive % of profits Gain sharing plans-- receive a % of the value (i.e., cost savings) realized through increases in productivity

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