Operations Management in Healthcare Organizations

HCM-401 Week II Group Project Questions from the Groups Pre-test Kyle Bain Value-Based Purchase John Donnelly Shared Saving Plan (SSP) Week II presentation by Kemal Erkan CCHS 2010 Annual Financial Report Balance Sheet Comparison P & L Comparison Changing the Behavior

Changing The Behavior of Responsible Parties Changing the Behavior Cost Profit Medicare Medicaid Fee For Service Length of Stay No Copay No Deductible Patients Physicians And Hospitals Insurance Companies Government

Where is the actual money spent? Hospital Faculty Fees $$$$$$ Lab/Tests Diagnostic / Others $$$$$ Professional Component $

Payments From Insurance Companies FacilityPhysicians GlobalNon- Global Technical Component Professional Component

Examples of Global Billing Cardiologist Stress Test $ $ Tech Component Interpretation

If the Physician makes profit from the technical component; Is there a conflict? If so how can we solve the problem? Defensive Medicine Most physicians will justify the high ordering of studies by bringing up the “medical liability/malpractice” issue.

Cutting Cost How do we measure the outcome ? Need Examples Screening Does it really help? Immunization How do we monitor?

02/ / / / /2011 REC Federal & State Government Funding 375 Million 267 Million 20 Million 32 Million 12Million

Changing the Behavior

Physician Income from the Hospital Charges 10 day Study Changing the Behavior

Balance Sheet 2011 Changing the Behavior

CEO (Chief Executive Officer) Chief Executive Officer The Chief Executive Officer will provide the leadership to implement the goals and objectives of the organization. Further, the CEO will be instrumental in the development of a strategic plan to promote revenue while meeting the organization’s agreed upon philosophy and mission. Changing the Behavior

COO (Chief Operating Officer) The chief operations officer establishes harmonious relations with the chief executive officer most importantly to ensure that the business is able to create profit. Normally, the chief operations officer is trained to succeed the chief executive officer. The chief operations officer has the capacity to issue commands to lower level workers in the absence of the chief executive officer. Changing the Behavior

CFO (Chief Financial Officer) The Chief Financial Officer is the top financial position in any organization. His or her role is to carry out the following tasks: -Oversees all company accounting practices, including accounting departments, preparing budgets, financial reports, tax and audit functions. -Directs financial strategy, planning and forecasts; conferring with president, VP of sales and department heads. -Supervises investment and raising of funds for business. -Studies, analyzes and reports on trends, opportunities for expansion and projection of future company growth. Changing the Behavior

CQO (Chief Quality Officer) A chief quality officer is responsible for designing, planning, and implementing performance improvement systems that integrate quality practices in an organization. A chief quality officer may be required to consult with the administrative team, department managers, and other staff on quality issues. Identification of the best methods to reduce risk is an important role played by such positions Responsibilities include making sure that data collected by the quality teams is effectively used to support continuous improvement. Changing the Behavior

Return On Investment (ROI) Changing the Behavior A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments.

Return On Investment (ROI) Changing the Behavior ROI = [(Payback -Investment)/Investment)]*100

Economy Of Scale Changing the Behavior The ability of larger entities (governments, businesses) to produce things more cheaply per unit because they produce so many.

Economy Of Scale Why should the average cost of providing treatment fall as a hospital becomes larger? There are a number of reasons. A large institution is able to make more use of specialization. This can involve both people and capital. A large hospital is able to develop specialist medical units employing both highly skilled surgeons and specialist capital equipment. Such a hospital is also able to employ specialized managers and ancillary staff which will allow it to operate more efficiently. A large institution is able to achieve purchasing economies of scale through bulk buying. capitaleconomies of scale A large hospital prevents wasteful duplication of facilities. There will only be a limited number of patients with a particular condition needing particular skills and equipment in any one area. Concentrating the treatment in one place allows the most efficient use of resources. Changing the Behavior