White Paper Operations Research Applications to Support Performance Improvement in Healthcare

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1 White Paper Operations Research Applications to Support Performance Improvement in Healthcare Date: April, 2011 Provided by: Concurrent Technologies Corporation (CTC) 100 CTC Drive Johnstown, PA Business Point of Contact: Technical Point of Contact: Mr. Dave Davis Dr. John Dulin Senior Director, Healthcare Initiatives Principal Operations Research Analyst Phone: (814) Phone: (303)

2 1.0 INTRODUCTION Concurrent Technologies Corporation (CTC) is pleased to submit this white paper to describe our understanding of and our approach to addressing the challenges currently being faced by the healthcare industry. This white paper centers on the broad area of performance improvement in a healthcare setting, describing how the use of Operations Research (OR) tools, techniques and applications can be instrumental in developing solutions focused on specific issues experienced within healthcare organizations. 1.1 Background/Problem Description The United States healthcare industry has always been unique from a global perspective, and new governmental policy developed and instituted over recent years has created additional constraints under which healthcare organizations must operate. While the industry focus has always been on providing quality care, and rightfully so, that care must now be provided while dealing with many challenges that are prevalent across the industry: Aging infrastructure, technologies and processes Increasing complexity of healthcare requirements Limited resources, including personnel, beds and equipment Reduced revenues and profit margins Rising costs to deliver quality care Difficulty recruiting and retaining talent In light of these challenges, healthcare organizations are constantly searching for ways to improve their efficiency when it comes to providing patient care. This focus is a much more complicated endeavor than in other industries, owing to the extreme uncertainty surrounding the demand for healthcare. Furthermore, the highly interdependent nature of the various departments within a healthcare organization adds even more complexity to the problem of developing and implementing efficient performance improvement initiatives. Oftentimes these initiatives take a fairly narrow focus, identifying and addressing a specific issue without considering the ramifications of changes across the rest of the organization. For example, increasing throughput in the Emergency Department (ED) is a common effort in hospitals, and can sometimes be accomplished with low-cost process changes. But many times throughput gains can be offset by downstream effects, such as bottlenecks in the admissions process or insufficient capacity in inpatient units. To date, the healthcare industry has adopted a couple of primary tools and techniques in the pursuit of performance improvement. Lean and Six Sigma approaches have yielded much success within the industry through their focus on process refinement and waste reduction. While the qualitative aspects of these have proven useful in their application to healthcare, they are sometimes limited in their capability to assess the potential impacts of proposed solutions. Information technology (IT) and data management solutions have similarly resulted in some success, but the major shortcoming of these is that oftentimes organizations are forced to fit their data and processes into a standard system rather than developing an IT solution that supports the unique aspects and specific challenges of that organization. But the strengths of these approaches, such as process analysis and data 1

3 management, should not be overlooked. Operations research tools and techniques, when combined with effective process management and appropriate IT systems, can provide the edge that allows a healthcare organization to not only succeed, but to excel. 1.2 Solution Approach There is little argument that performance improvement is a significant challenge facing the healthcare industry. It is imperative that organizations continually evaluate their processes, and search for opportunities to implement changes that will ultimately improve organizational health. While there can be no one size fits all solution, the foundation for performance improvement lies in decision support. Organizational leadership maintains the ultimate responsibility for the performance of the organization, and so decisions about improvement initiatives must rest in their hands. The objective, therefore, is to provide leadership with complete, accurate and relevant information upon which to base their decisions. This is accomplished with solutions to specific problems using flexible methods that allow continuous analysis, solutions that take a broad view of the system as a whole to assess and monitor the overall impacts of those initiatives throughout the organization. To accomplish this, the application of OR tools and techniques can (1) accurately model demand patterns, including their variation, across the organization, (2) describe the interdependencies of areas throughout the organization, (3) incorporate constraints that limit an organization s ability to make changes, and (4) evaluate the expected impact of initiatives before any resources are allocated to their implementation. Providing detailed decision support within the healthcare industry is something of a departure from the past; utilizing OR within this decision support framework and taking a broader total hospital approach even more so. Dynamic solutions, near real-time data analysis and reporting, and organizational holism are key ingredients in driving performance improvement. Decision support that incorporates these elements can enhance the system by providing decision makers with a better understanding of current processes, how those processes affect one another, and how changes to one process will impact the entire system. Implementing dynamic, adaptive solutions, versus static, one-time resolutions, provides for perpetual improvement but continually monitoring and updating processes as environmental factors change. Making use of near real-time data supports both proactive and reactive planning, ensuring that all available information is considered and those short-term gains do not come at the expense of long-term benefits. Taking a holistic view of performance, recognizing that the whole is more than the sum of its parts, allows the strategic vision to be fully realized throughout the organization. These attributes can be integrated into a planning and decision support concept that seamlessly interfaces with existing tools and procedures to support resource planning, process optimization and what-if analysis. 2.0 CTC S APPROACH CTC takes a practical approach to performance improvement. This means first understanding the problem, then developing a solution. It means understanding the system-wide impacts of that 2

4 solution, rather than developing it in a vacuum. And it also means taking advantage of baseline tools and best practices to rapidly develop prototype solutions and quickly assess their expected results. By integrating OR tools with process analysis techniques and information systems, CTC s approach provides leadership with optimal solutions to specific challenges and a complete understanding of the expected impacts of improvement initiatives throughout the organization. CTC s approach to meeting the challenges being faced by the healthcare industry is to marry operations research tools, techniques and methodologies with process analysis and information technology to provide decision support in the development, evaluation, and implementation of performance improvement initiatives. Operations research is the discipline of applying advanced analytical methods to real-world problems in order to help make better decisions. This begins with effective data collection and analysis to fully understand the organization, includes thorough business process analysis to identify potential opportunities for improvement, and concludes with the application of quantitative methods to assess the expected impact of proposed initiatives. The result is asking the right questions and producing the best answers. 2.1 Operations Research Methods CTC leverages several OR methods to capture and unlock the complexities of healthcare performance challenges and provide decision makers with the insights needed to make the best decisions. These methods include optimization algorithms, statistical analysis, and modeling and simulation tools, among many others. The appropriate application of these techniques to specific areas within a healthcare organization can yield substantial benefits in terms of costs, resource utilization, patient satisfaction, and other performance metrics. CTC s expertise in both healthcare and OR methodologies produces the ideal combination of skills needed to effectively apply analytical methods to healthcare challenges. Patient flow analysis within and across clinics and support services is accomplished through simulation modeling, used to identify resource bottlenecks and the downstream effects of removing them. Mathematical programming is used to optimize staffing plans and personnel schedules, but with consideration for environmental and other qualitative factors that may complicate matters. Hierarchical capacity planning, based on statistical demand analysis and forecasting, provides insight into how resources are used and their best mix and assignment. This combination of tools and techniques produces a wellengineered solution that is essential to the smooth implementation of performance improvement initiatives. The result is effective resource allocation and capacity planning that leads to efficient utilization, limited waste, and appropriate levels of care. 2.2 Process Analysis Process analysis is the foundation upon which any long-term performance improvement solution must be built. Simply put, a process is the method by which something is done within an organization. But despite this simple definition, processes are generally quite complex and so a complete understanding requires in-depth analysis. Processes typically consist of inputs and outputs, flow units, activities and queues, resources, and an information structure. 3

5 CTC s approach to process analysis is two-fold. First, at the system (organizational) level, general processes are reviewed and modeled to quantify the interdependencies among the subsystems (departments). This answers a series of questions regarding process inputs and outputs, resource allocation and sharing, and capacity requirements, which provides the impetus behind understanding the impact of initiatives across the entire system: How are admissions managed, from both the ED and outside the hospital? How is patients flow through the hospital monitored and managed? Which resources are shared across departments and which are dedicated? How do ancillary areas and other clinical support services interact with primary, critical and emergency care units? Second, each subsystem is modeled and represented at the lowest entity and activity levels. This degree of detail delivers a thorough understanding of each cog in the organizational wheel, and leads to the identification of performance improvement opportunities. 2.3 Decision Support Systems A decision support system that accounts for clinical and departmental interdependencies, supports what-if analyses, describes the effects of systemic changes, and displays information at various levels appropriate to the question being asked, will offer a holistic solution that allows for efficient resource allocation, accurate data analysis and effective process management. In this respect, the foundation of process analysis combined with the scientific rigor of operations research provides an ideal platform from which to optimize a healthcare organization. Given the extreme variability in healthcare activity volumes owing to demand uncertainty, CTC uses multiple stochastic models to form the underlying basis for a decision support system, offering the flexibility and adaptability features required within the healthcare industry. The result is a comprehensive system that provides users with accurate, relevant and timely information to support initiative formulation, implementation and analysis. 3.0 SUMMARY In summary, CTC can help you make better decisions about complex challenges in your organization by applying advance analytics. We can model a proposed solution to understand its impact across the organization before a lot of time and money are expended. As pressure to reduce costs while maintaining or improving quality continue to escalate, let CTC be your partner to maximize the value of important operational decisions. 4

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