Dr. Joan Burtner, CQE

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ISE 468 Healthcare Process Improvement

• Dr. Joan Burtner, CQE
• Associate Professor of Industrial Engineering and
  Industrial Management

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Chapter 1 Outline

• Overview of Healthcare Management
• Historical Background
• Nature of Healthcare Services
• Decision Making
• Process Model
• Healthcare Manager Responsibilities
• Distinctive Characteristics of Healthcare
  Services

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Nature of the Healthcare Industry 1

• Combines medical technology and human touch,
  administers care around the clock from newborns
  to critically ill
• More than 580,000 establishments make up the
  health services industry
• Nearly 77 percent of all health services
  establishments are offices of physicians,
  dentists, or other health care practitioners.
• Hospitals constitute 1.3 percent of all health
  service establishments, but they employ 34.8
  percent of all health workers.

Source U.S. Department of Labor Bureau of Labor
Statistics (2006), www.bls.gov/oco/cg/cgs035.htmn
ature
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Nature of the Healthcare Industry 2

• The largest industry in 2006, health care
  provides 13.6 million jobs for wage and salary
  workers and about 438,000 jobs for the
  self-employed.
• 7 of the 20 fastest growing occupations are
  health care related.
• Health care will generate 3 million new wage and
  salary jobs between 2006 and 2016, more than any
  other industry.
• Most workers have jobs that require less than 4
  years of college education, but health diagnosing
  and treating practitioners are among the most
  educated workers. .

Source U.S. Department of Labor Bureau of Labor
statistics (2006), www.bls.gov/oco/cg/cgs035.htmn
ature
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Table 1.2
Distribution of Health Providers and Health
Workers in Health Services in 2006, and Expected
Growth
Provider type Percent of Providers Percent of Employment Employment(in 000) Percentchange,2006-2016
Hospitals, public and private 1.3 39.9 5,438 13.0
Nursing and residential care facilities 11.5 21.3 2,901 23.7
Offices of physicians 36.7 15.8 2,154 24.8
Offices of dentists 20.7 5.8 784 22.4
Home healthcare services 3.3 6.4 867 55.4
Offices of other health practitioners 19.3 4.2 571 28.3
Outpatient care centers 3.4 3.6 489 24.3
Other ambulatory healthcare services 1.4 1.6 216 32.3
Medical and diagnostic laboratories 2.3 1.5 202 16.8
Source U.S. Department of Labor (2006)
www.bls.gov/oco/cg/cgs035.htmnature.
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Employment
Potential for Healthcare Managers
Table 1.3. Health Services by Occupation in 2006,
and Projected Growth.
Health services occupation Employment (in 000) Percent change, 2006-2016
Management, business, and financial occupations 579 21.3
Top Executives 98 11.6
Professional and Related Occupations 5,955 21.3
Service Occupations 4,334 27.1
Office and administrative support occupations 2,446 14.4
All health service occupations 13,621 21.7
Source U.S. Department of Labor (2006)
www.bls.gov/oco/cg/cgs035.htmnature.
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Transformation of Poor Health to Good Health
Sick patient
Treated patient
The essence of healthcare operations is to add
value.
Look at the difference between the cost of inputs
and the value of outputs
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The Healthcare Process is
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Decision Making is the Key

• There are two groups of decisions
• System Design-- capacity, location, departmental
  arrangements, product and service planning,
  acquisition and placement of equipment
• System Operations-- personnel, inventory,
  scheduling, product management, and quality
  measurement and assurance

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Decision Hierarchy
Broad Scope Product Selection New
Construction Location Decisions Technology Choices
Strategic
Moderate Scope Staffing Levels Supply
Chain Equipment Selection Financial Resource
Allocation
Tactical
Narrow Scope Scheduling Controlling
Quality Inventory Replenishment
Operational
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Distinctive
Characteristics of Healthcare Services

• Patient is a participant in the process (the
  patients condition is both the input and the
  output)
• Production and consumption occur simultaneously
  (poor care cannot be recalled)
• Perishable capacity
• Site selection is dictated by patient location
• Capacity is labor intensive
• Example operating rooms staffed but not used
• Intangible nature of healthcare outputs (patient
  opinions about service quality are formed over
  time)
• Heterogeneous nature of healthcare requires a
  high level of judgment

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The End