Operational Implications of Process Improvement
During this class, we examined a range of methods used in operations management to monitor, assess, and improve performance in health care organizations. In this final Assignment, you will review the Learning Resources made available throughout the class, and any additional external resources you may find. Then, you will synthesize your understanding of these resources, applying your knowledge to the Pediatric Hospital case study.
According to the case study, a kaizen event revealed that variability in operations performance and outcomes was the root cause of a bottleneck in scheduling MRIs. Three solutions were provided, including:
- Modify the master schedule.
- Streamline the insurance authorization process.
- Implement standardized work instructions.
To prepare for this Assignment:
Read the Pediatric Hospital in Tough Market Pegs Growth to Lean Process Improvement case study by Tonya Vinas, located in the Learning Resources. Review the key metrics and current state of the organization before the interventions were conducted.
In a 6- to 7-page report to the board of directors (not including title page or references):
- Assess operations requirements and resources for Pediatric Hospital. Describe what is working and what is not working.
- Conduct a quantitative and qualitative benchmark literature review and scan of operations best practices (from the health care industry or outside the health care industry) and provide and evaluate an example of an initiative that a high-reliability health care organization has implemented, and indicate how Pediatric Hospital can implement that initiative.
- Evaluate Pediatric Hospital’s readiness for the transition of health care systems from a volume- to value-based delivery system. Using data provided in this case, provide relevant and practical recommendations to improve its readiness and how it might affect the implementation of the initiative.
- Analyze the operational implications of 2–3 current health care reforms and mandates that might affect the implementation of the initiative.
- Consider current and future trends and forces in operations management excellence and assess how these can help this Pediatric Hospital and other similar health care organizations to become a sustainable model for high-reliability organization.
Pediatric Hospital Review
With increased competition and the need for improved service delivery, health care organizations are finding it imperative to improve efficiency and effectiveness of their operations. Moreover, improving efficiency and effectiveness of operations holds the potential to lower the operational costs. Akron Children’s Hospital is a health care organization that in the recent past has placed emphasis on lean concept to improve efficiency and effectiveness. The health care facility aims at improving service delivery and cutting a niche in the market industry. This paper examines the hospital’s change initiative over the recent past.
Assessment of Operations Requirement and Resources for Pediatric Hospital
The Pediatric Hospital, Akron Children’s Hospital (ACH) is among the best global pediatric hospitals, attracting patients from around the world. Due to its positive image, the hospital attracts a pool of best doctors and leading scientists from around the world. ACH is also a leading center of research and innovative surgical procedures that save the lives of children. Over the past few years, AHC has implemented a successful continuous improvement program known as Center for Operations Excellence. This program is key in transforming ACH into a leading pediatric facility in the region in terms of service provision. Another set of benefits from the program include saving costs and optimizing usage of various key assets. ACH maintains a simple operation system that has ensured easy adoption of lean systems. Key improvements include an additional 26 MRIs per week, reduction in flash sterilization rate to 2 percent, and increased number of surgeries per year.
Nonetheless, a lot still needs to be done to improve systems and processes at Akron Children’s Hospital. There is still low capacity with regard to the number of surgeries performed. For instance, the hospital is currently running at 64 percent capacity on surgery, with aims of improving this to about 85 percent efficiency in less than 3 years. Another problem the hospital is currently facing is lengthy wait times for patients. Although significant improvements have been made, patients still experience lengthy wait times. Doctor’s accessibility is another problem that closely relates to the previous problem on lengthy wait times. The hospital has in the past faced challenges with training and staff development.
Quantitative and Qualitative Benchmark Literature Review and Scan of Operations Best Practices
A closer look at the health care industry may reveal a number of impactful health care initiatives implemented by various health care organizations in an effort to improve service delivery. One of the initiatives is the implementation of a new dialysis machine in St. Johns Hospital, a regional medical center located in Springfield. The medical facility used to depend on an old dialysis machine, which often broke down causing delays in treatment of patients at the facility. The usual routine was to have the machine repaired. However, after some time the dialysis machine would develop another problem leading to a break down and delays in service delivery. The costs of repairing the old dialysis machine were high. In light of this, the management made a consideration to purchase a new and modern dialysis machine instead of relying on the old one. Quantitative reviews indicated that the benefits derived from purchasing a new dialysis machine far outweighed the costs associated with the old dialysis machine.
St. Johns Hospital conducted an environment scan to establish whether the new dialysis machine would fit to the organization. The environment scan was meant to assess space requirements as well as the level of skills needed to operate the new dialysis machine. In addition, the management had to ensure that there was a smooth transition from operating the old dialysis machine to the new dialysis machine. The hospital management noted that majority of patients with kidney failure were being referred to other hospitals. Since it is difficult to find possible donors, majority chose dialysis treatment. The new machine will improve service delivery in the hospital by ensuring that all patients receive treatment within the facility. ACH hospital can also implement such an initiative to upgrade its equipment especially the old ones that might be costly to run.
Pediatric Hospital’s Readiness for the Transition of Health Care Systems
There is need for Akron Children’s Hospital to make the transition from volume-based to value-based delivery system. ACH has taken active measures to ensure it transitions to value-based health care system. One of the measures is opening of the Center for Operations Excellence (COE), a type of department charged with value-based improvements (Vinas, n.d). The COE enables employees to achieve set goals within the organization. Over the recent past, COE has helped improve the efficiency and effectiveness of various programs. A value-based transition of the health care system is enabling the hospital to optimize asset utilization rates and to improve quality of service delivery among patients. An example of effective transition to value-based health care system is in MRI scheduling, where the hospital was able to overcome bottlenecks experienced in scheduling. By utilizing a Kaizen event, the hospital was able to identify challenges in MRI scheduling and improve the same by over 30 percent efficiency (Vinas, n.d).
The ACH’s readiness to transition the health care systems from volume to value-based delivery system is also evident in process improvement in the sterile processing area. The hospital had planned to spend about $3.5 million in enlarging the area (Vinas, n.d). By reducing the flash sterilization rate, the hospital was able to improve processes, which translates to a higher number of surgical procedures performed daily. There are various recommendations for improving the hospital’s readiness. For instance, the hospital may aim at streamlining the various services provide. Streamlining services can enable the hospital save costs and to increase its capacity by ensuring optimal utilization of resources. Another recommendation is for the hospital to empower employees. Empowering employees can enable the hospital improve efficiency and effectiveness by improving the motivation their motivation levels. Employee motivation is a critical factor in achieving organizational success.
Operational Implications of 2-3 Current Health Care Reforms and Mandates that Might Affect the Implementation of the Initiative
Various health care reforms may have a significant impact on the implementation of the initiative. A major current reform in the health sector is the introduction of the Affordable Care Act (ACA). The ACA has tremendously expanded the health system (Dolatshani, Hess, & Jee, 2013). The act has also improved coverage of health care even to the poor. One of the major changes under the ACA is the high insurance coverage – with the introduction of the act, the rate of uninsured has reduced from 16 percent to 9.1 percent since 2010. This represents an additional insurance coverage of about 20 million Americans (Dolatshani, Hess, & Jee, 2013). Although the Medicare program does not cover children, they can still benefit under the Medicaid program. The Medicaid program covers children if their families are under the low-income bracket. This is important since it makes it easier for children from poor backgrounds admitted in ACH to cover their hospital bills.
Another set of reforms under the ACA specifically targets children coverage. Under the new reforms, ACA has increased the mandatory level of children coverage in Medicaid program to 19 years. The new health insurance stipulates that children may be covered by Medicaid program up to age 26. This, however, depends on the income (if one’s income falls below 133% of the federal poverty level) (Dolatshani, Hess, & Jee, 2013). The new changes increase coverage for thousands of low-income families who could not afford health care owing to financial constraints. Another health care reform involves the nondiscrimination of children with pre-existing medical conditions in various health plans. This means that children with pre-existing medical conditions are still able to obtain insurance coverage. This policy may increase health insurance costs among providers.
Current and future trends and forces in operations management
Various current and future trends and forces in operations management may have a significant impact on the operations of the Pediatric Hospital. One of the current trends is a focus towards leanness and agility. This involves establishing ways of increasing efficiency by reducing waste and adding value to operations. Toyota introduced lean production as a way of reducing manufacturing inefficiencies. Over time, the principles of lean production spread to the health care industry as well. The agile concept emphasizes on key points such as speed, flexibility, quality, and responsiveness (Guimaraes & Carvalho, 2012). The agile concept gives organizations the ability to survive in competitive business environments. Adopting leanness and agility can enable ACH improve service delivery and to reduce operational costs.
Outsourcing is another current development in operations management that may have significant benefits in health care organizations. Outsourcing refers to the process of transferring particular internal activities to parties outside the firm (Guimaraes & Carvalho, 2012). Outsourcing enables the outsourcing company to concentrate operations on core activities while various activities or services are outsourced to third parties. Some of the services the hospital can outsource include clinical research, patient data security, big data, medical billing, and other services. Outsourcing may be benefit the health care system in a various ways. For instance, outsourcing can act as a way of mitigating risks. Another benefit is that it can give the hospital flexibility to adapt to changes in the environment without affecting service delivery (Guimaraes & Carvalho, 2012). Lastly, outsourcing also enhances cost reductions.
Another current development in operations management relates to performance measurement and the use of quality controls. This involves establishing how assessing various operations within an organization can help modify operations behavior. One of the major goals of health care organizations is providing quality service delivery to patients. Performance measurement enables health care organizations to establish how well they are accomplishing the goal of service delivery. Performance measurement and quality controls involves regularly collecting data in order to assess goal achievement.
To conclude, Akron Children’s hospital has significantly transformed service delivery through adoption of the lean concept. The health care facility has successfully transitioned to valued-based facility that emphasizes on service delivery. The introduction of lean concept has enable the health care facility to expand service delivery against space and personnel constraints. The key has been in eliminating waste and inefficiencies, leading to value-based service delivery.
Dolatshani, J., Hess, C., Jee, J. (2013). Health care reform and children: planning and design considerations for policymakers. National Academy for State Health Policy. Retrieved from http://www.nashp.org/sites/default/files/HCR.and_.Children.revised.pdf
Guimaraes, C. M., & Carvalho, J. C. (2012). Outsourcing in healthcare through process modularization – a lean perspective. International Journal of Engineering Business Management, 4(1): 45.
Vinas, T. (n.d). Pediatric Hospital in tough market pegs growth to lean process improvement. Lean Enterprise Institute. Retrieved from http://www.lean.org/search/documents/206.pdf