Healthcare Operations Management

452 Pages·2008·2.81 MB·English

by  Daniel B. Mclaughlin

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This book is about operations management and the strategic implementation of a
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programs, techniques, and tools for reducing costs and improving quality. It not l
only covers the basics of operations management, but also explains how operations t
and process improvement relate to contemporary healthcare trends such as evidence-based H
medicine and pay-for-performance. The book’s practical approach includes real-world c
examples to illustrate concepts. a
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Included CD-ROM e
The book explains and demonstrates the use of various software tools associated with problem
solving and decision making, including Microsoft Excel and Project. A version of Arena
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software is included in order to practice process modeling. Arena is a powerful simulation
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tool used by healthcare organizations to optimize patient flow, develop scheduling systems,
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and improve patient-care processes.
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Companion Website
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Visit ache.org/books/OpsManagement to access an extensive companion website that
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features various Excel templates, Arena models, tutorials, exercises, and PowerPoint
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presentations for each chapter.
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Daniel McLaughlin, MHA, is director of the Center for Business Excellence in the Opus a M a n ag e M e n t
College of Business at the University of St. Thomas, Minneapolis, MN. Previously, he was the n
executive director of the National Institute of Health Policy at the University of St. Thomas, a
the CEO of Hennepin County Medical Center, and the director of a county health system. g
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Julie M. Hays, PhD, MBA, recently deceased, was an associate professor in the Opus
College of Business at the University of St. Thomas. She was the 1998 recipient of the e
Juran Fellowship awarded by the Juran Center for Leadership in Quality at the University n
of Minnesota.
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McLaughlin/
Hays
Daniel B. McLaughlin
Julie M. Hays
Order No: 2102
HEALTHCARE
OPERATIONS MANAGEMENT
Association of University Programs in Health Administration
Health Administration Press
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Lydia M. Reed
AUPHA
Sharon B. Schweikhart, Ph.D.
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Nancy H. Shanks, Ph.D.
Metropolitan State College of Denver
HEALTHCARE
OPERATIONS MANAGEMENT
Daniel B. McLaughlin
Julie M. Hays
Health Administration Press, Chicago
AUPHA Press, Washington, DC
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This publication is intended to provide accurate and authoritative information in regard to
the subject matter covered. It is sold, or otherwise provided, with the understanding that the
publisher is not engaged in rendering professional services. If professional advice or other
expert assistance is required, the services of a competent professional should be sought.
The statements and opinions contained in this book are strictly those of the author(s)
and do not represent the official positions of the American College of Healthcare Exec-
utives, of the Foundation of the American College of Healthcare Executives, or of the
Association of University Programs in Health Administration.
Copyright © 2008 by the Foundation of the American College of Healthcare Execu-
tives. Printed in the United States of America. All rights reserved. This book or parts
thereof may not be reproduced in any form without written permission of the publisher.
12 11 10 09 08 5 4 3 2 1
Library of Congress Cataloging-in-Publication Data
McLaughlin, Daniel B., 1945-
Healthcare operations management / Daniel B. McLaughlin, Julie M. Hays.
p. ; cm.
Includes bibliographical references and index.
ISBN-13: 978-1-56793-288-1 (alk. paper)
ISBN-10: 1-56793-288-6 (alk. paper)
1. Medical care—Quality control. 2. Health services administration—Quality control. 3.
Organizational effectiveness. 4. Total quality management. I. Hays, Julie M., 1954- II. Title.
[DNLM: 1. Quality Assurance, Health Care—organization & administration. 2. Decision
Support Techniques. 3. Efficiency, Organizational—standards. 4. Total Quality
Management—methods. W 84.1 M4785h 2008]
RA399.A1M374 2008
362.1068—dc22 2007036070
The paper used in this publication meets the minimum requirements of American
National Standard for Information Sciences—Permanence of Paper for Printed Library
Materials, ANSI Z39.48-1984. ™
Acquisitions editor: Janet Davis; Project manager: Ed Avis; Cover designer: Chris
Underdown.
Health Administration Press Association of University Programs
A division of the Foundation in Health Administration
of the American College of 2000 14th Street North
Healthcare Executives Suite 780
One North Franklin Street, Suite 1700 Arlington, VA 22201
Chicago, IL 60606 [phone]
[phone]
To my wife, Sharon, and daughters, Kelly and Katie,
for their love and support throughout my career.
Dan McLaughlin
To my family, Kevin, Jessica, Jake, and Abby,
for their constant understanding and support.
Julie Hays
• • •
During the final stages of the completion of this book, Julie Hays unexpectedly
died. As Dr. Christopher Puto, Dean of the Opus College of Business at the
University of St. Thomas, said, “Julie cared deeply about students and their
learning experience, and she was an accomplished scholar who was
well-respected by her peers.” This book is a final tribute to Julie’s accomplished
career and is dedicated to her legacy.

ACKNOWLEDGMENTS
A number of people contributed to this work. Dan McLaughlin would like
to thank his many colleagues at the University of St. Thomas Opus College
of Business. Specifically, Dr. Ernest Owens provided guidance on the project
management chapter and Dr. Michael Sheppeck assisted on the human
resources implications of operations improvement. Former U.S. Senator
Dave Durenberger, of the National Institute of Health Policy, provided an
impetus for this book, as he strongly feels that system change in U.S. health-
care must come from within—this is what much of this book is about.
The outstanding professionals at Hennepin County Medical Center in
Minneapolis, Minnesota, also provided much of the practical and realistic
examples in this book. Finally, Dan McLaughlin would like to thank Profes-
sor Vernon Weckwerth of the University of Minnesota, who inspired the
author early in his career to be numerate in his management but also careful
“not to focus on counting wing flaps if the bird can’t fly.”
Julie Hays would like to thank her many colleagues at the University
of St. Thomas Opus College of Business, especially Dr. Thomas Ressler, who
greatly influenced the statistics review chapter of this text.
The authors would also like to thank Rockwell Automation for per-
mission to use Arena and for support of its application in healthcare. The
reviewers were particularly helpful with edits, comments, and suggestions for
additions. Janet Davis, acquisitions editor at Health Administration Press,
was invaluable in guiding the authors through the complex process of pub-
lishing in today’s multimedia world.

BRIEF CONTENTS
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii
Part I Introduction to Healthcare Operations . . . . . . . . . . . . . . . . . . . . . 1
1 The Challenge and the Opportunity . . . . . . . . . . . . . . . . . . . . . . . . 2
2 History of Performance Improvement . . . . . . . . . . . . . . . . . . . . . . 18
3 Evidence-Based Medicine and Pay-for-Performance . . . . . . . . . . . . 50
Part II Setting Goals and Executing Strategy . . . . . . . . . . . . . . . . . . . . 69
4 Strategy and the Balanced Scorecard . . . . . . . . . . . . . . . . . . . . . . . 70
5 Project Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Part III Performance Improvement Tools, Techniques,
and Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
6 Tools for Problem Solving and Decision Making . . . . . . . . . . . . . 138
7 Using Data and Statistical Tools for Operations Improvement . . . . . 170
8 Quality Management: Focus on Six Sigma . . . . . . . . . . . . . . . . . . 226
9 The Lean Enterprise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260
10 Simulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282
Part IV Applications to Contemporary Healthcare
Operations Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311
11 Process Improvement and Patient Flow . . . . . . . . . . . . . . . . . . . . 312
12 Scheduling and Capacity Management . . . . . . . . . . . . . . . . . . . . . 342
13 Supply Chain Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370
ix