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After reviewing the readings, please answer the following questions:

1) Do you think that is achievable? What would be the challenges you see in health care today to achieve that?

2) What challenges do you see in achieving that goal?


1. Spear, Steven J. Fixing HealthCare from the Inside, Today

2. Case Study: Virginia Mason Medical Center

3. Attached presentation
Operations Management

A CEO Checklist for High-Value Health Care: Ten Elements

Foundational elements • Governance priority—visible and determined leadership by CEO and board. • Culture of continuous improvement—commitment to ongoing, real-time learning. Infrastructure fundamentals • IT best practices—automated, reliable information to and from the point of care. • Evidence protocols—effective, efficient, and consistent care. • Resource utilization—optimized use of personnel, physical space, and other resources.

Care delivery priorities • Integrated care—right care, right setting, right providers, right teamwork. • Shared decision-making—patient-clinician collaboration on care plans. • Targeted services—tailored community and clinic interventions for resource-intensive patients. Reliability and feedback • Embedded safeguards—supports and prompts to reduce injury and infection. • Internal transparency—visible progress in performance, outcomes, and costs.

What is Operations Management? • The design, operation, and improvement of

the processes that create and deliver the organization’s services.

• The goal is to more effectively and efficiently produce and deliver the organization’s services.

Healthcare Management • The management of processes or health systems

that provide care to patients. • The use of decision tools to manage and

improve processes.

• Functional roles: – CEO – COO – CXO – Mid-level manager – Department or function manager

Health Care Operations Management – Process improvement. – Quality control and outcomes . – Patient satisfaction. – Financial operations – cost, reimbursement. – Supply chain management – procurement, medical supplies. – Human resources management – productivity, motivating

employees. – Information systems management. – Population health. – Physician alignment. – Governance. – Strategy and operations.

System Decisions

System Design Capacity.  Location. Proximity.  Service planning. Acquisition and placement of


System Operations Personnel.  Inventory.  Scheduling. Product management. Quality measurement

and assurance.

There are two groups of decisions:

Applicability to Health Care • Patient is a participant in the process. • Production and consumption occur

simultaneously. • Uncontrollable capacity. • Site selection is dictated by patient location. • Labor intensive.


Process or Performance Improvement

• Scientific management – Mass production

• TQM, CQI, Six Sigma • ISO 9000 • Lean • Six Sigma

Background • Scientific Management Techniques (1910s) – Frederic W. Taylor

• Standardization – Frank & Gillian Gilberth

• Psychological Effects of Work Conditions – Henry Gannt

• Quantitative Inventory Management (1915) – F.W. Harris

• Quality Control & Sampling (1930s) – W. Shewhart

• Operations Research/Management Science (1950s) Linear Programming (G. Dantzig), Queuing Models

• Japanese manufacturing advances – E. Demming (1950s)

• Management Information Systems (1970s)

• TQM (1980s)

• Supply Chain Management, Reengineering (1990s)

Health Care Data • System limitations of data • Data input lacks integrity • Data output, multiple interpretations • Data

– Operational, wait times, LOS – Clinical, utilization – Financial – Productivity – Systems and process – Quality outcomes – Patient satisfaction


The PDSA Cycle

• Plan the change: Establish the objectives and processes necessary to deliver results. Set an expected output focus.

• Do implement the change on a small scale: Choose a small group of people to test the change.

• Study the results: Measure the new processes and compare the results against the expected results.

• Act on what was learned: Analyze the differences to determine their cause. Determine where to apply changes that will include improvement.

PDSA is a way to test out improvements on a small scale before implementing them across the board. It will give you the opportunity to see if the proposed change will work. Here’s how:

Key Questions • Continuous process

improvement. • Sustain and improve

gains. • Cyclical, rapid. • Customers or patients at

the core of the improvement result.

Failure Modes and Effects Analysis (FMEA) • Failure Modes and Effects Analysis (FMEA) is a systematic,

proactive method for evaluating a process to identify where and how it might fail and to assess the relative impact of different failures, in order to identify the parts of the process that are most in need of change. FMEA includes review of the following:

• Steps in the process: – Failure modes. (What could go wrong?) – Failure causes. (Why would the failure happen?) – Failure effects. (What would be the consequences of each failure?)

Failure Mode and Effects Analysis (FMEA)

• Failure mode: What could go wrong? • Failure causes: Why would the failure happen? • Failure effects: What would be the consequences of failure? • Likelihood of occurrence: 1–10, 10 = very likely to occur • Likelihood of detection: 1–10, 10 = very unlikely to detect • Severity: 1–10, 10 = most severe effect • Risk priority number (RPN): Likelihood of occurrence ×

Likelihood of detection × Severity

The Health Failure Modes and Effects Analysis (HFMEA)

• Tool for risk assessment. • Five steps:

1. Define the topic. 2. Assemble the team. 3. Develop a process map for the topic, and consecutively

number each step and substep of that process. 4. Conduct a hazard analysis (i.e., identify cause of failure

modes, score each failure mode using the hazard scoring matrix, and work through the decision tree analysis).

5. Develop actions and desired outcomes.

Root Cause Analysis (RCA) • A formalized investigation and problem-solving

approach focused on identifying and understanding the underlying causes of an event as well as potential events that were intercepted.

• System at the “root” of the problem, not individual. • Retrospective outline of events.

– What happened? – Why did it happen? – What can be done to prevent it from happening again?

Fishbone Diagram

• Cause and effect. • Problem = Effect • Categories of causes of problem:

– Methods – Machines (equipment) – People (manpower) – Materials – Measurement – Environment

Use a Fishbone Diagram when identifying possible causes for a problem, especially when a team’s thinking tends to fall into ruts.

Sentinel Events and/or “Never Events” • Serious and costly errors that should never

happen. • Examples:

– Surgery on the wrong part of the body. – Retention of foreign body. – Death with a fall. – Assault.

Force Field Analysis • A technique for evaluating all the forces for

(driving) and against (restraining) a proposed change.

• Used to decide whether a proposed change can be implemented successfully.

• Used to develop strategies that will enable successful implementation of a change.

Force Field Analysis

Plan: Change to

bedside shift


Critical incidents on the increase

Staff knowledgeable in change management

Increase in discharge against medical advice

Complaints from patients and doctors increasing

Care given predominantly biomedical in orientation

Ritualism and tradition

Fear that this may lead to more work

Fear of increased accountability

Problems associated with late arrivals

Possible disclosure of confidential information

Total: 19






Total: 21

Driving Forces Restraining Forces

Feedback Back Loop

Inputs Land Labor Capital

Transformation/ Conversion





Feedback Feedback

Value added Inputs:

Land Labor Capital

Transformation/ Conversion





Value added

The essence of health care operations is to add value.

Sick patient Treated


• No system is ever completely stable. • Each system’s performance is modified and controlled

by feedback. • Feedback is “any reciprocal flow of influence.” • Feedback can be reinforcing or balancing. • A confounding problem of feedback is delay. • Feedback in health care comes in many forms:

– Patient condition – Patient satisfaction – Quality/clinical outcomes

System: a set of interacting or interdependent entities forming an integrated whole

Process Improvement Touch Points

Inputs Processing Outputs

Doctors, nurses Examination Healthy patients Hospital Surgery Medical supplies Monitoring Equipment Medication Laboratories Therapy

Operations Management
A CEO Checklist for High-Value Health Care: �Ten Elements
What is Operations Management?
Healthcare Management
Health Care Operations Management
System Decisions
Applicability to Health Care
Process or Performance Improvement
Slide Number 11
Health Care Data
The PDSA Cycle
Key Questions
Failure Modes and Effects Analysis (FMEA)
Failure Mode and Effects Analysis (FMEA)
The Health Failure Modes and Effects Analysis (HFMEA)
Slide Number 19
Root Cause Analysis (RCA)
Fishbone Diagram
Slide Number 22
Sentinel Events and/or “Never Events”
Force Field Analysis
Force Field Analysis
Slide Number 26
Slide Number 27
Slide Number 28


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