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Mismanaged Hospital Operations: A Neglected Threat To Reform

February 22nd, 2011

If one performs a “Google” search with the key words: “health reform” and “US  OR America” for 2007, one will find about 160,000 links. If one does the same for 2010, there will be over 2.5 million links.  Quite a difference!

This is not surprising, since the Affordable Care Act (ACA) is going to affect the life and well being of almost everybody. It affects the uninsured, it affects the insured, it affects children, it affects adults, and it affects the elderly. Initial debates, prior to the President signing the ACA into law, were about its affordability, implication on quality of care, etc. Then, it became a divider between both parties and frequently was about which party is “better” for people.  That was a time of “death panels”, “communists” and “fascists.”

“Small details,” like feasibility of the ACA, and the technical support necessary for its success, have gradually been moving to the back burner. Unfortunately, the need for attention to these “details” is still there. A perfect example of this is the progress, or lack thereof, in patient safety efforts. In particular, it is time to focus on the neglected but crucial area of hospital operations management.

Why Is Patient Safety Still Not Adequate?

For over ten years since the ground breaking and long overdue IOM report To Err is Human  citing 98,000 annual preventable deaths, there has been a national movement to improve quality of care. If one adds to the above Google search “quality OR safety”, the number 2.5 million links is reduced to a still impressive number of over 1.6 million links. Currently, we probably have more quality specialists in the healthcare delivery system than the number of avoidable annual deaths, and yet, the results are far from satisfactory.  Many researchers, policy makers and administrators have analyzed plausible causes of such lack of significant improvement, but one “elephant in the room” – hospital operations management – is still overlooked.

Traditionally, failure by the individual clinician was seen as the main source of medical error. The proposed remedies were appropriate education and training, emphasizing constant individual vigilance, and reinforcing the message with the threat of punishment through the malpractice system. More recent thinking shifts the emphasis away from blame directed at individual clinicians and toward the systems in which clinicians work. We applaud that, but believe that current strategies must be broadened to address the design of major hospital operational systems that affect patient load if progress in ensuring safe, high quality care is to gain leverage.

Managing Hospital Operations

If instead of “quality OR safety” one adds to the above mentioned Google search just two words “operations management”, 1.6 million links would shrink to just 400! This is a perfect evidence of our continuing unrealistic attempts to improve the healthcare delivery system and to add to it millions of uninsured, without analyzing its operations. There is no other industry (except maybe education) that is improving its product without optimizing its operations. In any industry, with no exceptions, operating systems have a huge impact on work climate, staffing, financial results and  customer satisfaction (see for example two well-known Harvard Business School case studies: McDonald’s Corp. and Burger King Corp.), and yet we are trying to change our health care delivery system without changing its core operations. We are trying to achieve the results we want just by changing the reimbursement system, by asking different parties to collaborate, etc. By focusing on reimbursement and ignoring operational realities, we might inadvertently achieve the exact opposite of what we desire: higher costs and lower quality of care.

One hospital-level factor (“condition”) experienced everyday by the system and caregivers that is particularly crucial to patient safety is patient volume.  The number of patients who must be treated in any given time period is a key condition under which a health care system must operate. Yet surprisingly, many hospitals ignore this key dimension in their improvement efforts.  Variation in patient demand strongly affects both the quality of care and its cost. It becomes more difficult to maintain quality of care as the number of patients needing care increases relative to the number of clinicians available, even with state-of-the-art clinical protocols and informational technology.   Even the best protocols cannot be consistently observed when the organization is overwhelmed with patients, and when staff therefore must take shortcuts to cope, or delay attending to some of those who need care.

In a recent Health Affairs publication, Maureen Bisognano of the Institute for Healthcare Improvement and I addressed this issue, describing a very specific practical way of how these costs could be eliminated while simultaneously improving quality of care significantly by smoothing variability in the number of patient treated.  We also provided examples of a few hospitals that achieved these results through smoothing artificial peaks in patient demand created by mismanaged operations rather than by patient needs. What would such an approach mean nationally?

A National Opportunity

Suppose we let hospital operations to be managed the same way they are being managed now with the same level of Emergency Departments overcrowding, the same number of medical errors, etc.  As has been demonstrated in the recent Institute of Medicine publication, even if we do not improve any of these characteristics, adding 32 million uninsured to the delivery system would result in hundreds of billions of dollars in incremental capital plus operational costs (without counting other hospital expenses for radiological equipment, Operating Rooms, etc.).  We do not even consider here availability of additional nurses, which itself is very questionable.

On the other hand, a scientific approach to managing patient flow would make these costs unnecessary.  In addition, it would result in significant improvements in patient safety and quality of care that could be simultaneously achieved.

Now, while many are watching the debates on the Capitol Hill on health reform, the reform is quietly repealing itself by mismanaged hospital operations. This manifests in multi-billion dollar waste, overcrowded Emergency Rooms, stressed nurses and unsatisfactory quality of care. Streamlining hospital operations should become an intrinsic part of reform implementation if we want to cover an additional 32 million people without throwing hundreds of billions of dollars at the health care delivery system.

Addressing this issue would make Senator Schumer’s recent call for bi-partisanship a reality: “We have the best health care system in the world and the most inefficient. If we can work together on cutting those costs without damaging the good health care that people get, that’s an area for bipartisan agreement.” This is the very issue that could unite both parties, and addressing it would greatly benefit all of us.

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2 Responses to “Mismanaged Hospital Operations: A Neglected Threat To Reform”

  1. Frank Meijers Says:

    As management consultant in healthcare I observe significant opportunities for Dutch hospitals to improve their accessibility, quality and efficiency dramatically. The key is focus on operations management and using a system approach. Based on hospital statistics and qualitative research, I estimate that Dutch hospitals can reduce costs with 20% to 40%. These opportunities are the same as the possibilities dr. Litvak sees for U.S. hospitals.

    The Dutch hospital statistics I analyzed, revealed the same patterns as the researches of dr Litvak have shown (from ultimate effects to root causes):

    1) Significant variations in patient volumes, during the day, week, month and year, have a strong and negative impact on most hospital performances dramatically (lower accessibility, quality and efficiency of care and more workload and stress for doctors and nurses).
    2) Variation in patient volumes leads to more preventable care for hospitals and patients (the readmission rates of patients are significantly and positively correlated with the workload of doctors and nurses (patient volume) during the admission period of these patients).
    3) Variation in the volume of elective (planned) care exceeds the variation in volume of emergency (unplanned) care.
    4) The variation in elective care is significantly correlated with the variation in the daily number of elective surgeries/admissions.
    5) The variation in elective surgeries (and hospital performances) is ultimately significantly correlated with the doctor’s personal agenda, and therefore with his/her presence during the day, week, month and year.

    Planning and organizing care around the doctors agenda increases variation and creates a downward spiral in hospital performances. That is why reducing this variation will result in an upward spiral.

    While trying to improve the utilization and efficiency of the expensive operating rooms, Dutch hospitals and operating facilities still focus on methods to maximize the daily number of elective surgeries/admissions, instead of determing a maximum/fixed number of elective daily, weekly and monthly surgeries, as dr. Litvak suggests.

    Besides the dramatic impact variation has on the performances of clinical units throughout the hospital, it therefore also must have an equal impact on the demand and performances (accessibility, quality and efficiency) of the medical support units (radiology, laboratories, etc.) and the facility services (cleaning, catering, energy, parking, etc). That in turn also effects the performances of the clinical units

    The positive impacts of spreading the number of daily surgeries/admissions that dr. Litvak has demonstrated in U.S. hospitals, is also proved in the Netherlands. An ICU with 32 beds implemented this method in 2009. Within a month the average length of stay dropped with 20% and the number of patients increased with more than 20%. The number of cancelled surgeries and admission refusals by the ICU also dropped significantly. The quality of care improved as well, because the readmission rate of patients, during and after their stay in the hospital, dropped significantly too.

    Before the change, management and doctors were all strongly convinced that the increased length of stay at the ICU in the last few years was caused by an increased complexity of the patients (more elderly and more comorbidity), and that more capacity was the only possible solution. They were skeptical about the suggested improvements in planning and organization of care. Eventually they were (and some still are) also skeptical about the major improvements after three months – despite the evidence: “it is temporarily and caused by a change in patient-mix” or “the problems of the ICU is shifted to other units within the hospital”. The improvements now lasts for almost three years.

    Investigation of the improvements revealed that further improvement is possible and necessary, by 1) aligning the available capacity of units through the hospital and their discharge and readmission criteria, 2) putting more explicit focus on realizing the treatment plan and expected length of stay of patients, 3) more timely and adequate communication about the expected discharge of patients with step-down units, external institutions where patients are transferred to, or the family or relatives of patients, 4) continuous observing, discussing and eliminating other structural bottlenecks for timely discharges.

    Realizing this (or any other) significant changes and improvements of quality and efficiency in Dutch healthcare/hospitals is hard (some say impossible).

    My conclusion is that the governance of the Dutch healthcare/hospitals is discouraging those improvements – unintentional – and that this is the hardest part to change. The root cause I see, is that healthcare organizations are still organized vertically (grouped around medical specialties – the same as dr. Litvak says for US hospitals, instead of around diseases or treatments) and that there is a structural lack of adequate management information about performances and their causes (what ultimately still leads to the focus on costs).

    This causes the following patterns in beliefs and behaviors: 1) a consistent and increasing gap between perceptions (of managers and doctors) and reality, due to the lack of information and feedback → 2) decision making based on gut feelings, politics and power, instead of based on facts, → 3) delegating power and responsibilities to unit managers and doctors, but due to the lack of information is executive management not able to control these responsibilities adequately, → 4) focus on personal or units interests and needs (and thus conflicting interests), instead of focus on patients and systems needs, → 5) focus on symptoms (which ultimately results in frustration and the ‘religion’ that change and improvements are impossible), instead of focus on root causes, → 6) lack of learning and cooperation, and ultimately → 7) the need to maintain the status quo, maybe because of the fear for dramatic improvements: what will be the consequences for hospitals and doctors?

    Is it the same or recognizable for U.S. healthcare/hospitals? What could be effective methods to start and create changes in the governance and performance patterns?


    I previously served as VPMA for a large teaching hospital. Every serious occurrence review I performed during my time in this position found high census or peaks in patient flow to be one of the root causes. Dr. Litvak is absolutely correct, unless we learn how to apply modern operations management techniques to health care, true reform and its two main goals – higher quality at lower cost – will not occur.

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