Chapter 1: Quantitatve Methods in Health Care Management Yasar A. Ozcan 1 Chapter 1. Introduction to Quantitative Decision-Making Methods in Health Care

Chapter 1: Quantitatve MChapter 1: Quantitatve Methods in Health Care Maethods in Health Care Management nagement

Yasar A. OzcanYasar A. Ozcan 11

Chapter 1.

Introduction to Quantitative Decision-Making Methods in Health Care Management



OutlineOutlineOutlineOutline Overview of Healthcare Management Historical Background Nature of Healthcare Services Decision Making Healthcare Manager & Responsibilities Distinctive Characteristics of Healthcare Services

Overview of Healthcare Management Historical Background Nature of Healthcare Services Decision Making Healthcare Manager & Responsibilities Distinctive Characteristics of Healthcare Services



Healthcare Management is...Healthcare Management is... the management of processes or

health systems that provide care to patients.

the use of decision tools to manage and improve processes.



Healthcare Management Requires Decisions in:– Forecasting– Capacity planning– Staffing & Scheduling– Managing medical supplies– Quality Control– Motivating employees– And more . . .



Scientific Management Techniques (1910s) – Frederic W. Taylor: work/labor - observe, measure, analyze, improve.

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

Management Information Systems (1970s)

TQM/CQI (1980s)

Supply Chain Management, Reengineering (1990s)

Historical Background and Development of Decision Techniques



Nature of the Healthcare IndustryNature of the Healthcare Industry Combines medical technology and human touch,

administers care around the clock from newborns to critically ill

More than 518,000 establishments make the health services industry

Two-thirds of all private health services establishments are offices of physicians or dentists

Hospitals constitute two percent of all private health services, but they employ 40% of all health workers (with government hospitals 45%)

Source: U.S. Department of Labor Bureau of Labor statistics (2004), www.bls.gov



Table 1.2 Distribution of Health Providers and Health Workers in Health Services: in 2002, and Expected Growth

Provider typePercent of Providers

Percent ofEmployment Employment

(in 000)

Percentchange,

2002-2012

Hospitals, public and private 1.9 40.9 5,148 12.8

Nursing and residential care facilities

11.7 22.1 2,743 34.3

Offices of physicians 37.3 15.5 1,983 38.8

Offices of dentists 21.6 5.9 726 30.9

Home healthcare services 2.8 5.5 675 55.8

Offices of other health practitioners 18.2 3.9 482 48.8

Outpatient care centers 3.1 3.3 184 47.5

Other ambulatory healthcare services

1.5 1.5 174 37.6

Medical and diagnostic laboratories 1.9 1.4 5,148 12.8

Source: U.S. Department of Labor (2004).



This is What Healthcare Industry Do!Transform the Poor Health to Good Health

The difference between the cost of inputs and the value of outputs.

Inputs Land Labor Capital

Transformation/Conversion

process

Outputs Services

Control

Feedback

FeedbackFeedback

Value added

The essence of healthcare operations is to add value.

Sickpatient

Treatedpatient



Simply- Healthcare Process is:

Inputs Processing Outputs

Doctors, nurses Examination Healthy patientsHospital Surgery

Medical Supplies MonitoringEquipment MedicationLaboratories Therapy



Decision Making is the Key!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



Decision Making

System Design– capacity– location– arrangement of departments– product and service planning– acquisition and placement of

equipment



Decision Making

System operation– personnel– inventory– scheduling– project

management– quality assurance



Who is the Healthcare Manager?Who is the Healthcare Manager? •CEO?

•COO?

•CFO?

•CIO?

•CNO?

•CXO?

•Mid-Level Manager?

•Operational Level Manager?



Decisions fall into a hierarchy.

StrategicStrategic

TacticalTactical

OperationalOperational

Broad Scope:Product SelectionNew ConstructionLocation DecisionsTechnology Choices

Moderate Scope:Staffing levelsSupply ChainEquipment SelectionFinancial Resource Allocation

Narrow Scope:SchedulingControlling QualityInventory Replenishment



Employment Potential for Healthcare Managers?Employment Potential for Healthcare Managers?

Table 1.3. Health Services by Occupation in 2002, and Projected Growth.Health services occupation Employment

(in 000)Percentchange,

2002-2012

Management, business, and financial occupations 598 31.2

General and operations managers 81 34.1

Administrative services managers 32 28.4

Medical and health services managers 171 34.2

……… …… …….

All health service occupations 12,524 28.0

Source: U.S. Department of Labor (2004).



Patient is a participant in the process Production and Consumption occur

simultaneously Perishable Capacity Site selection is dictated by patient

location Labor intensiveness Intangible nature of healthcare outputs High level of judgment called upon and

heterogeneous nature of healthcare

Distinctive Characteristics of Healthcare Services



The End

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Chapter 1: Quantitatve Methods in Health Care Management Yasar A. Ozcan 1 Chapter 1. Introduction to Quantitative Decision-Making Methods in Health Care