Continuous Improvement Programs in Health Care Service Organizations

A major focus of operations management is the work that must be completed to meet organizational objectives. And in order to meet these targets there is much emphasis on the design, management, and improvement of activities that creates the product and/or service that is delivered to customers. The activities and people, resources, and procedures that dictate how work is organized make up the operating system.[i] Taking a closer look at an organization’s operating system you find that there are building blocks to the operating process. The operating process is defined as “a set of tasks to be performed in a defined sequence and uses inputs (such as labor, capital, knowledge, raw materials, purchased components, and energy) to create outputs that are of great value to customers and therefore to the organization itself.[ii] 

It is often conventional to think of operations management, operating systems, or operating processes as approaches pertinent to an automobile assembly, however, every organization (public or for-profit) organizes work through an operating process. Take our main example for this discussion, hospitals/health service providers, there is an input of a sick patient, labor is applied (doctors, nurses, and support personnel), knowledge, capital (facilities and technology), energy, and supplies, which then outputs a healthy patient,[iii] optimistically. Similar to companies, hospitals place great emphasis on the efficiency of its operating processes, because of the impact processes can have on the customer promise (restore the health of the sick patients) and the value captured for its stakeholders (patient).  Due to this emphasis on optimal outcomes and other factors hospitals across America have incorporated continuous performance improvement (CPI) programs to improve their supply systems. 

Seattle Children’s Hospital and Kaiser Permanente are health services organizations that have enacted continuous performance improvement programs to meet their primary goal, providing patients with optimal care. At Seattle Children’s Hospital nurses in the intensive care unit (ICU) would place catheters in the closet, surgical dressing in patient dresser drawers and clamps in the nurse’s office due to an unreliable supply system. Nurses were very anxious when they couldn’t get their hands on tools needed for their patients, so they stored them, which, in turn, makes the shortages more acute.   The implementing of a CPI system, that follows practices used in manufacturing or retailing, made tubing is readily available on a fully stock rack.  The system set in place is as followed; “There are two bins for each item; when one bin is empty, the second is pulled forward. Empty bins go to the central supply office and the bar codes are scanned to generate a new order.”[iv] The system has cut the hospital storeroom in half with fewer supplies being discarded for exceeding their expiration dates. Seattle Children’s hospital has improved patient care and its bottom line by reducing waste and increasing value for customers through continuous improvements. Patrick Hagan, the hospital’s president maintains that “it turns out the highest quality care also is the most cost effective because we make fewer mistakes and create better outcomes.”[v]

Continuous performance improvement programs take into account every part of the patient’s stay at the hospital from parking lot to discharge in order to see what could work better for them and their families. CPI helped cut Seattle Children’s costs per patient by 3.7 percent, for a total savings of $23 million, and as patient demand has grown the hospital avoided spending $180 million on capital projects in 2010 by using its facilities more efficiently.[vi] In 2009, the hospital served 38,000 patients up from 27,000 in 2004, without expansions or adding beds.[vii] The hospital spent ~$20,000 overhauling the process to sterilize instruments and avoided a $3.5 million expenditure[viii] to expand the surgical department to increase the number of surgeries the hospital could perform. The hospital implemented an efficient schedule in the MRI department reducing the average waiting time for non-emergency MRI’s from 25 days to 1-2 days.[ix] CPI also helped the hospital reduce surgery wait time from three months to less than one month,[x] due to moving more surgeries to Fridays; patients could recover over the weekend when more beds are free, with parents and patients missing fewer work and school days as a consequence of this change.

IT professionals at Kaiser Permanente view CPI as the primary goals of healthcare technology. Ann O’Brien, director of clinical informatics at Oakland, California based Kaiser Permanente, maintains, “You have to look at what can enable small amounts of change as it relates to a larger goal of better quality for patients.”[xi] The inpatient environment is in chaos and nurses are experiencing cognitive overload wanting their path and workload simplified. To address the chaos and need for simplicity, Kaiser implemented rapid sign on technology and a system that moved clinical care dashboard information to their whiteboard. These new improvements require nurses to only login once a day to gain access to patient charts; an RFID chip on the nurses badges enables them to tap in or out of disparate records until nurses log off,[xii] at the end of their shift. O’Brien asserts, “If you’re saving 8 second and the nurse is logging on 100 time, you’re getting more than 13 minutes of direct care back, and in that time you can talk with patients or their families instead of spending your time looking for information.”[xiii] For Kaiser CPI programs are an opportunity for care to be much more patient-centric, real-time, intelligent and actionable.

While CPI’s have demonstrated efficiency for hospitals and healthcare service organizations, there has been some protest from labor personnel. CPI’s aim to standardized procedures within the health service process, however nurses view that not every part of the process can be standardized, specifically procedure times. In some cases where children need to be calmed before IV’s are inserted into their arms or parents need more information, there cannot be a set procedure time.[xiv] Largely due to nursing being more that a sum of parts but a complete patient centered experience. CPI is data-driven and can be challenging for many hospitals to put into effect, as it requires a large amount of time and a cultural shift, which can chafe hospital staff. George Labovtiz, management professor at Boston University, maintains that performance improvement programs have their limits since human health is much more variable and complex than making a car.[xv] Therefore even if you do everything ‘right’ you can till have a bad outcome.  

In weighing the positives of CPI and acknowledging the cultural challenges that organizations face when implementing CPIs, leads to the following question. What would be plausible alternative for addressing the cultural shifts associated with the data-driven nature of CPI programs?

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[i] Core Curriculum- Operations Management: Process Analysis. Harvard Business School. Roy D. Shapiro. September 12, 2013.

[ii] Core Curriculum- Operations Management: Process Analysis. Harvard Business School. Roy D. Shapiro. September 12, 2013.

[iii] Core Curriculum- Operations Management: Process Analysis. Harvard Business School. Roy D. Shapiro. September 12, 2013.

[iv] Factory Efficiency Comes to the Hospital. New York Times. Julie Weed. July 10,2010.

[v] Factory Efficiency Comes to the Hospital. New York Times. Julie Weed. July 10,2010.

[vi] Factory Efficiency Comes to the Hospital. New York Times. Julie Weed. July 10,2010.

[vii] Factory Efficiency Comes to the Hospital. New York Times. Julie Weed. July 10,2010.

[viii] Factory Efficiency Comes to the Hospital. New York Times. Julie Weed. July 10,2010.

[ix] Factory Efficiency Comes to the Hospital. New York Times. Julie Weed. July 10,2010.

[x] Factory Efficiency Comes to the Hospital. New York Times. Julie Weed. July 10,2010.

[xi] Kaiser informatics director: IT must be about continuous quality improvement for nurses. Fierce Health IT. Dan  Bowman. March 25, 2014.

[xii] Factory Efficiency Comes to the Hospital. New York Times. Julie Weed. July 10,2010.

[xiii] Factory Efficiency Comes to the Hospital. New York Times. Julie Weed. July 10,2010.

[xiv] Factory Efficiency Comes to the Hospital. New York Times. Julie Weed. July 10,2010.

[xv] Factory Efficiency Comes to the Hospital. New York Times. Julie Weed. July 10,2010.