Healthcare Operations Management

Chapter 2. History of Performance Improvement

Daniel B. McLaughlin Julie M. Hays

Chapter 2
History of Performance Improvement
Knowledge Based Management (KBM) Scientific Management
- Mass Production - Frederick Taylor - Frank and Lillian Gilbreth

Quality
- Quality Gurus

TQM, CQI, Six Sigma ISO 9000, Baldrige Award Lean Service Typologies

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Operations Management
What is operations management? Operations management is the design, operation, and improvement of the processes and systems that create and deliver the organizations products and services. The goal of operations management is to more effectively and efficiently produce and deliver the organizations products and services.
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Operations Management in Healthcare Organizations

Cost and level of healthcare is increasing
- 1987 11% of US economy for healthcare - 2004 15% of US economy

Control costs Improve level of service Improve quality

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Systems View

INPUT

Transformation Process
Feedback

OUTPUT

Labor Material Machines

Management Capital
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Goods or Services

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Knowledge Hierarchy
Importance
Wisdom Morals Understanding Knowledge Patterns Information Data Principles

Relationships

Learning
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Mass Production
Two men assembling car in Ford factory

Two men use hammers on Ford factory assembly line

Men work on Ford on assembly line and then drive away

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Frederick Taylor
The Principles of Scientific Management (1911) Wasted human effort One best way Four principles
Standard work Training Cooperation Planning
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Frank and Lillian Gilbreth

One best way Time and motion studies Cheaper by the Dozen

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Project Management
Gantt chart (early 1900s) Program Evaluation and Review Technique (1950s)
- U.S. Navy - Beta distribution for task times

Critical Path Method (1950s)

- DuPont and Remington Rand

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Quality Gurus
Walter Shewhart
- SPC and PDCA Do Plan PDCA Cycle Act

W. Edwards Deming Joseph M. Juran

Check

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W. Edwards Deming
Father of the quality revolution 1970s energy crisis Common cause versus special variation 14 points System of profound knowledge
Appreciation for a system Knowledge about variation Theory of knowledge Knowledge of psychology
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Joseph M. Juran
Quality trilogy
- Quality planning - Control - Improvement

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TQM (CQI) Six Sigma

TQM less codified than Six Sigma Based on the teachings of Shewhart, Deming, Juran Top management support and leadership Continuous improvement DMAIC, PDCA Six Sigma goal of 3.4 DPMO

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Quality Certification and Awards

ISO 9000
- To be certified, an organization must demonstrate compliance with the standards - Standards are concerned with the processes of insuring quality

Baldrige Award
- Based on organizational excellence in seven categories - Dissemination of best practices - 2005 winners
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JIT Lean Agile

Just In Time (JIT)
- Inventory management strategy aimed at reducing inventory

Lean
- Philosophy of eliminating waste

Agile
- Ability to respond quickly to changing conditions

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Service Process Matrix

Relative Throughput Time
Low

Service shop

Service factory

Professional service
High High

Mass service
Low

Degree of Variation Customer Interaction and Service Customization

Adapted from Schmenner, R. W. 2004. "Service Businesses and Productivity." Decision Sciences 35 (3): 333347. Copyright 2008 Health Administration Press. All rights reserved. 2-17

Supply Chain Management

Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. It also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies.
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Important Events in Performance Improvement

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Performance Improvement
Improve the quality, safety, efficiency, and effectiveness of healthcare using knowledge-based tools, techniques, and programs for system improvement.

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