Chapter 1.

Introduction to Quantitative Decision-Making Methods in Health Care Management

Chapter 1: Quantitatve Methods in Health Care Management

Yasar A. Ozcan

Outline

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

Chapter 1: Quantitatve Methods in Health Care Management

Yasar A. Ozcan

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.

Chapter 1: Quantitatve Methods in Health Care Management

Yasar A. Ozcan

 Healthcare

Management Requires Decisions in:

Forecasting Capacity planning Staffing & Scheduling Managing medical supplies Quality Control Motivating employees And more . . .

Chapter 1: Quantitatve Methods in Health Care Management

Yasar A. Ozcan

Historical Background and Development of Decision Techniques

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)
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Chapter 1: Quantitatve Methods in Health Care Management

Nature 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

Chapter 1: Quantitatve Methods in Health Care Management

Yasar A. Ozcan

Table 1.2 Distribution of Health Providers and Health Workers in Health Services: in 2002, and Expected Growth
Provider type Hospitals, public and private Nursing and residential care facilities Offices of physicians Offices of dentists Home healthcare services Offices of other health practitioners Outpatient care centers Other ambulatory healthcare services Medical and diagnostic laboratories
Source: U.S. Department of Labor (2004). Percent of Providers Percent of Employment Employment (in 000) Percent change, 2002-2012

1.9 11.7 37.3 21.6 2.8 18.2 3.1 1.5 1.9

40.9 22.1 15.5 5.9 5.5 3.9 3.3 1.5 1.4

5,148 2,743 1,983 726 675 482 184 174 5,148

12.8 34.3 38.8 30.9 55.8 48.8 47.5 37.6 12.8

Chapter 1: Quantitatve Methods in Health Care Management

Yasar A. Ozcan

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.
Sick patient

Value added
Inputs Land Labor Capital Transformation/ Conversion process
Feedback

Treated patient

Outputs Services

Control
Feedback
Chapter 1: Quantitatve Methods in Health Care Management

Feedback

The essence of healthcare operations is to add value.

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Simply- Healthcare Process is:

Inputs
Doctors, nurses Hospital Medical Supplies Equipment Laboratories

Processing
Examination Surgery Monitoring Medication Therapy

Outputs
Healthy patients

Chapter 1: Quantitatve Methods in Health Care Management

Yasar A. Ozcan

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
Chapter 1: Quantitatve Methods in Health Care Management

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Decision Making System Design

capacity location arrangement of departments product and service planning acquisition and placement of equipment

Chapter 1: Quantitatve Methods in Health Care Management

Yasar A. Ozcan

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Decision Making
System operation
personnel inventory scheduling project management quality assurance

Chapter 1: Quantitatve Methods in Health Care Management

Yasar A. Ozcan

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Who is the Healthcare Manager?

CEO? COO?

CFO?
CIO? CNO? CXO? Mid-Level Manager? Operational Level Manager?
Chapter 1: Quantitatve Methods in Health Care Management

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Decisions fall into a hierarchy.

Broad Scope: Product Selection New Construction Location Decisions Technology Choices

Strategic

Tactical

Moderate Scope: Staffing levels Supply Chain Equipment Selection Financial Resource Allocation
Narrow Scope: Scheduling Controlling Quality Inventory Replenishment
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Chapter 1: Quantitatve Methods in Health Care Management

Operational
Yasar A. Ozcan

Employment Potential for Healthcare Managers?

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

Health services occupation Employment (in 000) Percent change, 2002-2012

Management, business, and financial occupations General and operations managers Administrative services managers Medical and health services managers All health service occupations
Source: U.S. Department of Labor (2004). Chapter 1: Quantitatve Methods in Health Care Management

598 81 32 171 12,524

31.2 34.1 28.4 34.2 . 28.0

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Distinctive Characteristics of Healthcare Services

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

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The End

Chapter 1: Quantitatve Methods in Health Care Management

Yasar A. Ozcan

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