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Operations Management Makes Its Case In The Hospital

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A recent article in the New York Times touts the improvements that hospitals and health systems have made by incorporating some of the classic operations management strategies used in manufacturing facilities and on factory floors. While some healthcare providers are concerned with the emphasis on operations in healthcare, a number of hospitals, doctors, nurses and healthcare executives are seeing the benefits in both the bottom line and the care they’re able to provide to their patients.

The article highlights Seattle Children’s Hospital and its Continuous Performance Improvement (CPI) program, which is based on the kaizen techniques so widely (and successfully) used in manufacturing. Over the last ten years Seattle Children’s has examined the patient experience from start to finish, continuously making changes to improve everything from the management of surgical supplies and scheduling of MRIs to the flow of patients and the design of facilities. The results are noteworthy: The hospital credits CPI with helping it save $23 million, or 3.7% per patient, last year. And with efficiency improvements that enabled Seattle Children’s to serve 40% more patients last year than it did six years ago, the hospital avoided another $180 million in capital expenditures.

Other hospitals and health systems have taken notice, and many are trying to implement similar programs.

While anyone who’s worked in operations may wonder why an organization would do things any other way, this emphasis on operations, which has been so successful in manufacturing, is relatively new in healthcare. But it’s a development that has promise for all stakeholders: hospitals and health systems, healthcare providers, patients—and the operations profession itself.

At Arena, we know a lot about the life and times of the operations professional. (Arena BOMControl helps manufacturers manage their bills of materials (BOMs), control the engineering change process and share product information with suppliers and contract manufacturers, and so we’ve met countless operations people over the years! They like sharing their stories, and we like listening.) One thing we’ve learned is that operations is an underappreciated role in most organizations, typically noticed only when something goes wrong. Contrary to that perception though, a well-run operations group adds tremendous value. After all, in a manufacturing environment these are the people (the unsung heroes, some might say!) who make sure the right product gets built while schedules are met and costs are contained.

With a growing nationwide emphasis on healthcare reform, hospitals and health systems will face increasing pressure to cut costs and improve performance. As more and more look for solutions through an operations lens, the field of operations management and the value provided by its skilled practitioners will receive additional–and well-deserved–visibility. Other industries may also be inspired to take a similar operations-based approach. And for any operations professional seeking a new job but finding traditional operations roles in short supply, the extended reach of operations may offer just the boost they need.

Further reading: Factory Efficiency Comes to the Hospital in the New York Times

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