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Volume Flexible Strategies in Health Services: A Research Framework

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Volume Flexible Strategies in Health Services: A Research Framework Written by: Eric P. Jack and Thomas L. Powers Paper #16 Presented by: Leslie Van Gessel – PowerPoint PPT presentation

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Title: Volume Flexible Strategies in Health Services: A Research Framework


1
Volume Flexible Strategies in Health Services A
Research Framework
  • Written by Eric P. Jack
  • and Thomas L. Powers
  • Paper 16
  • Presented by Leslie Van Gessel

2
Purpose
  • To develop a research framework that describes
    four volume flexible strategies
  • Design ways for the hospital to meet their
    uncertainty of demand, while keeping their high
    quality service

3
Previous Work
  • Gutierrez (1998) Analyzes an elective surgical
    procedure to estimate the relationship between
    hospital procedure, specific volume, and average
    hospital treatment costs. Results were that
    cost savings were associated with the hospitals
    volume level and size.
  • Birkmeyer (2002) Provides evidence that
    higher-volume hospitals had lover operative
    mortality rates for six types of cardiovascular
    procedures and eight types of major cancer
    resections.

4
Previous Work (cont.)
  • Carey (2003) Alerted the health care community
    to the strong relationship between hospital
    volume of service and quality of care outcomes
    and it also suggested minimum volume levels of
    cardiovascular procedures that hospitals should
    perform in order to maintain quality standards.
  • Smith-Daniels (1988) provided a research agenda
    and suggests that responses to demand and
    capacity management in health care involves
    decisions related to the allocation of three
    types of resources facilities, equipment, and
    workforce.

5
Previous Work (cont.)
  • Upton (1994) stated that volume flexibility is
    concerned primarily with an organizations
    ability to efficiently manage it output level in
    response to fluctuations in demand for its
    current products or servies.
  • De Groote (1994) suggest that any flexibility
    strategy must incorporate three important
    aspects technology, uncertainty, and
    performance.

6
Previous Work (cont.)
  • Vissers (2001) suggests four underlying
    dimensions of demand uncertainty in health care
    to include
  • Size of the population
  • Demographic changes in the population
  • Changing professional standards
  • Technological developments

7
Methodology
  • Interview 10 health care administrators from
    Carnegie I research and teaching hospital because
    that facility has different levels that include
  • Level of acuteness
  • Transplantation
  • Multi-organ diseases
  • Level 1 trauma care
  • Cardiology
  • Gastroenterolgy
  • Urology
  • Oncology
  • Primary Care
  • Ambulatory services

8
Four Volume Flexible Strategies
  • Shielding Strategy low range of flexibility with
    a high level of demand uncertainty
  • Absorbing Strategy low range of flexibility with
    a low level of demand uncertainty
  • Containing Strategy high range of flexibility
    with a low level of demand uncertainty
  • Mitigating Strategy high range of flexibility
    with a high level of demand uncertainty

9
Volume Flexible Strategies Framework
  High           Range of Flexibility        
  Low   Low High Demand
Uncertainty
10
Volume Flexible Framework
  • Organizations will selectively choose a volume
    flexible strategy based on the level of internal
    flexibility desired in response to a given level
    of demand uncertainty.

11
Demand Uncertainty
  • 3 ways to remove demand uncertainty
  • Pricing Rationing
  • gtDifferential pricing strategies
  • gtProduct and service rationing
  • gtCreation of dual markets
  • gtReservation system
  • gtDenial of admission to non- emergency
    patients
  • gtRelocation/Discharge of patients
  • gtForfeit revenues of transfer patients
  • Interviews showed that administrators werent
    able to use price and rationing to stabilize
    demand.

12
Demand Uncertainty
  • 2) Demand Management Models
  • gtStates that demand for health care services
    is influenced by several factors including size
    of the population, demographic changes in the
    population that drive disease incidences,
    technological advances, and changing professional
    standards.
  • gtSuggest to use the Shielding Strategy
  • Interviewees didnt think the demand management
    model was very important

13
Demand Uncertainty
  • 3) Managed Care Control
  • gtTo manage excess demand, organizations may
    use demographic factors such as geographic
    distance, HMO membership, competitor location,
    and the availability of different service
    offerings in a given location.
  • Interviewees say that managed care control has
    the potential to stabilize demand.

14
Absorbing Uncertainty
  • Ways to absorb uncertainty
  • Time Buffers
  • gtReservations
  • Interviewees didnt think reservations worked
    because doctors dont always go according to the
    schedules
  • Slack Capacity
  • gtCapacity needs to take into consideration
    factors such as
  • -No-show rates
  • -Early and late arrivals of patients
  • -Confusion and crowding in waiting areas
  • -Late arrival of physicians
  • -Inadequate equipment for treatment
  • -Emergency admissions

15
Containing Uncertainty
  • 3 approaches to containing uncertainty
  • Workforce Flexibility
  • gtDeployment of overtime and temporary employees
  • gtInnovative shift schedules
  • Creative use of existing employees through
    cross-training
  • Interviewees commented a lot on how they are
    understaffed, especially in the nursing
    department.
  • Efficiency Measures
  • gtFocus on processes that enhance their efficiency
    and improve internal planning control systems
  • -Utilization reviews
  • -Standard Costing
  • -Focus on improving labor productivity
  • Interviewees had a negative response to
    efficiency measures.

16
Containing Uncertainty
  • 3) Information Technology
  • gtWays to reduce uncertainty through technology
  • -Deployment of new information technology
  • -Online patient records
  • -Electronic billing systems
  • -Highspeed telecommunication systems
  • Interviewees liked keeping up to date with the
    advancing technology.

17
Mitigating Uncertainty
  • Organizations need to improve coordination in
    every area of the supply chain, especially when
    demand is increasing.
  • 3 approaches to mitigating uncertainty
  • Restructuring (both internal and external)
  • Interviewees found it hard for the hospital to
    acquire more facilities.

18
Mitigating Uncertainty
  • 2) Risk Pooling
  • -Putting the product and service lines under
    one roof will help demand. When one is in high
    demand the other is in low demand.
  • Interviewees viewed risk pooling as a
    potentially effective tool.
  • 3) Outsourcing and Strategic Alliances
  • -Outsourcing will lower cost, offer broader
    service mix, and give providers the opportunity
    for market share.
  • Senior interviewees noted that there needs to be
    more emphasis on outsourcing.

19
Propositions
  • Volume flexible strategies may be deployed
    tactically at the service line or departmental
    delivery system level within the organization.
  • Size of the health care organization may be
    positively related to the extent of deployment
    and use of the four volume flexible strategies.

20
Dimensions of Volume Flexible Strategies
  • 1)Time
  • Short-term organizations rely on time buffers,
    workforce flexibility, inventory buffers,
    efficiency measures, demand management models,
    pricing rationing, and managed care controls.
  • Long-term organizations rely on restructuring,
    risk pooling, outsourcing strategic alliances,
    investments, and slack capacity.

21
Dimensions of Volume Flexible Strategies
  • 2) Sources
  • Internal sources organizations measure by time
    buffers, workforce flexibility, inventory
    buffers, efficiency measures, information
    technology, and slack capacity.
  • External sources organizations measure by
    outsourcing strategic alliances, risk pooling,
    managed care controls, and pricing rationing
    strategies.

22
Conclusions
  • How to know what strategy to use
  • 1) Use Shielding Strategy when the organization
    has a low range of flexibility and high level of
    demand uncertainty. Which results in the use of
    pricing and rationing, demand management models,
    and managed care control.
  • 2) Use Absorbing Strategy when the organization
    has a low range of flexibility with a low level
    of demand uncertainty. Which results in the use
    of time buffers and slack capacity.

23
Conclusions (cont.)
  • 3) Use Containing Strategy when the organization
    has a high range of flexibility and a low level
    of demand uncertainty. Which results in the use
    of workforce flexibility, efficiency measures,
    and information technology.
  • 4) Use Mitigating Strategy when the organization
    has a high range of flexibility with a high level
    of demand uncertainty. Which results in the use
    of restructuring, risk pooling, and outsourcing.

24
Volume Flexible Strategies by Service Lines
       High         Range of Flexibility    
      Low   Low High Demand
Uncertainty
25
Any Questions?
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