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Introduction to Healthcare for Industrial Engineers

Introduction to Healthcare for Industrial Engineers. This presentation incorporates the work of many active IIE and SHS members and to whom the society expresses its appreciation for their efforts and continuing the growth in our field.

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Introduction to Healthcare for Industrial Engineers

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  1. Introduction to Healthcare for Industrial Engineers This presentation incorporates the work of many active IIE and SHS members and to whom the society expresses its appreciation for their efforts and continuing the growth in our field.

  2. Note: this presentation is intended to be a generic set of introductory slides to the profession. Presenters should feel free to adjust the content and emphasis to suit their own experiences and audience.

  3. Overview Of Content • Healthcare Overview • Quality • Cost • Overview of Hospitals • IE’s in Healthcare • Background • Organizational Structure • Key Roles • Examples • Future of Healthcare • Resources

  4. Healthcare Overview Quality, Cost, Access

  5. The U.S. Health Care Industry • Insurance companies work with both employers and MCO’s to provide coverage; • The government provides a form of insurance for qualifying patients through Medicare/Medicaid Source: Institute for Industrial Engineers

  6. U.S. Health Challenges: Quality Most American hospitals provide safe and effective care for the vast majority of patients, the vast majority of the time The vast majority of caregivers are well trained and conscientious Western medicine’s ability to save and extend life, and to improve the quality of life for the ill and injured is nothing short of miraculous

  7. U.S. Health Challenges: Quality …but that does not change a harsh reality… …care is far too unsafe… …and quality is too inconsistent…

  8. U.S. Health Challenges: Quality Schuster MA, McGlynn EA, Brook RH. How good is the quality of healthcare in the United States? MillbankQuarterly, 1998; 76(4):517-63 (Dec). Extensive literature review performed at RAND in 1998: • Only 50% of Americans receive recommended preventive care • Patients with acute illness: • 70% received recommended treatments • 30% received contraindicated treatments • Patients with chronic illness: • 60% received recommended treatments • 20% received contraindicated treatments

  9. U.S. Health Challenges: Quality American health care "gets itright” 54.9% of the time. McGlynn EA, Asch SM, Adams J, et al. The quality of health care delivered to adults in the United States. N Engl J Med 2003; 348(26):2635-45 (June 26).

  10. U.S. Health Challenges: Quality So why is this so hard? • Inadequate levels of safety and inconsistent quality result from clinical uncertainty which in turn results from: • An increasingly complex healthcare environment • Rapidly exploding medical knowledge • Lack of valid clinical knowledge (poor evidence) • Over reliance on subjective judgment

  11. U.S. Health Challenges: Quality • Rapidly Exploding Medical Knowledge • In 2004, the U.S. National Library of Medicine added • almost 11,000 new articles per week • to its on-line archives • That represented about 40% of all articles published, • world-wide, in biomedical and clinical journals. • (1,500 – 3,500 completed references per day, 5 days a week) • To maintain current knowledge, a general internist would need to read: • 20 articles per day, 365 days of the year This is an impossible task…

  12. U.S. Health Challenges: Quality • Medical errors and iatrogenic injury: • 98,000 deaths / year • 770,000 - 2 million patient injuries • $17 - $29 billion dollars • More US deaths/yr than for traffic accidents, breast cancer, & AIDS • Hospital-acquired infections: • 1.7 million NSI/year - $3,000/case • 8.7 million additional hospitals days/year • 98,987 deaths/year • $4.2 - $11 billion annually • Adverse drug reactions: • 770,000 to 2 million per year • $4.2 billion annually • 6-10% of hospital patients suffer 1 or more serious adverse events Institute of Medicine 2000 Centers for Disease Control and Prevention

  13. How Would You Measure Success? • Patient Safety • Patient Centeredness • Timeliness • Efficiency • Effectiveness • Equity Voice of the Customer!

  14. We’re Not The Best: IE’s Needed! (1 = best, 5 = worst) Source: Davis, et al., The Commonwealth Fund, 2004

  15. Sound familiar? Healthcare System Today • Costs of Poor Quality • Estimated 35% of all healthcare costs = waste • Duplication, non-value add, redundancies • Medical errors, adverse events, preventable deaths, process defects Descriptive Statistics • Largest single industry in the world • Approximately 17% of the USA’s GDP • Expenses increasing at 4 - 10% annually • Major pressure to become more efficient and provide higher quality care • Shortage of skilled workers

  16. U.S. Health Challenges: Cost

  17. Total National Health Expenditures, 1980 – 2009(1) U.S. Health Challenges: Cost Source: Centers for Medicare & Medicaid Services, Office of the Actuary. Data released January 6, 2011. (1) CMS completed a benchmark revision in 2009, introducing changes in methods, definitions and source data that are applied to the entire time series (back to 1960). For more information on this revision, see http://www.cms.gov/nationalhealthexpenddata/downloads/benchmark2009.pdf. (2) Expressed in 1980 dollars; adjusted using the overall Consumer Price Index for Urban Consumers.

  18. U.S. Health Challenges: Cost Percentage of GDP Source: www.oecd.org/health/healthdata

  19. National Health Expenditures as a Percentage of Gross Domestic Product, 1989 – 2009(1) U.S. Health Challenges: Cost Source: Centers for Medicare & Medicaid Services, Office of the Actuary. Data released January 6, 2011. (1) CMS completed a benchmark revision in 2009, introducing changes in methods, definitions and source data that are applied to the entire time series (back to 1960). For more information on this revision, see http://www.cms.gov/nationalhealthexpenddata/downloads/benchmark2009.pdf.

  20. National Health Expenditures as a Percentage of Gross Domestic Product and Breakdown of National Health Expenditures, 2009 U.S. Health Challenges: Cost Health Care Expenditures, 17.6% Source: Centers for Medicare & Medicaid Services, Office of the Actuary. Data released January 6, 2011.

  21. National Expenditures for Health Services and Supplies(1) by Category, 1980 and 2009(2) U.S. Health Challenges: Cost $235.6B $2,330.1B Source: Centers for Medicare & Medicaid Services, Office of the Actuary. Data released January 6, 2011. (1) Excludes medical research and medical facilities construction. (2) CMS completed a benchmark revision in 2009, introducing changes in methods, definitions and source data that are applied to the entire time series (back to 1960). For more information on this revision, see http://www.cms.gov/nationalhealthexpenddata/downloads/benchmark2009.pdf. (3) “Other” includes net cost of insurance and administration, government public health activities, and other personal health care. (4) “Other professional” includes dental and other non-physician professional services.

  22. Distribution of National Health Expenditures by Source of Payment, 1980, 2000, and 2009(1) U.S. Health Challenges: Cost $255.7B $1,378.0B $2,486.3B Source: Centers for Medicare & Medicaid Services, Office of the Actuary. Data released January 6, 2011. (1) CMS completed a benchmark revision in 2009, introducing changes in methods, definitions and source data that are applied to the entire time series (back to 1960). For more information on this revision, see http://www.cms.gov/nationalhealthexpenddata/downloads/benchmark2009.pdf.

  23. Percent Growth in Medicare Spending per Beneficiary vs. Private Health Insurance Spending per Enrollee, 1989 – 2009(1,2) U.S. Health Challenges: Access Private Health Insurance Medicare Source: Centers for Medicare & Medicaid Services, Office of the Actuary. Data released January 6, 2011. (1) CMS completed a benchmark revision in 2009, introducing changes in methods, definitions and source data that are applied to the entire time series (back to 1960). For more information on this revision, see http://www.cms.gov/nationalhealthexpenddata/downloads/benchmark2009.pdf. (2) Data reflects spending on benefits commonly covered by Medicare and Private Health Insurance.

  24. Inefficiencies Drive Up Cost • Unnecessary & Overuse of Medical Services • Practice variation among providers • Defensive Medicine – Risk of liability suits • $70 – 126 billion annually • End of Life Care • Seen to have significant overuse • ¼ cost of Medicare services is for patients in last year of life • Fragmentation of care • Repeated medical histories and duplicative diagnostic tests • Services that yield savings are not used effectively • Preventive care • Care for chronic conditions, such as hypertension, high cholesterol, diabetes Source : IIE & Ronald M. Davis, MD, Addressing the Rising Cost of Health Care, AMA eVoice, Feb 2008,

  25. More Contributions To Rising Costs • Intensity of Services • Longer life spans and increase in chronic disease • Increased need for on-going treatment, long-term care • Inflation in high cost / high technology products • Pharmaceuticals • Surgical supplies • Non-Clinical Spending- especially “transactional” costs • Duplicative services • Facilities & technology • Staffing

  26. What Are The Solutions To The Rising Costs Of Healthcare? • Reduce the burden of preventable disease • Health care delivery must be more efficient • Must reduce nonclinical health system costs (administration, overhead, etc.) • Promote value-based decision making • Understanding cost, benefit, clinical outcomes • Selecting drug therapies, insurers, legislators Source: IIE & Ronald M. Davis, MD, Addressing the Rising Cost of Health Care, AMA eVoice, Feb 2008

  27. What Does It All Mean For IE’s IE’s are in a unique position to greatly improve the healthcare system • Improving quality of care • Decreasing cost through increasing efficiency This creates a high demand for Process Optimization and Project Management

  28. Overview of Hospitals

  29. Types Of Hospitals • Community • Profit – Investor owned • Non-Profit – Supported by local funding • Teaching • Associated with a Medical College & provide clinical training to medical students and other health professionals • Public • Owned and operated by federal, state or city governments • Tertiary –Could be any one of the above • A major hospital that usually has a full complement of services including pediatrics, general medicine, various branches of surgery and psychiatry or • A specialty hospital dedicated to specific subspecialty care (pediatric centers, oncology centers, psychiatric hospitals). Patients will often be referred from smaller hospitals to a tertiary hospital for major operations, consultations with subspecialists and when sophisticated intensive care facilities are required

  30. Community Hospitals By Ownership Source: Kaiser Family Foundation 2009, www.statehealthfacts.org

  31. Number of Community Hospitals,(1) 1989 – 2009 Types Of Hospitals All Hospitals Urban Hospitals Rural Hospitals (2) Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2009, for community hospitals. (1) All nonfederal, short-term general, and specialty hospitals whose facilities and services are availableto the public. (2) Data on the number of urban and rural hospitals in 2004 and beyond were collected using coding different from previous years to reflect new Centers for Medicare & Medicaid Services wage area designations.

  32. Number of Beds and Number of Beds per 1,000 Persons, 1989 – 2009 Hospital Bed Changes Number of Beds Number of Beds per 1,000 Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2009, for community hospitals.

  33. Number of Hospitals in Health Systems,(1) 2000 – 2009 Hospitals & Health Systems Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2009, for community hospitals. (1) Hospitals that are part of a corporate body that may own and/or manage health provider facilities orhealth-related subsidiaries as well as non-health-related facilities including freestanding and/or subsidiary corporations.

  34. Hospital Costs

  35. Hospital Costs

  36. Hospital Labor Costs

  37. Patient Volume Is Increasing Inpatient Admissions in Community Hospitals, 1989–2009 Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2009, for community hospitals.

  38. Patient Time In Hospital Is Flat Total Inpatient Days in Community Hospitals, 1989 – 2009 Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2009, for community hospitals.

  39. ALOS Is Gradually Decreasing Average Length of Stay (ALOS) in Community Hospitals, 1989 – 2009 Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2009, for community hospitals.

  40. ED Trends Emergency Department (ED) Visits and Emergency Departments(1) in Community Hospitals, 1991 – 2009 Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2009, for community hospitals. (1) Defined as hospitals reporting ED visits in the AHA Annual Survey.

  41. ED Trends Hospital Emergency Department Visits per 1,000 Persons, 1991 – 2009 Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2009, for community hospitals. US Census Bureau: National and State Population Estimates, July 1, 2009. Link: http://www.census.gov/popest/states/tables/NST-EST2009-01.xls.

  42. Percent of Hospitals Reporting Emergency Dept. Capacity Issues by Type of Hospital, March 2010 ED Trends Source: American Hospital Association 2010 Rapid Response Survey: Telling the Hospital Story.

  43. Inpatient & Outpatient Trends Inpatient Use Has Plummeted While Outpatient Use Has Soared Total Number of Hospital Days (in 000s) Total Number of Outpatient Visits (in 000s) Source: IIE & Vital and Health Statistics, National Hospital Discharge Survey, 1995; 2000 AHA Statistics; 2005 AHA Statistics

  44. Healthcare Is Highly Regulated

  45. The Changing Focus

  46. Typical Hospital Organizational Structure • Two Governance Structures • Board of Directors & CEO / Management • Medical Staff • Key Leadership Roles include • CEO – Chief Executive Officer • COO – Chief Operations Officer • CNO – Chief Nursing Officer • CFO – Chief Financial Officer • CIO – Chief Information Officer • CMO - Chief Medical Officer (VP of Medical Affairs)

  47. Typical Hospital Organizational Structure

  48. Multi-Hospital System Structure • Organizational Structures • Traditional Functional • Matrix Organizations • System vs Facility Structure • System functions vary by organization • IE’s may be at system level or facility level (or both)

  49. Integrated Health Care Systems “ a network of organizations that provides, or arranges to provide a coordinated continuum of services to a defined population and is willing to be held fiscally and clinically accountable for the health status of the population served.” Stephen Shortell, et al., 1993

  50. Integrated Healthcare Delivery Network • Aligns health care facilities to deliver integrated healthcare services by improving quality and reducing costs to a defined geographic area • Hospital and physician components and at least one other component of care are required for a system to be considered highly integrated • In 2007, there were an estimated 450 health care systems that were vertically integrated • Ownership or formal agreements Source: IIE & KnowledgeSource , Integrated Healthcare Networks Market Overview , 2008

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