Of course healthcare is a supply chain

I fly Qantas around Australia quite frequently (don’t ask how many frequent flyer miles I’ve got banked, but my wife loves her new washing machine). If a flight is delayed or cancelled, I get an SMS alerting me of the issue and alternatives. I value such service since I have the opportunity to use my time effectively in case of disruption.

I get no such service from any clinic or hospital around Australia. Worse, when I show up for an appointment, the front counter personnel rarely know the impact of any delays or disruptions. (They also rarely inform waiting people of any issues but that’s another complaint for another time.)  Delays and disruptions are the norm in healthcare, which is why I never go to any appointment without calling up to check first.  If I’m “lied” to twice, I will switch doctors, clinics, or simply come late…and bring a book (I hate the magazines in waiting rooms.)

Why is this type of service accepted and worse, tolerated by patients, clinics and hospitals? Hospitals in particular invest in very sophisticated clinical information systems, most of which contain some form of rostering and scheduling, so what’s missing?

Of course healthcare is a supply chain

Why healthcare is a supply chain

Healthcare costs have skyrocketed in the past 30 years. When I worked with the healthcare industry in the US in the mid-90s, we talked about the US Healthcare sector being the sixth largest economy in the world! And yet, a fundamental service KPI – on-time appointments – is one of the least improved (and therefore, least cost-efficient) parts of the sector. What’s fascinating is that the healthcare sector is also one of the most thoroughly quantified sectors imaginable, and yet this is one area that eludes remedy.

Let’s look at the fundamentals of the hospital “planning puzzle” and how to resolve it. Simply put, hospitals are highly complex and dynamic “supply chains” that have several characteristics in common with other complex, dynamic supply chains with similar planning puzzles. Let’s look at the two most important ones:

  1. The hospital supply chain experiences vast amounts of unpredictable variability – namely delays and disruptions on a daily and hourly basis, just like the airlines.
  2. The information systems currently in use are brilliant at scheduling resources used in hospitals — patients, beds, nurses, physicians, specialists, inventory. But these systems do not have the “smarts” to re-plan affected patients and hospital resources quickly and optimally, while taking into account the impact on future scheduled activities and resources.
  3. Variability happens in every supply and service chain. Healthcare is a process operation where variation is unpredictable and often disruptive: Surgical procedures run overtime, patients show up late, lab results don’t come in as expected, a staff member calls in sick. People simply don’t run reliably like machines.

The result of this reality is that healthcare professionals know that variation makes any prediction (a schedule is a prediction) a 50-50 bet at best. You certainly wouldn’t accept such odds from an airline, but we accept it from the healthcare industry (and from most plumbers and tradespeople too, unfortunately.)  So is there an effective way to handle the impact of variation?

The planning puzzle gets interesting

Scheduling complex multi-resource service chains, which hospitals obviously are, is best handled through some sort of optimization capability. The good news is that most rostering and scheduling software does contain adequate optimization functionality. However, given the complex reality of hospitals, especially with various departments having to collaborate and variation being the norm, optimization is not enough. Hospitals need technology that can easily and quickly handle not only the large number of variables, business rules and constraint behaviours, but also manage variation. Optimization is not enough because when variation hits, the impact across the organization is huge.

In other words, scheduling is not the issue when it comes to productivity and service levels. What’s critical is the ability to respond quickly and effectively to variation that will have impact on patients, doctors and facilities. It’s important to understand the impact of decisions taken to address serious variation. The impact of these decisions have to be carefully considered and minimized for everyone affected by that disruption.

How leading healthcare practitioners can improve customer service

OK, so what’s the resolution? Sophisticated planning and optimization software. The good news is that Quintiq embeds award-winning optimization in its base solution and has a specialist team constantly improving the algorithms and fine-tuning the application. Let me explain how the Quintiq technology resolves the variation puzzle in a unique way:

  • Detects and alerts your team when delays and disruptions are about to adversely impact your KPIs, including customer service. Configuration of these KPIs is completely controlled by your business.
  • Visualizes the impact of variation across the entire service chain. You can easily and quickly see where and how variation will affect future performance and service.
  • Provides optimized decision support to assist your team to select the best (optimal) responses from a variety of possible scenarios, highlighting the trade-offs.
  • Assists in communicating the changes (decisions) to all affected people and resources.

In other words, the Quintiq system mimics the dynamic reality of your hospital’s supply chain, while supporting your team in making the best possible decisions to handle variation and serve your patients, their families, your physicians, and your entire clinical team. Take for example, one of our clients, Spotless, who manages the services of hundreds of healthcare facilities across Australia. Using the Quintiq optimization technology, Spotless dynamically manages the scheduling and variations of over 30,000 personnel.

Of course hospitals are complex, dynamic service chains. So what better remedy is there than a highly flexible, highly responsive system that supports sound decision-making by your highly capable teams?

Join us at the Quintiq World Tour 2016 in Sydney, Australia. Discover the next level in planning and optimization. Sign up today!

Lee Hochberg

About Lee Hochberg

In business, the only thing that matters to me is how to improve performance and be better than competitors. It’s been my quest for over 35 years, to learn better skills and techniques from some of the keenest practitioners around the world. I’ve been fortunate to have met, learned from, and worked with Dr Deming, Eli Goldratt, Peter Senge, Dr Roger Fisher, Dr Donald Burwich, Stephen Covey, and others. I’ve also been privileged to work with some of the world’s best run companies and outstanding business leaders in diverse industries such as steel bridge fabrication, hospitals, FMCG, wine production, grain handling, rail and road logistics and mining.