Tag: Iowa

OM in the News: Iowa–Home of Corn and Facebook

Facebook's servers require only 75 employees in this massive facility
Facebook’s servers require only 75 employees in this massive facility

Among the big draws in Altoona, Iowa, population 15,000, are Adventureland, a Bass Pro Shop, and the Prairie Meadows casino. “And now,” says The Wall Street Journal (Nov. 15-16, 2014), “it has Facebook’s new data center.” The social network just opened the $300 million facility, a move that highlights the intense competition and lavish tax breaks available from small communities looking for technology bragging rights. Nearly 3 times the size of the city’s sole Wal-Mart, Facebook’s warehouselike structure is packed with refrigerator-sized stacks of computer servers and thick coils of cables. The Altoona facility was built on millions of dollars of tax breaks and about 18 months of negotiation.

Facebook isn’t Iowa’s first high-tech catch. Microsoft  is spending $2 billion on a data center nearby in Des Moines. Google is expanding a facility in Council Bluffs.

States and cities long have vied against each other to lure factories, sports teams and corporate headquarters. Iowa, the county’s largest producer of corn and soybeans, is among more U.S. states rolling out a green carpet for those farming bits and bytes. Officials say data centers broaden their tax base, create well-paying technical and construction jobs and confer bragging rights that will lure companies with bigger hiring plans. They also contribute to the local economy without stressing infrastructure such as roads and sewage plants.

But it remains an open question whether the cost of these facilities in tax breaks and services works out in their favor. Altoona provided Facebook a 20-year exemption on paying property taxes, and Iowa agreed to $18 million in sales-tax refunds or investment-tax credits through 2023. Facebook pledged to spend at least $300 million on the project and create jobs paying $23.12 an hour. “For the tax breaks they often receive, the centers produce few jobs or spinoff benefits,” said an Iowa State U. prof. Tech companies aren’t looking for incentives alone. Availability and pricing of electricity, which can exceed 2/3 of the cost to run a data center, are among the most important factors.

Classroom discussion questions:

1. Are these unusual incentives?

2. What are the risks to each side–Altoona and Facebook?

OM in the News: Iowa Hospitals Saving Millions With Lean Techniques

Though lean has been around for the past 3 decades in manufacturing,  its use in driving health-care performance improvement has been much more recent.  In fact, many of the lean specialists working at hospitals  have been hired from manufacturing companies in the past 6 years. They’re now applying skills once devoted to making factory floors more efficient to health-care challenges such as decreasing patients’ waiting time in ERs.

The Business Record (Feb. 24, 2012)  just  reported that in my home  State of Iowa (I was born in Dubuque), more than 70% of the 118 hospitals say they are now using lean techniques. This is up from 50% just 3 years ago. The Iowa Medical Society provides 73 separate detailed, and on-line, monthly quality measures based on reports from all of the state’s hospitals.

Iowa’s 2 major quality goals are to reduce hospital-acquired infections by 40% and reduce preventable readmissions by 20%. If these two goals were achieved nationwide, health care costs in the US would be reduced by $35 billion. Since the Congressional Budget Office (CBO) expects health-care spending to increase at a rate of 8%  per year between now and 2022, Medicare/Medicaid programs will double in the next decade to $1.8 trillion, or 7.3% of our nation’s total economic output.

Under the Patient Protection Act, hospitals’  medical reimbursement payments will be linked to their performance on such procedures as cardiac, surgical, and pneumonia care. “Health care is turning to lean to continue to stay in business,” says the CEO of  the Iowa Healthcare Collaborative. Currently, one of its biggest projects is an initiative to ensure operating room supplies are delivered to the right place at the right time, to minimize unnecessary movements of supplies.

You might want to show the Arnold Palmer Hospital video on JIT (see Ch.16) if you discuss this article with your class. It illustrates the many ways OM and lean are  critical to the future of hospitals.

Discussion questions:

1. Why is lean so important in the health-care system?

2. Name several areas in which lean can be applied in a hospital.