process improvement – The OM Blog by Heizer, Render, & Munson

OM in the News: How to Fix the Emergency Room Using OM Tools

Armed with new strategies borrowed from OM, The Wall Street Journal (Sept. 13, 2017) writes that “hospitals are making a push to fix one of the most irritating issues in health care: the emergency room.” Not only are wait times long, but they’re not improving. The median length of stay for patients treated in the ER and then discharged was 138 minutes in 2015-16, the same as a decade earlier. Crowded ERs and long wait times have bad effects for patient outcomes and satisfaction. I suspect that many of your students have had some ER experiences, and will have their own ideas to complement these found in the article:

Eliminate triage. One of the biggest frustrations people encounter in the ER is registration and triage. After signing in and giving information, patients see a nurse who asks questions to judge how urgently they need care and the amount they’ll need, on a 5-point scale. Then patients wait to see a doctor who may ask them the same things all over again. A patient seldom sees an MD in less than 30 minutes, even if the ER is empty.

Eliminate details that waste time using lean management. Use lean (Ch. 16) to look at all steps in the ER processes and figure out how to improve them, cutting out as much waste as possible. For example, one hospital saw nurses were taking time to escort patients to other areas of the hospital for X-rays, so it put up colored tape that patients could follow to where they needed to go.

Quickly help patients with minor complaints and those who probably just need tests. Give people with small complaints, or who need diagnostic tests their own spot in the ER–and not a bed. Redesign the ER to include an area where patients in need of a medication refill or with mild complaints can be seen right away by a professional dedicated to only such patients. Seeing low-acuity patients quickly means there’s not a huge pileup of people in the waiting area.

Classroom discussion questions:

How could software help?
What other stumbling blocks slow down the ER process (eg, prescheduled surgeries or admissions to the hospital, which are also mentioned in the article)?

OM in the News: The Solution to the Lost Luggage Problem

An unclaimed bag at the Charlotte N.C. Airport

The airline industry says its rate of mishandled baggage is lower than ever, down more than 12% from 2015 and the lowest ever recorded. “Much of the reduction is due to investments by airlines in technology improvements,” writes The New York Times (May 16, 2017). Still, that is small comfort to the lone traveler waiting by a deserted carousel with a sinking feeling.

There are myriad reasons a bag can go missing. “Weather and missed connections are by far the largest proportion of causes for bags not arriving on time,” says Delta’s VP. “We’ve invested about $50 million in deploying baggage tech across our organization,” he said. That investment includes integrating baggage data into the Delta mobile app. “If you’re traveling and you check a bag, you get a push notification when your bag is loaded.”

New technology and better baggage handling procedures had paid off, but the drop also coincided with the major carriers beginning to charge passenger fees for checking a bag. Those fees reduced the number of travelers checking bags.

Bag tags are now embedded with RFID chips, which means the location of bags is tracked and electronically crosschecked against a database to make sure that they are in the right place at the right time. This increases security, since each bag is linked to a ticketed passenger. It also speeds up the discovery of a bag in the wrong place so the process of reconnecting a bag to its owner can begin sooner.

At most U.S. airports, the airlines have operational control of their terminals, so it is incumbent on them to add new technology. By June, 2018, all airlines must maintain an accurate inventory of passenger baggage by tracking when each piece of checked luggage moves on, off or between planes.

Classroom discussion questions:

Discuss how Alaska Air guarantees its 20 minute baggage delivery. (See the Video Case Study in Chapter 7).
What is the role of RFID in baggage tracking?

OM in the News: Safer Surgery Through Operations Management

“Hospitals are trying to make it safer for patients to go under the knife,” writes The Wall Street Journal (Feb. 17, 2015). Surgery can be risky by its very nature, and 46% to 65% of adverse events in hospitals are related to surgery. Despite years of prevention efforts, procedures are still performed on the wrong body part and surgical tools are sewn up in patients. The consequences of surgical error are huge, both for patient health and hospital finances. Johns Hopkins estimates that there are 4,082 malpractice claims each year for “never events”—the type of shocking mistakes that should never occur. There are also 600 reported operating-room fires in the U.S. each year, though there may be many more that aren’t reported.

Many hospitals don’t collect reliable data on their own adverse events, and as industry experts say, “you can’t improve a hospital’s surgical quality if you can’t measure it.” In Tennessee, 10 hospitals participating in a data analysis program from 2009 to 2012 reported that they reduced complications by nearly 20% since 2009, saving at least 533 lives and $75.2 million in costs. Data analysis can also help prevent foreign bodies from being left in patients when they do undergo surgery. With new OM processes in place, if a count at the end of a procedure indicates sponges or instruments are missing, hospital policy requires an X-ray before the patient leaves the OR, which can’t be overruled by a surgeon.

Surgeons are also expected to follow strict infection-prevention processes, such as sterile procedures that include fully draping patients on the operating table and wearing caps and masks before putting in a central line, a tube inserted in the chest to administer IV fluids, drugs and blood. As briefings and checklists become part of the hospital culture, new doctors coming out of training know this is the expectation. Older doctors are often hard to convert.

Classroom discussion questions:

1. Why is it important to measure hospital quality?

2. What do checklists do in this setting?

OM in the News: How Operations Management Improves Hospital Procedures

Swamped with tasks such as hunting for supplies, tracking down medications, filling out paperwork at the nursing station and looking for missing test results, nurses may spend less than two hours of a 12-hour shift in direct patient care, says The Wall Street Journal (July 22, 2014). But research has also found that the more time nurses spend at the bedside, the less likely patients are to suffer falls, infections and medication errors, and the more likely they will be satisfied with their care.

Now hospitals are changing traditional work practices, shifting more routine tasks to certified nurse assistants and other less highly skilled staffers. They are eliminating inefficient processes that make nurses walk as many as 5 miles around the hospital in a single shift. Some hospitals are aiming to triple the amount of time nurses spend with patients. That means locating supplies inside patient rooms and having pharmacists deliver medications to patient floors. As more hospitals adopt electronic medical records and place computers in patient rooms, they are enabling nurses to access information quickly and fill out medical charts while keeping close to patients.

Presbyterian Medical Center, in Winston-Salem, N.C., found in a 2010 internal audit that nurses were involved in direct patient care at the bedside for only 2.5 hours every 12-hour shift. “Not only was that eye-opening, it was also completely unacceptable,” says its chief clinical officer. With a shift to a team-based model, the hospital hit 6.5 hours per shift at the end of 2013, with a goal to hit 8.5 hours by the end of 2015. Process changes helped save $20 million last year at Presbyterian, and the transfer to electronic records also reduced by 42 minutes the amount of time spent paging doctors, copying and faxing, and tracking down tests.

This is a good article to link to the video case studies on Arnold Palmer Hospital in Chapters 6 (Quality), 7 (Process Analysis), and 9 (Layout).

Classroom discussion questions:

1. What tools of TQM could be used to help improve hospital processes (see pages 218-222)?

2. Why is it important for nurses to spend more time with patients, and less time at their stations?

OM in the News: Improving the Airline Baggage Claim Process

In 2007, airlines world-wide mishandled 47 million bags, or 19 per 1,000 passengers. Lost baggage was costing the airline industry $4 billion a year. Returning delayed or lost luggage to passengers cost an average of $100 per bag, and there had been a steady increase in the frequency of mishandled baggage. But airlines last year mishandled only 22 million bags, or 7 per 1,000 passengers, reports The Wall Street Journal (June 5, 2014). Why the dramatic change?

One big factor was that airlines realized when they started charging fees for baggage, customer expectations would rise. Airlines typically spent as little as possible on baggage handling before fees because it didn’t drive revenue. Now baggage was bringing in money and new equipment was easier to justify. Bag fees also reduced the volume of checked baggage, as passengers carried more on board. Airports got more involved and some invested in new innovations to move bags faster from the curb to the airplane belly. TSA sped up the process by moving baggage screening from terminal lobbies to machines built into conveyor-belt systems that can check bags faster.

Airlines also focused attention on the problem by sending teams of baggage experts to 80 airports world-wide and evaluating root causes of lost bags. One of the biggest issues they found: Airlines did a poor job communicating with each other and their own employees about bags. Baggage handlers often didn’t know when a bag was coming from another carrier or when a quick transfer had to be made. Another simple fix: Keeping tag printers clean and well-maintained so bar codes print crisply for machine-reading.

Airlines say the effort coincided with availability of cheaper technology for scanning bag tags and tracking bags. Key infrastructure such as airport Wi-Fi that could be used by hand-held scanners and computers mounted in baggage vehicles also made a difference. Finally, with more data available, airlines can tell baggage handlers when to shuttle connecting bags from plane to plane directly, and when there’s enough time to put bags into the airport’s sorting system so they can go out to their next flight with other luggage.

Classroom discussion questions:

1. Why did airlines decide to improve baggage handling processes?

2. What tools in Chapter 7 can be used to analyze this process?

OM in the News: Treating Chickens With Respect in California

Five states have joined a lawsuit challenging a California law that would require producers of all eggs sold in the Golden State to house hens in roomier cages, reports The Wall Street Journal (March 6, 2014). Officials in those states, all of which have big agriculture sectors, argue the California law violates the principle of interstate commerce. They say out-of-state farmers would have to spend hundreds of millions of dollars to change their facilities to comply with the law.

“It’s one thing for them to regulate their own egg producers, but when they regulate the egg producers of the other…states, including Iowa, I think it’s a clear violation,” says Iowa’s governor. The plaintiffs note that California—the nation’s most populous state—represents the biggest domestic market for eggs. Missouri’s Attorney General sued to block California’s law on Feb. 3, saying it would hurt his state’s egg producers, which sell about a third of their eggs in California.

In 2008, California residents approved a ballot initiative that would ban farmers from housing egg-laying hens in enclosures that are too small for the birds to lie down, stand up or fully spread their wings. In 2010, state legislators passed a law extending the standards to all producers selling eggs in California.

About 80% of egg-laying hens in the U.S. are raised under guidelines from the United Egg Producers, which include 67 to 86 square inches of floor space per bird and enough room for hens to stand “comfortably upright.” The California law requires at least 116 square inches of space per bird. Consumers can also buy “cage-free” eggs, laid by hens raised in open barns. Cage-free production accounts for more than 5% of laying hens.

Classroom discussion questions:

1. What are the ethical implications of housing chickens in such confined spaces to lower costs?

2. What process changes (see Chapter 7) are needed to meet the California standards?

OM in the News: Starbucks Process Improvement with Apps

Businessweek (Aug.23-30, 2012) provides a great example of business process improvement (Chapter 7) through Starbucks’ mobile payment plan program. Even before its recent $25 million investment in startup company Square, Starbucks had been processing a million mobile-phone transactions per week. “What mobile payments allows is an unprecedented relationship between us and our customer,” says Starbucks’ chief digital officer.

Starbucks released its first mobile app in 2009; it helped customers find stores, learn about coffee, and get nutrition information. In 2011, the chain released a more powerful Starbucks Card Mobile App, which also lets consumers pay at the register by waving a bar code on a phone’s screen in front of a scanner. Customers can load Starbucks’ digital prepaid card with an existing credit card.

Starting this fall, coffee lovers will be able to use smartphones to pay via an account linked directly to their credit cards. The mobile payment options also promise a profit boost for Starbucks. By letting its customers make purchases with their smartphones, Starbucks pays fewer fees—which sometimes top 2%—on credit-card transactions. Square says it can now process Starbucks payments at a lower rate than other payment networks.

From an OM perspective, the apps can also help sales by making store lines move 10 -20% faster during peak hours. Each 1% increase in a store’s capacity during rush hour translates into a revenue boost of up to 1%. “Current payment solutions don’t meet the expectations of customers or merchants,” says Wal-Mart’s VP. Since selling through a mobile app can cut transaction fees in half, the cost savings can make a big difference in retail, where operating margins are in the single digits (about 6% for Wal-Mart). The bottom line: Starbucks has created a successful mobile payments model that other retailers are following in an effort to reduce transaction fees.

Discussion questions:

1. What other mobile phone apps can increase OM efficiency?

2. How else has Starbucks increased productivity, as discussed in OM in Action boxes in the text?

OM in the News: Process Improvement In Hospitals

The New York Times (June 3,2012) writes that there is some good news about our health care system. A growing number of hospitals, doctors, employers and insurers are using the process improvement tools of Chapter 7 to reduce the cost of delivering medical care while maintaining or improving quality.

Seattle’s Virginia Mason Medical Center, for example, has conducted reviews to eliminate waste and inefficiency. It says that after doctors were required to use a checklist of the medical circumstances needed to justify a costly imaging test, CT scans for sinus conditions dropped by 27% and M.R.I.’s for headaches by 23%. It placed nursing teams and supplies closer to patients, freeing nurses to spend 90% of their time on direct patient care, far more than the 35% at most hospitals. The time needed to process insurance claims was sharply cut by consolidating steps.

Virginia Mason also collaborated with Starbucks and the company’s insurance provider, Aetna, to find better ways to treat patients with back pain, a costly burden to Starbucks. At the start, all patients complaining of back pain typically waited many weeks to see a specialist, who would then prescribe a costly, unnecessary M.R.I. before finally sending them on to a physical therapist. Using process analysis to separate out the uncomplicated cases, the medical center was able to send them directly to a therapist on the day the patient requested an appointment, and the vast majority were able to quickly return to work.

Premier Inc., a 2,600 hospital group, has also reduced unnecessary laboratory and screening tests and reduced labor costs by eliminating inefficient processes, like multiple re-entries of the same patient data for admitting, scheduling, discharge and billing. It has started using administrative assistants rather than nurses to call patients to remind them of appointments. Premier reported that over a three-year period, 157 of its hospitals in 31 states saved almost 25,000 lives and reduced health care spending by nearly $4.5 billion, a 12% savings.

Discussion questions:

1. What are the benefits to Starbucks, Aetna, and Virginia Mason from their new approach?

2. Why is OM such an important topic in hospitals today?