Chapter 6. Reengineering

Chapter 6: Quantitatve MChapter 6: Quantitatve Methods in Health Care Maethods in Health Care Managementnagement

Yasar A. OzcanYasar A. Ozcan 11

Chapter 6.Chapter 6.ReengineeringReengineering



OutlineOutline Reengineering vs. Other Methods Work Design in Health Care Organizations

– Work Design– Job Design

Work Measurement-Standard Times– Stopwatch Time Studies– Standard and Predetermined Times

Work Measurement Using Work Sampling– Determination of Sample Size– Development of Random Observations Schedule– Training Observers

Work Simplification– Flow Chart– Work Distribution Chart– Flow Process Chart

Worker Compensation



Reengineering vs. Other MethodsReengineering vs. Other Methods Healthcare managers have often sought

organizational change, restructuring, and downsizing. Although those methods may improve the financial base of the organization or productivity at least temporarily by “cutting the fat,” namely by reducing the staff across the board, yet they create other problems. In particular, reducing staff can lead to major problems in the quality of care.

Two other contemporary and popular methods that aim to improve both performance and the quality are total quality management (TQM) and continuous quality improvement (CQI) which are geared to make incremental changes over time.



Reengineering vs. Other MethodsReengineering vs. Other Methods Reengineering is a methodology intended to

overcome the difficulty in realizing TQM/CQI performance over a long duration, as well as the myopic conduct of organizational change, restructuring and downsizing.

To reengineer the system, healthcare managers must be able to understand work-design, jobs, job measurement, process activities, and reward systems – all well known concepts of industrial engineering. With that knowledge, they can recognize the bottlenecks in the old system, identify unnecessary and repetitive tasks, and eliminate them in the reengineered system of care.



Importance and PurposeImportance and Purpose

Human resources represents over 40% of healthcare facility budgets

Productivity and satisfaction of staff involves an understanding of the work environment

Work must be designed so that employees are happy, organizational productivity is high, and costs are minimized



Work Design- A Systems Work Design- A Systems PerspectivePerspective

Work Design

WorkMeasurement•Time Study•Predetermined Standard•Work Sampling

Job Design•Who?•How?

•Where?

Job Simplification

WorkerCompensation

•Time Based•Output Based•Incentive Plans

ExternalFactors



Job DesignJob DesignWho does what, how, and where?Who does what, how, and where?

Consistent with organizational Consistent with organizational goalsgoals

Write it down!Write it down! Understand and communicate itUnderstand and communicate it Involve employees and Involve employees and

managementmanagement



Frederick Winslow TaylorFrederick Winslow Taylor

Developed Scientific Management Approach

Focused on time studies Conflicts between labor and

management occurred because management had no idea how long jobs actually took

For what types of jobs would thisapproach work best? Are there

Healthcare applications?



Efficiency School--Efficiency School--Logical and SystematicLogical and Systematic

Best for simple, repetitive routine, and separable tasks

Healthcare Examples:– lower level administrative duties– division of labor– standardized forms and paperwork– robots in laboratories– automation of routine tasks

Not good for judgmental/unpredictable tasks



Advantages and Disadvantages of Specialization

Management Employees

Advantagesa. Simplifies trainingb. Higher productivityc. Low wage costs

a. Low education/skillb. Minimum responsibilitiesc. Little mental effort needed

Disadvantages

a. Difficult to motivate qualityb. Worker dissatisfaction, absenteeism, high turn- over, disruptive tactics, poor attention to quality

a. Monotonous and boringb. Limited opportunities for advancementc. Little control over workd. Little opportunity for self- fulfillment



Behavioral SchoolSatisfaction of Wants/Needs

Intrinsic and extrinsic motivators Specialization leads to monotony and

worthlessness



Socio-technical School Approach

Efficiency School(Technical Focus)

Behavioral School(Human Focus)

Socio-technical School



How can jobs be improved?How can jobs be improved? Job enlargement-- give workers a larger

portion of the total task (horizontal loading-- additional work at same level of skill and responsibility)

Job enrichment-- increasing responsibility for planning and coordinating tasks (vertical loading)

Job rotation-- workers periodically exchange jobs

What are examples of each?



Work Measurement Using Time Work Measurement Using Time StandardsStandards

Time standards are important in establishing productivity measures, determining staffing level and schedules, estimating labor costs, budgeting, and designing incentive systems

A time standard represents the amount of time needed for the average worker to do a specific job working under typical conditions



The First Step. . .The First Step. . .

The amount of time it should take a qualifiedworker to complete a specified task, working at a sustainable rate, using given methods and equipment, raw materials, and workplace

arrangements is called a standard time.

A Standard time can be developed through:•Stop-watch studies•Historical times•Predetermined data•Work sampling



Stopwatch Time StudiesStopwatch Time Studies

Take time over a number of trials (cycles) Workers should be educated regarding the

process to avoid suspicion and avoid the Hawthorn Effect

Number of cycles to time (i.e., sample size)– variability in observed times– desired accuracy– desired level of confidence for the estimate



Desired Confidence Z-value 90 1.65 95 1.96 98 2.33 99 2.58

Determining Sample SizeDetermining Sample Size

Accuracy desired may be explained by the percentage of the mean of the observed time. For instance, the goalmay be to achieve an estimate within 10 percent of theactual mean. The sample size is then determined by:

n = z sa x( )

2where:

z = number of std. dev. needed for desired confidence

s = sample std. dev.a = desired accuracyx = sample mean



An Alternative Formula

Desired accuracy may be expressed as an amount (e.g.,within one minute of the true mean). The formula for sample size becomes:

n = zs e( )

2where

e = Accuracy or maximum error

acceptable

To make an initial estimate of sample size, you shouldtake a small number of observations and then compute the mean and std. dev. to use in the formula for n.



An ExampleAn ExampleA time study analyst wishes to estimate the time required to perform a certain job. A preliminary study yielded amean of 6.4 minutes and a standard deviation of 2.1 min.The desired confidence level is 95 percent. How manyobservations will be needed (including those already taken)if the desired maximum error is:

a) +/- 10 percent?b) one-half minute?

a) n = zsax( )

2

= 1.96(2.1).10(6.4)( )

2= 41.36

b) n = zs e( )

2

n = 1.96(2.1) 0.5( )

2= 67.77



Determining the Standard TimeDetermining the Standard Time

Observed Time-- average of observed times

– OT = xi/n Normal Time-- observed time adjusted for

worker performance– NT = OT * PR (where PR = performance

standard measured for the entire job)

– NT = (Ej*PRj) (where PR is measured element by element)

– PR equals 1 for the average worker; PR< 1 is for a slower worker



ST = NT * AF

Standard time equals normal time multiplied by an allowance factor

Allowance Factor– accounts for personal delays,

unavoidable delays, and/or rest breaks

– AFjob = 1+A, where A= allowance percentage based on job time

– AFday = 1/(1-A), where A = allowance percentage based on work day



Table 6.1 Typical Allowance Percentages for Varying Healthcare Delivery Working Conditions

Allowance Level Percent

1. Basic-low (personal, fatigue, standing) 11

2. Basic-moderate (basic-low and mental strain) 12

3. Basic-high (basic-moderate and slightly uncomfortable heat/cold or humidity

14

4. Medium-low (basic high and awkward position) 16

5. Medium-moderate (medium-low and lifting requirements up to 20 lbs.)

19

6. Medium-high (medium-moderate and loud noise) 21

7. Extensive-low (medium-high and tedious nature of work) 23

8. Extensive-medium (extensive-low and with complex mental strain)

26

9. Extensive-high (extensive-medium and lifting requirement up to 30 lbs.)

28

Source: Adapted from B.W. Niebel, 1988.



The Allowance FactorThe Allowance Factor

Compute the allowance factor if:– The allowance is 20 percent of job time.– The allowance is 20 percent of work

time.

A) AF = 1 + A = 1.20, or 120%B) AF = 1/(1-A) = 1/(1-.2) = 1.25 =

125%



An ExampleAn Example

The following observed times have been collected with a performance rating of 1.10. Using an allowance factor of 15% of job time, determine the appropriate standard time.

Preliminary Calculations:n=9PR =1.10A = 1.15

Obs Time (min) Obs Time 1 4.20 6 4.18 2 4.15 7 4.14 3 4.08 8 4.14 4 4.12 9 4.19 5 4.15 37.35



The SolutionThe Solution

Obs. Time (min) Obs. Time 1 4.20 6 4.18 2 4.15 7 4.14 3 4.08 8 4.14 4 4.12 9 4.19 5 4.15 37.35

A. OT = 37.35/9 = 4.15 minutesB. NT = OT x PR = 4.15 x 1.10 = 4.565 minutesC. ST = NT x (1+A) = 4.565 x 1.15 = 5.25 minutes

Now, what do: OT, NT and ST represent?



What are the problems with time What are the problems with time studies?studies?

Subjective performance ratings and allowances

Only observable jobs can be studied Highly costly -- best for repetitive

tasks Disrupts worker routine May cause worker resentment



Other MethodsOther Methods

Historical/Standard Elemental Times– Firms collect data on standard job elements– Put these data together to determine job

times– Less costly and disruptive– Limited applications in healthcare

Predetermined Standards– Obtained from trade publications– Need no performance of allowance factor– Operations are not interrupted



Technique for estimating the proportion of time that a worker or machine spends on various activities

Observers make brief observations of a worker or a machine at random intervals over a period of time and simply note the nature of the activity

Purpose:– To estimate percentage of unproductive or idle

time for repetitive jobs– To estimate the percentage of time spent on

various tasks for non-repetitive jobs

Work Measurement Using Work Sampling



Work Sampling StepsWork Sampling Steps1) 1) Determine the sample size2) Train the observers, 3) Develop random sample schedule4) Take observations, and re-compute the desired sample size several times if initial estimates are not reliable5) Determine the estimated proportion of time spent on specified activity



Step 1: Sample SizeStep 1: Sample Size

CI = confidence interval,e = error,z = number of standard deviations needed to achieve desired confidence, sample proportion (number of occurrences divided by sample size), n = sample size.

epCI ˆ

nppze /))ˆ1(*ˆ(

)ˆ1(ˆ)/( 2 ppezn

The goal of work sampling is to obtain an estimate that provides a specified confidence not differing from the true value by more than a specified error

p̂



Sample Size, cont.Sample Size, cont.Example 6.1:Example 6.1: A hospital administrator wants an

estimate of X-ray idle time that has a 95.5 percent confidence of being within 4 percent of the actual percentage. What sample size should be used?

e = 0.04 z = 2.00

Desired Confidence Z-value 90 1.65 95 1.96 95.5 2.00 98 2.33 99 2.58

n = (z/e)2p(1-p)

When p is unknown, apreliminary estimate of sample size can be obtainedusing p = 0.5. Then after 20 observations, a new estimatecan be obtained.



Solution:Given: e = 0.04; z = 2.00 (see Appendix A);

p̂ = 0.5 (preliminary).

p̂

If for 20 observations, it is observed that the x-ray was breaking down on average 1 time, the revised estimate is then

p̂ = 1/20 = 0.05.

p̂ = 0.05, n = (2.00/0.04)2 x .05 x (1-..05) = 118.75 or 119 observations.

The revised estimate of sample size is:

= 0.5: n = (2.00/0.04)2 * .50 * (1-.50) = 625 observations.



Step 2: Step 2: Train Observers

A comprehensive training program of three steps should be standardized for all data collectors. Data collectors should be first educated as to the study’s goals, protocol, collection procedures, and data submission procedures, and the guidelines for their behavior. Then, the observers should be trained in data collection. Training may include sessions using videotaped activities for practice in identifying and recording actual nursing services. In the third phase, observers participate with a project member, in explaining the nature of the project to those who will be observed, in the observation setting.



Step 3: Random Observation ScheduleStep 3: Random Observation Schedule

Need random number for day, hour, and minute, with the number of digits needed for each number equaling the number of days in the study, hours per day, and minutes per hour.



Table 6.6 Random Numbers

11 22 33 44 55 66 77 88

11 3549193735491937 2065109020651090 3054673830546738 2769671327696713 9185485891854858 2647090126470901 2960038129600381 4366240443662404

22 9008932190089321 7513819775138197 1826229618262296 5850698858506988 5366432953664329 5868369158683691 4407265644072656 7212330172123301

33 7426444474264444 2055321620553216 8888091088880910 3218284832182848 9922727399227273 4209124342091243 0018541500185415 83575058357505

44 69759416975941 1970123619701236 5983082959830829 7999579579995795 3433040034330400 6369139663691396 9786605897866058 3609375136093751

55 8510451585104515 2807901128079011 3079186930791869 4906930749069307 2560105325601053 2005951220059512 5964758459647584 8232751482327514

66 4944583049445830 3179190631791906 9243566492435664 5544968055449680 3629307836293078 7682671476826714 8914119789141197 1220527512205275

77 9798453697984536 6031736660317366 2150892821508928 9801449798014497 6152905861529058 4427659144276591 1471572614715726 6934055469340554

88 5099172050991720 7403827174038271 9645177796451777 0876441508764415 5607246056072460 4640412846404128 3803332438033324 0192616801926168

99 6434929964349299 3783150637831506 6318263963182639 0478994504789945 7765845277658452 0427212404272124 4804838048048380 4190275141902751

1010 3489423734894237 1311615513116155 4311088343110883 7098279070982790 8339780683397806 7638349176383491 0138023101380231 7281134872811348

Random number generator formula: =RAND()*1000 ((generated using Excel))Random number generator formula: =RAND()*1000 ((generated using Excel))



Example 6.3: A nursing manager wants to observe the time a nurse spends in direct and in indirect care over a 5-day period, on a unit where the shift is 8 hours.

Solution: A one digit number will be needed for the day, one digit for the hour, and two

digits for the minute. Using Table 6.4, starting from row 4, column 3, we obtain the random number

59830829. The first number is 5. Thus, we determine the day (in this case, the fifth day

of the week, Friday). We move to the next number, 9, for the hour; but since activity is performed

8 hours daily, we discard that number, and move to the next one, 8. If we assume that the shift starts at 7:00 AM, the number 8 represents 2:00 PM.

The minutes are derived from the next two digits, 30. Put together, the first observation is made on the fifth day, 30 minutes into the 8th hour of work, or at 2:30 PM.

This procedure is repeated for each observation to be taken. Then the observations should be sorted chronologically by day, hour and minute.



Example 6.4:Example 6.4: The chief of the hospital maintenance technicians wants to estimate the proportion of time that technicians spend in a part of the maintenance process. The maintenance office is open 9 hours, starting at 8:00 AM, every day of the week. 20 observations will be taken during a month-long investigation. Determine the random observation times and develop an observation schedule, assuming that the serial number of a dollar bill starts with 25.

Solution:Solution: Since we know the starting point in Table 6.4 is the 2nd row and 5th column,

the random number is 53664329. Next we need to choose the reading direction of the succeeding random

numbers: either by moving to the right on the same row, and when the row is finished, going down one row and moving from left to right; or by going down on the same column, and when the column is finished moving to the next column right and reading from bottom to top.

For this case, we choose to read in the same column, going down. For days, read two digits from left to right – select two-digit number, if higher than 31, then move to the next digit to make a two-digit day observation, and so on.

Within eight digit numbers, if there are not enough digits to identify day, hour and minutes for the observation, discard that random number and select the next one.

For hours, read single digit numbers from left to right, discard 0 and assign 1=8:00 A.M., 2=9:00 A.M., and so on.

For minutes, read two digit numbers and discard numbers 60 or over. Prepare a chronological list of the observation time results by day, hour and minute, to be given to the data collection team.



Observation Random Number Day Hour Minute Notes

53664329 discarded

1 99227273 22 7=2 PM 27

2 34330400 30 4=11 AM 00

3 25601053 25 6=1 PM 01

4 36293078 29 3=10 AM 07

5 61529058 15 2=9 AM 05

6 56072460 07 2=9 AM 46

77658452 discarded

83397806 discarded

7 41697527 16 9=4 PM 52

8 97271339 27 1=8 AM 33

39337813 discarded

75852472 discarded

9 35183489 18 3=10 AM 48

10 08589156 08 5=12 PM 15

Table 6.7 Development of the Schedule for a Work Sampling Study



Table 6.8 Final Work Sampling ScheduleObservation Day Time

18 04 8:28 AM

17 04 9:21 AM

13 07 8:04 AM

6 07 9:46 AM

10 08 12:15 PM

14 10 2:36 PM

15 11 10:13 AM

12 11 4:08 PM

16 12 11:42 AM

5 15 9:05 AM

7 16 4:52 PM

9 18 10:48 AM

11 19 12:08 PM

1 22 2:27 PM

3 25 1:01 PM

20 26 2:14 PM

8 27 8:33 AM

19 27 1:59 PM

4 29 10:07 AM



Table 6.4 Abridged Patient Care Tasks in a Nursing Unit Patient Care Tasks

Professional Non-Professional

Direct Indirect

1. Ace bandage application * *

2. Admit – patient orientation * *

3. Assist to/from bed, chair * *

4. Bed bath *

5. Bed change – empty * *

6. Bed change - occupied * *

7. Bed pan * *

8. Blood pressure * *

9. Catheterization of bladder * *

10. Census count * *



Table 6.5 Work Sampling Data Collection Form for Nursing Unit

Unit: 4 West Observer: CL Date: 11/02/05 Shift: AM Time: 10:04

ObservedStaff

Name& Title

Prof.Direct

Non-Prof.

Direct

Prof.Indirect

Non-Prof.Indirect

In Communication with On Break

Patient Staff Physician

G. Smith, RN √ √

V. Black, RN √ √

E. Mason, RN √

Z. Sander, RN √

P. Bills, RN √ √



Work Sampling StepsWork Sampling Steps

4) Take observations, and re-compute the desired sample size several times if initial estimates are not reliable

5) Determine the estimated proportion of time spent on specified activity



Advantages of Work SamplingAdvantages of Work Sampling

Observations less susceptible to short term fluctuations

Little or no work disruption Workers are less resentful Less costly and time-consuming Many studies can be conducted

simultaneously Useful for non-repetitive tasks



Disadvantages of Work SamplingDisadvantages of Work Sampling

Less detail on elements/tasks of a job Workers may alter patterns Often no record of method used by worker Observers may fail to adhere to random

observation schedule Not useful for short, repetitive tasks Much time required to move from

observation area to observation area to ensure randomness



Nobody likes to do things the hard way!

Work Simplification

Work Simplification-- process of changing work methods:– Eliminate unnecessary parts of work– Combine and rearrange parts of work– Simplify work when possible

Work Simplification Tools– Flow Chart– Work Distribution Chart– Flow Process Chart– Layout Chart



Process

Decision

Start/Terminate

Preparation

Document

ManualOperation

Figure 6.4 Commonly Used Flow Chart Symbols

Off page connector

On page connector



PatientEntry

Figure 6.5 Flow Chart for Emergency Room Specimen Processing

Triage:need blood?

Nurse draws blood

MD orderslab

IS orderentry

Label &package

Verification

Lab

Accession &analysis

IS doubleentry

MD terminateslab order

(end)

PatientEntry

Triage:need blood?

Nurse draws blood

MD orderslab

IS entry label & package Lab

Accession &analysis

Results arrive in ER

(end)

Initial Process After Improvement

Yes

endNoendNo



The Work Distribution Chart Shows what a department does to identify each of

its major activities and to pinpoint the contribution of each employee to those activities

Must be specific! Spotting Trouble

– Which activities consume the most time?– Are tasks evenly distributed?– Is there under-specialization?– Are employees assigned too many unrelated

tasks?– Are talents utilized efficiently?



Table 6.9 Partial Work Distribution Chart for Nursing Unit

Activity Hours Nurse Manager Hours Nurse I Hours Nurse II Hours

Patient admissions 12 Coordination with Admissions Dept.

8 2 2

Communications 16 Physicians and patient family

8 Patient family 4 Patient family 4

Direct patient care 48 8 Medication administration

20 20

Indirect patient care 16 Monitor charts 4 Meals 6 Update Charts 6

Discharge planning 14 2 6 6

Scheduling & Adm. 4 4

Miscellaneous 10 Supervisory meeting Sessions with trainees

42

Emergency coverage

2 2

TOTAL 120 40 40 40



Flow Process ChartFlow Process Chart Records a procedure in a graphic form, using a

sort of shorthand to simplify and unify the record– Ensures every significant detail of the work

process in its proper sequence is recorded– Highlights inconsistencies and redundancies

Can eliminate, combine, change (sequence, place, person), or improve activities

Operation

Move

Inspect

Delay

Store



PPaattiieenntt EEnnttrryy Triage

RN draws blood Specimen waits for MD order Order entry

Label and package Sent to lab Accessioning process

Lab analysis VVeerriiffiiccaattiioonn bbyy llaabb//IISS eennttrryy SSeenntt ttoo EERR MMDD tteerrmmiinnaatteess llaabb oorrddeerr

OPERATION MOVE INSPECT DELAY

Figure 6.3 Flow Process Chart for Emergency Room Specimen Processing



Now the important part! Worker Compensation

Compensation schemes:– Time based-- most common in healthcare– Output based-- more difficult to

operationalize, yet pay is related to efforts Incentive Systems

– Profit sharing plans-- receive % of profits– Gain sharing plans-- receive a % of the

value (i.e., cost savings) realized through increases in productivity



The End

Chapter 6. Reengineering

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