During a recent interview, LeanTaaS Founder and CEO Mohan Giridharadas discussed why asset utilization and capacity management are such urgent operational issues for hospitals today.
Mr. Giridharadas and the LeanTaaS team work closely with over 450 hospitals belonging to 120 leading U.S. health systems. Together they are proving these operational challenges can be solved — in a rapid and scalable manner. We asked Mr. Giridharadas to share some key learnings for others.
Question: What does healthcare get wrong about operations that other industries get right?
Mohan Giridharadas: UPS, Delta Airlines and a typical hospital have more in common than you think. For all three of them, demand is very difficult to predict, and fixed supply constraints exist. As an added complexity, demand and supply must balance within a short period of time at extremely high levels of safety and quality.
The difference between a hospital and UPS or Delta is that the latter are addressing the complexity of the supply-demand balance head-on. Embedded in Delta and UPS’ operational workflows are sophisticated algorithms that predict demand patterns and the availability of the required elements of supply. These predictions are augmented with real-time alerts to be as accurate as possible. They run simulations thousands of times to make their operations resilient to unexpected swings in either the demand or the supply, and they continuously intervene in near real-time to keep the demand and supply in balance. That is what it takes to raise asset utilization to an acceptable level of performance.
Health systems, on the other hand, largely ignore the complexity involved in balancing supply and demand. Instead, they try to power their way through it by sheer determination, instinct and force of will. The front line makes decisions under pressure, using gut feel combined with Excel spreadsheets or standard reports from the EHR. Somehow, they succeed in treating all the patients who were supposed to have been treated that day. But muscling their way through the process like that creates enormous stress on both staff and patients, and often results in long, extended wait times.
Q: Hospitals have invested millions of dollars in the EHR. Why isn’t the EHR the solution to managing capacity?
MG: EHRs are excellent at putting all the clinical and financial information from every patient encounter into a single database. But they simply don’t have the optimization algorithms — nor the artificial intelligence/machine learning capabilities — to continuously learn and improve.
Ignoring the mathematical complexity of balancing supply and demand doesn’t make the problem go away. It takes sophisticated demand prediction models — for each unit of service, for each hour of each day of the week — with models that learn continuously. It takes a sophisticated understanding of the elements of supply capacity needed for each service to extract the interconnectedness and the constraints under which they must operate. Then, it takes active intervention on a continuous basis to nudge the demand or supply in a direction to stay as close to equilibrium as possible throughout the day, every day. The EHR was not built to do this.
Q: What is at stake for hospitals? How much value can be unlocked by getting asset utilization right?
MG: Getting more out of existing assets is one of the most pressing operational questions facing health system leadership. The operational and financial impact that can be delivered is enormous. Improving the staffed room utilization of operating rooms by five to six points allows more surgeries to be completed each day, thereby creating tens of millions of dollars of value each year for hospitals with 20 or more operating rooms. Reducing wait times in infusion centers by 40 to 50 percent enhances the patient experience while also unlocking 10 to 15 percent of extra capacity, which adds $1 million dollars of value per year for oncology practices with 50 or more infusion chairs. The total value at stake is $200 to $250 billion dollars per year across all five thousand hospitals in the United States, which translates to $40 to $50 million dollars per year for the average hospital. This is particularly relevant now given the adverse impact COVID-19 has had on the financial performance of many health systems.
Q: You’re hosting Transform, a hospital operations summit, in early December. What can you tell us about that event and what are you looking forward to?
MG: We’re honored to have Dr. Scott Gottlieb, the former head of the FDA, a board member at Pfizer and accomplished healthcare expert as a keynote speaker at Transform. He’s provided consistent and reliable expert analysis that has guided not just policy makers and leaders but all Americans. He’ll delve into the clinical and public health policy challenges raised by the pandemic and also the specific failings with regards to operations, information systems and data collections. This conversation is so important because the pandemic is a perfect manifestation of what happens when a system is operating at the edge of its capacity.
We also experienced an inability as a health system to collect information — initially, we couldn’t even report how many patients were hospitalized or bed capacity in intensive care units, and later on we didn’t know the right quantity of medicine needed to be shipped to specific hospitals because we didn’t have the right infrastructure and processes in place to collect this information. I’m looking forward to a robust conversation with Scott about how data analytics and technology can help us prepare not only for the next pandemic, but for delivering better care in the years to come.
To gather more insights on digital transformation from Mohan Giridharadas and to hear an exclusive keynote from Dr. Scott Gottlieb, register for Transform: Hospital Operations Virtual Summit on December 7-8.