First of all, let me introduce myself: I studied Healthcare Management & Strategy and Informatics before I started my career at SAP NL in 1993. I worked more then 10 years as a pre-sales/business consultant Healthcare. Since 2003 I am supporting the SAP Healthcare Development department as a freelancer and as a Process Consultant Healthcare I am/have been implementing TOC in several hospitals in the Netherlands. Right now I am introducing TOC in the German/Swiss healthcare market.
In a series of blogs I’d like to tell you about the Theory of Constraints(TOC), a simple method for process optimization but with astonishing results, the use of TOC in Hospitals and the possible influence TOC can have on managing healthcare systems in general. A lot of you are familiar with (international) healthcare systems, I hope you provide me with feed back on this topic, because TOC might be a way to solve the dilemma between an increasing demand for healthcare services on one side, and a limited budgets on the other side.
Theory of Constraints
TOC has been developed in the early 80’s by Dr. Eli Goldratt. Originally it was mentioned as a management philosofy to optimize throughput in production and logistic environments. May be some of you know “The Goal“, it’s a novell about a director who manages a troubled manufacturing plant, and looks at the concept of throughput accounting. In this paper the basic concepts of TOC are explained.
The basic idea of TOC is that a within a chain of dependent activities (proces steps), the throughput(production) is determined by the weakest link, this is the constraint or bottleneck in the process.
Optimizing complex systems
The common way to manage a large, complex organisation is to divide it into several sub systems (departments). Every department has his own manager, who has his own budget and targets he has to reach. The manager is doing the best he can to optimize the performance of his departement and to motivate his staff to work as efficient as possible, reduce costs and produce as much as possible. So far so good. Every department is optimizing in it’s own way, according the goals they have to reach. But what they don’t realize is that every department is part of the chain and that they are not independent of each other and even worse, that local effiency can cause a bad performance for the system as a whole. Especially because the goals of the different departments are not in line with each other
Praxis hospital example: The goal of the emergency department is to treat as many patients/hour as possible. The doctors need the lab results as fast as possible to define the diagnosis and start the treatment. The manager of the lab wants to analyse the blood samples as efficient as possible. This means that he waits to start the blood analyser untill the tray with blood samples is filled to the maximum, so the costs per blood sample are low. This takes half an hour and the doctor has to wait this time for the results. For the system as a whole this means that because of the local effiency of the lab, less patients can be treated (less throughput), and the system is loosing money. In this case the weakest link in the treatment chain is the lab.
The weakest link determines the troughput in the system as a whole!!
TOC tries to find the weakest link, strenghten it and by doing this improve the throughput through the whole system. More about that in the next blog!