Hospital management by learning

Time flies; my last blog was in September when I thought I was almost ready with my hospital social network. The social network is not yet complete – soon will be!! – so I will wait sharing that. In the meantime my first (scientific) paper (ever) has been accepted and will be published any time soon in the journal Health Services Management Research. I was very happy with the news, since a lot of time and work (not to mention patience!) had gotten into it. The paper was born two years ago and has grown up in the past one and a half year of reviews.

As I read it again, for proof reading, I was thinking about the two Dutch hospitals that went bankrupt recently (see news item). I wrote in my paper that managing and controlling 106 logistical parameters, is a ‘challenge’ for strategic management (see blog about this). In the context of a scientific paper this is the right way to express it, but it is an understatement. I think it is impossible for one man, women or board of directors or whatever other small group of people.

If you want to control the hospital you need to know how these 106 parameters, such as Waiting Time, Lead Time, Inventory Cost, Length of Stay, Bed Utilization and so on, influence one another. Then you need to know how these parameters translate into financial parameters. The way that hospital care is financed seems to be uncoupled from the operational system so this is hard. Costs are made for staff, materials, equipment and infrastructure, but are not yet known in terms of one (type of) treatment of a patient. Negotiations with healthcare insurers on payment per treatment are therefore not really based on actual cost. One hospital manager once said to me: ‘our budget is largely based on past year’s budget and some idea of what next year will bring, but usually from June, when we know how far we are with the budget, we are fighting in the rest of the year to get the budget for the treatment of all of our patients.’

This is changing; hospitals are trying to get more overview on parameters, costs and manage these. That is a good thing for sure. This will however only work in an environment that is willing to learn, because knowing how you perform is not always fun. Revealing bed utilization (that low?), material cost (my goodness, how high!) or space utilization (what?! not higher than about 30% on outpatient departments?!) usually raises a few eyebrows and causes headaches. When I presented some pretty disturbing figures on logistics in a meeting some years ago,  someone asked who would like to work on the required improvements. The hospital facility manager then looked out of the window and sighed: ‘Well, not me!’

This response is perfectly understandable if individual people are held accountable for a performance they can barely influence themselves, if we assume that the 106 parameters all matter. Nobody volunteers to fail very visibly. An effective hospital is perhaps more of a learning system, in which continuous adaptions are made, based on what is happening around and in the hospital, which is detected and led by a network of people who have overview on all aspects and performance indicators of the hospital. When discussing the social network of the hospital I will get back to that.





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