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3 Hidden Hospital Cost-saving Strategies

Dan J. Woods, for HealthLeaders Media, July 18, 2011

2. Asset Utilization

Asset Utilization can be defined as the percent of time a specific asset is “Active” divided by the combined time the asset is “Idle” and “Active”. The most highly correlated variables of asset utilization are demand for the use of the asset and operational processes supporting the use of the asset. 

Today, if you were to walk into a modernized manufacturing plant you would observe a calm, planned and controlled environment. This is because industries have spent billions of dollars driving variability out of their systems. They know that variability is the nemesis of process control—the less variability inside a process, the closer the asset’s utilization capacity can come to 100%.

Creating a demand model can be highly illuminating as a way to reduce variability. You will discover demand is highly predictable and is usually correlated to time of day and/or season.   As an example, by building a supply/demand model for operating room use, it’s possible to uncover sources of variability that can be reduced through improved scheduling and/or staffing. 

In other cases, cost-saving initiatives at your facility may have created unintended consequences, such as a reduction in the number of environmental service workers required to turn over a patient room during peak times of admission. If patient transport positions were eliminated—say, that were used to help fill a radiology queue—the result could be underutilization of a highly valued asset by a workforce component that represents one of the organization’s lowest costs of labor.   

Similarly, patients are often idle in ER treatment bays waiting for tests to be administered or results returned, while others are stuck in the waiting room. Innovative solutions like parallel processing could enhance operational flow and significantly improve the ER treatment bay utilization.

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