HOW TO REDUCE AND ELIMINATE FINANCIAL WASTE IN YOUR HOSPITAL

The phrase “Hospital Economy” is a common one used in many clinical settings. It literally means conserving hospital materials to prevent waste. Hospital Entrepreneurs do this to minimize cost and maximize profit. Sometimes, the practice of hospital economy is taken to the point of trying to ligate a bleeder with the last tiny piece of suture remaining! I am sure surgeons will know what I am talking about.

But I have since discovered that the practice of hospital economy contributes little or nothing to the productivity of the hospital. It is better rather, to adopt trusted and tested principles of productivity to minimize waste. After all, medicine is a science and doctors are scientists not artisans. It is important therefore that we rely more on proven productivity techniques rather than on trial and error methods.

There are several sources of financial waste that you can find in the healthcare industry. I will highlight a few.

1. Excessive Production and Idle Time
Excessive production occurs when there is a mismatch between supply and demand. When you supply more than is demanded, you invariably experience over production. A good example of excessive production in the healthcare industry is employing more workers than is needed. This means your supply of workers exceed the demand (patient load) you have. There is then a supply (workers)- demand (patients) mismatch. This leads to the incidence of idle workers who consume financials but contribute nothing to the hospital process. To handle excessive production and idle time, you must match your supply with your demand.

2.Re-work
Rework is a repetition or correction of a process because of quality problems. It happens when the initial product does not meet the expected standard requirement. Rework is a painful and costly process. A healthcare example of rework is readmission.
It is very important that you quickly identify and correct rework in your hospital. To correct rework, you must analyze and solve the causes of rework. Consider the example below.

 Mr. Nwoye is a 72-year old hypertensive and diabetic of over 20 years duration. He was initially discharged 2 days ago (after spending a week on admission for sepsis secondary to UTI). He has just being rushed back to the hospital in septicemic shock. On inquiries by the Medical Director, it was discovered that the resident doctor discharged him without appropriate follow-up medication. Mr. Nwoye’s eldest son is a consultant nephrologist in the UK. So, there can be no cover up. The hospital may not be able to charge them for the new treatment.

The above case may sound extreme but it is an example of rework. Mr. Nwoye was discharged from hospital before regaining full fitness and without proper medication.

Readmission leads to wastage of resources-time, money, skill, efforts etc. 

Re-admissions can cause patients to lose confidence in your ability as a healthcare provider. It will portray you as being incompetent and hurt your productivity levels.

It is very important that you quickly identify and correct rework in your hospital. To correct rework, you must analyze and solve the causes of rework. You should critically and objectively evaluate your methods, materials, machines and manpower.

 An unbiased evaluation will help you ascertain the source of the defect. After detecting the reason for the rework, you must move to prevent a re-occurrence.

A good approach is to adopt quality management practices e.g Total Quality Management (TQM) and Six Sigma Concept of management. TQM simply states that every worker in the organization must produce quality at all times. The production of quality products/services should begin from the management team down to the least paid ward attendant. The emphasis of the Six Sigma Concept on the other hand, is that you must get it right the first time. Mistakes can be costly in medicine and a failure rate of 0.1% may lead to death. You must make the right diagnosis, use the right medication, and employ the right personnel the first time.

3. Waiting Time 

It is said that patients spend more time waiting to access treatment than the actual time spent on receiving treatment! Your goal in this instance is to reduce the waiting time in your hospital to the barest minimum. However, you cannot solve a problem until you understand the dynamics of that problem. To understand why patients wait, you must first understand the concept of the bottleneck.

The bottleneck is that resource (manpower or machine) in your hospital process with the least capacity. The bottleneck could be viewed in terms of “inter-department” or “intra-department”. In the “inter-departmental” view, one of the departments in your hospital could be the bottleneck in its working relationship with other departments. Once you can solve the problem of the bottleneck, then you are on your way to reducing waiting time.

Cheers!