Arnold Milstein, MD, MPH Medical Director, Pacific Business Group on Health; National Health Care Thought Leader, Mercer Health and Benefits; MedPAC Commissioner.

As a payer, you find yourself in an untenable situation as your medical expenses have skyrocketed over the past several years, causing you to pass on these cost increases to your membership base in the form of premium increases. You are repeatedly reminded that any attempt to contain provider reimbursements will lead to a decrease in quality or access or both. One reason this is true is that extreme artificial variability in patient flow is tolerated and left unmanaged. The result is that expensive resources such as inpatient beds, operating rooms, cardiac catherterization labs, staff, and so on face excessive demand at times and are significantly underutilized at other times. The consequent low average utilization of such assets drives up cost and simultaneously decreases access and quality. In such an environment any attempt to cut costs further decreases access and quality.


Helen Darling; President, National Business Group on Health

The science of operations management and IHO’s recommended approach for patient flow variability management offer a number of tools to address these intractable issues. For example, by appropriately managing the flow of patients and organizing resources to meet the needs of the different types of patients, one hospital, Cincinnati Children’s Hospital Medical Center, was able to increase its annual revenue potential by $137M without adding resources and also avoided a $100M capital expense. This increase in throughput was achieved alongside decreased waiting times and improved patient and provider satisfaction.

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