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Krannert professors Suresh Chand (left) and Herb Moskowitz (right) are leading a project team that uses management principles to increase the efficiency of healthcare delivery. The research is supported by the Regenstrief Center for Healthcare Engineering at Purdue’s Discovery Park.

Reengineering healthcare
Faculty, students apply industrial methods to medical clinic

What began as an MBA class project at Purdue University’s Krannert School of Management is now applying factory management techniques to a medical clinic, ultimately improving productivity and quality.

Herbert Moskowitz, Lewis B. Cullman Distinguished Professor of Manufacturing Management, says the student-faculty team’s approach to improving healthcare clinic operations is, of necessity, “multipronged.”

“We started with the idea of the need to provide better service to more patients,” Moskowitz says. “We soon realized that we could employ manufacturing principles to cut patient waits and better utilize medical personnel.” What makes a factory efficient is getting the right parts to the right places at the right time. In these days of just-in-time inventory and “lean” methods, factory managers use high-tech scheduling to manage global supply chains.

According to operations management professor Suresh Chand, established industrial management processes provide tools to reengineer medical clinics so they can deliver better care and increase productivity.

“We decided to apply factory physics at a high level,” says Chand. “Our goals were to increase the efficiency of the clinic in terms of patient time in the office, utilization of clinic resources, quality of care, and, ultimately, revenue for the physician.”

Physician revenue has been conspicuous in its absence from discussions about controlling healthcare costs. In fact, many organizational healthcare arrangements limit physicians’ revenue, a mistake in terms of making a clinic work more efficiently and in maximizing the quality of patient care, says Moskowitz.

“If we organize a clinic so a patient spends less time there, then we are maximizing the utilization of the doctors,” stresses Moskowitz. “That means physicians are being more productive and giving better service while they also are generating more revenue.”

Chand explains that better care also can cost less when the essential efficiencies are realized. “What we’ve come to understand is that increased revenue and improved quality go hand in hand,” he says. If patients’ clinic experience is fast and pleasant, they will be less hesitant to pursue care earlier, a prescription for better health.

In fall 2004, Moskowitz, Chand, and the MBA class started working with the Indiana University Medical Group’s physicians at Grassy Creek, one of their 18 outpatient clinics in Indianapolis serving low-income patients. Moskowitz describes the initial assignment as “collecting, recording, and tracking data to evaluate, create designs, and optimize systems using process control.”

The Purdue professors and students worked closely with the nine-physician clinic staff, led by Dr. Deanna Willis, an IU assistant professor of family medicine. Mapping clinic patient and physician flow, the team identified bottlenecks and flowimprovement factors and provided recommendations. With their help, the clinic was able to serve 37 percent more patients on a given day.

Though the team used an animated simulation model, Moskowitz stresses that the true success of the project stemmed from the cooperative relationship between the medical staff and the researchers. “One of the keys to our success was establishing rapport with the medical personnel so we could work with them to solve problems,” he says. “The physicians and staff were wonderful.”

The team is planning to further its analysis in future projects with Grassy Creek. “In our initial work, we didn’t consider clinic demand or appointment scheduling,” Moskowitz says. “There are other variables — a finite number of patient slots, congested days, slow days, patient preferences — that we need to come to terms with.”

Chand says that while the project’s first phase was to reduce the time the patients spend in the clinic, a new goal is to reduce the time between when patients call for appointments and when they are seen by the clinic. Sick patients need prompt treatment, and left untreated, the consequences grow worse. Some patients miss appointments made too far in advance, resulting in a loss of clinic and physician revenue and wasted slots for serving others.

Chand believes business models could supply solutions. “We might want to employ a revenue management model — that is, charge different prices for services booked at different times — along the lines of airlines or hotels,” Chand says. “After all, we’re after the same thing. We want to use all the seats, beds, and clinic slots, and there are established ways to manage these variables.”

Kwei Tang
John Norris

John Norris, a Krannert School doctoral candidate in quantitative methods, says the team is considering using RFID (Radio Frequency Identification) tags in the clinic to track more precisely patient and doctor flow. The tags are the same devices big retailers have started to use to track products from the assembly line all the way to the cash register and out the store door.

“We’re still considering the best way to utilize the technology,” Norris says. “But we need the seamless collection of data that RFID technology can provide so we can build the ‘industrial’ tools such as statistical process-control charts and process capabilities.”

Ultimately, the research applies he principles of engineering, management, science, and information technology to improve the delivery of healthcare to consumers. That’s a goal shared by one of the team’s key supporters, the Regenstrief Center for Healthcare Engineering at Purdue’s Discovery Park.

“We’re starting at the end of the chain and working backwards to show how to make the clinic model work efficiently to provide both better care and a financial incentive for medical professionals to buy into a different way of doing things,” says Moskowitz. “The next step is to evaluate the broader implications of our work for healthcare delivery.”

— Mike Lillich


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