Theory of Constraints Handbook - James Cox Iii [602]
Improving the effectiveness of the constraint is a very important part of exploitation of the constraint. The product-mix decision identifies the services that we must process through the constraint to best achieve the system goal. We have to look at the goal and the supporting strategy to determine if this is the best action to increase Throughput per constraint (doctor) time unit. In Fig. 31-7a, a pie chart of the current distribution of doctor time is provided. The chart indicates the total revenues collected and approximate time for specific procedures based on time blocks in the schedule. Notice that a large amount of time is directed to facial trauma surgery (the least profitable service), while little time is devoted to wisdom tooth extraction and dental implants (the most profitable use of doctor time). In Fig. 31-7b, crowns and bridgework provide Throughput of $400 ($1000 – $200 variable cost ö 2 doctor hours = $400) and fillings and veneer services provide Throughput of $400 per doctor hour, while extractions/RTC provide $350 per hour and implants provide $250 per hour. Clearly, the surgeon should focus more on the crowns and bridgework and fillings and veneer services and less on the implants.
Data mining and an understanding of TA will help determine the services and patients that should be sought to provide consistency with the organization goal. Throughput/constraint unit time or doctor unit time (DU) is the key factor used in pie chart in Fig. 31-7. Instead of taking each procedure and each patient that is highly variable, we aggregated the data over time. If the total collections from trauma services divided by the doctors’ time utilization is significantly lower than the T/DU from rendering services in other areas, the focus must be directed to those services with the higher Throughput.
FIGURE 31-5 Quality function deployment matrix sometimes called the house of quality.
FIGURE 31-6 Design process.
FIGURE 31-7 Current and ideal product mix.
There is another factor besides T/DU that is excessive: cost utilization of other resources. Some of the trauma cases require excessive paperwork, legal documentation, and court appearances by practice administrators or by the doctors to be paid for the services. This is a simplified version of activity-based costing, called CUT (cost utilization) in aggregate. In health care, the nursing staff, specialized billing or coding staff is an expensive resource. The cost utilization of these resources in addition to constraint resource time utilization can help with correct decision making about whether to perform or not to perform certain procedures. We also might have to make a decision about whether to perform certain procedures or refer the patient to someone else. We take into account our TA equation NP = T – OE. If Throughput is the function of effective and efficient use of doctor time, and OE are all the salaries, utilities, cost of inventory, etc., we must take into account the large cost of administrative work required to do certain procedures. The increase in OE can offset the gains in Throughput.
This concept could raise many questions, but with payments capped on many procedures, for-profit health care organizations cannot survive without taking these things into account.
In the hospital context, with the operating room being the constraint, the different services such as oral and maxillofacial surgery, orthopedic surgery, neurosurgery, general surgery, plastic surgery, otolaryngology, urology, cardiothoracic, and gastroenterology should be evaluated based upon Throughput generated divided by the allocated time to the specialty services. Due to variability in patient demands in these services, most of the time these services either do not use their allocated time completely or they need additional time. Any percentage of time that was not utilized after allocation to a service or practice should be accounted as