Using big data to improve OR efficiency and margins

April 07, 2017
By Rich Krueger

Today’s high-tech OR has benefited enormously from technological advancements in peer industries.
Bulky CRTs have been replaced with sleek, touch-screen LCDs, incandescent lighting with LEDs and surgical booms are made from lightweight carbon fiber instead of steel. Surfaces are coated with antimicrobial surfaces to lower infections, and the overall design and workflow takes into account the latest understanding of both provider and patient ergonomics.

Yet the planning and management of these ORs still rely on methods used 20 years ago. ORs are both the most expensive and most lucrative locations in many hospitals, so it is crucial that OR block time be optimally allocated to surgeons, practices and departments to maximize throughput and minimize waits, while still leaving enough headroom to fit in emergency cases. Most hospitals manage this, at best, with manual spreadsheets, and at worst, based on historical experience. Applying today’s management science to hospital operations requires data. Many hospitals have only recently computerized, partially as a result of the incentives associated with the American Recovery and Reinvestment Act of 2009.

The availability of both data and tools has created the opportunity for real innovation in perioperative management. Cloud-based operations planning and management platforms enable health care leaders to transition from being reactive to being proactive in managing the OR, in a way that best utilizes this shared resource while also taking into account the specific institution’s culture and policies. There’s a broad spectrum of how hospitals can manage OR resources, from “federated departments” to “centrally controlled.” In the former, each surgical department or practice is given an allocation of OR block time and is responsible for ensuring they meet target utilizations.

Within the department or practice, they can sub-allocate the blocks in any manner they see fit. As long as departments or practices meet their target utilization, they retain their OR blocks. If they exceed target utilization, they may gain additional blocks, and if they fall below target, they risk losing them. In all scenarios, the department or practice fully plans and manages their allocated OR blocks. Centralized control is the opposite. A hospital OR committee manages all blocks down to the individual surgeon level. The OR committee has full visibility into all block operations, and sets the policy that is used to manage block allocation, as well as evaluate whether or not the OR blocks have been utilized successfully.

Key aspects of both models are transparency and accountability. Whether it is the individual surgeon or the practice or department, unused blocks need to be re-allocated to where they are more likely to be utilized in a way that is consistent and fiscally responsible. Before the availability of data and operations planning and management tools, OR committees simply didn’t have access to such important insights.

Decisions were often made on first-hand experience, seniority and/or political influence. Given the very high operational expense of running an OR and the impact on downstream resources, a 1 to 2 percent increase in utilization or surgical volume can add millions to the annual operating margin or revenue. EMR vendors or Excel spreadsheets can provide a basic reporting capability, but they lack the flexibility, policy sensitivity and ”what-if” scenario capabilities of specialized vendors. Hospitals need to instill a framework of accountability that transparently allocates OR time, staff and surgical beds according to the case activity, demand and policy.

Other key elements are usability and verifiability. Some larger hospitals have invested in data operations, hiring staff to compile reports and even run basic predictive analytics to gain a basic set of insights. These reports are used by OR committees to help make decisions, but don’t take into account the level of complexity that often exists. The accuracy of these reports, and the inability to reproduce them, is often questioned by providers, creating data skepticism and diminished influence in driving critical change. With the average annual operating expense of a single OR costing $2 million to $3 million, this inaction has significant consequences on a hospital’s or health system’s financial performance.

A robust operations planning and management platform can account for complexities that exist in these environments. It allows all stakeholders from executives, to surgeons, to OR staff to quickly validate the raw data and easily follow it through each step of any recommendation in real time, so that conclusions are defensible and actionable. The opportunity for data and health care operations planning and management tools to modernize hospital and health system operations goes far beyond OR block time. By bringing in data on bed placement and length of stay and combining it with simulation and what-if modeling capabilities, hospital leadership can understand the impact of inpatient surgical demand on beds, create centers of excellence and build staffing structures with more precision.

About the author: Rich Krueger is president and CEO of Hospital IQ, provider of a cloud-based operations planning and management platform.