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Real-time capacity management means knowing the status of all resources all the time.

Methodist Healthcare, Ill. • $490,000 capital savings for infusion pump inventory • $187,000 rental expense reduction

Methodist Healthcare System, Texas • $51 million in transfer center net margin increase • $2 million to $10 million annual operational efficiency • Patient length-of-stay reduction from 5.2 to 3.81 days • 13 percent increase in market share in 18 months

Lehigh Valley Hospital, Pa. • 73 percent decrease in transfer center diversions

Oklahoma University Medical Center • Transfer denials decreased by more than 50 percent

Seton Healthcare, Texas • 40 percent decrease in bed request to bed assigned times

Advocate Good Samaritan, Ill. • 53 percent decrease in bed request to bed assigned times

Denver Health, Colo. • 92 percent reduction in ED diversion hours


Better capacity management is becoming a strategic initia- tive for healthcare executives facing federal reform measures, based on the belief that better use of existing capacity and resources is one of the fastest ways to reduce cost, generate income and maintain the quality of care.

One of the biggest sources of waste in healthcare, the

under-utilization of time and resources, can now become one of the biggest sources of savings and revenue. By having so much operational information online at the touch of a finger, executives and managers can make the kinds of decisions that optimize all hospital assets, including people, equipment and space, in a way that can save significant costs and generate considerably more revenue than most hospitals are currently realizing.


Real-time capacity management key drivers for maximum margin impact Key metric

Calculation Reduction in ED diversion

2.2 ambulance arrivals/hour averaging 1 admission x average contribution margin per inpatient admission

Reduction in ED left without being seen (LWBS) Average contribution margin per inpatient admission Reduction in OR hold/boarders

OR contribution margin per hour Growth in transfer center admissions

Reduction in ED length of stay and reduction in inpatient LOS

Improvement in mobile asset utilization Reduction in replacement capital Reduction in equipment rental expenses

Effi ciency in equipment preventive maintenance and repair

Support staff productivity Net contribution margin for transfer center patient

ED bed request to bed assigned placement time reduction revenue; LOS reduction impact to avail- able inpatient days or reduction in cost basis

Cost avoidance reduction in capital acquisition expense through inventory right sizing

Reduction in lost, stolen, misplaced equipment

Rental expenses reduced or eliminated as utilization of owned assets is increased

PMs and repair costs reduced as a result of both inventory right sizing and effi ciency in process

Support service staff productivity gained through optimal workfl ow process HEALTH MANAGEMENT TECHNOLOGY August 2012 17

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