Big problems could be ahead for a culture that has difficulty seeing any parallels between how healthcare and “industry” operate.

There's a new price tag for efficiency in healthcare.

This one comes from the federal government, not consultants or software vendors. Under healthcare reform law, hospitals that deliver the highest quality care at the lowest possible cost will be recognized and rewarded. Those that can't deliver quality care efficiently risk losing millions in reimbursement.

In a culture that still has difficulty seeing any parallels between how healthcare and “industry” operate, this could be a major problem.

To make matters more complicated, the current administration chose to incentivize electronic medical record (EMR) adoption while ignoring operational technology. While the scramble to install EMRs certainly will help the government track spending by beneficiary (and measure efficiency), it's not at all clear that EMRs will significantly save hospitals money.

On the other hand, operational technologies, such as real-time capacity management, have already been proven to save and even produce revenue at significant levels for hospital early adopters. Capacity management technologies play a key role in alleviating overcrowding, increasing transfer and admissions volume, dramatically reducing waste, promoting on-time discharges and shortening loss of service (LOS) by allowing hospitals to manage capacity and resources in real time.

Still, only 15 to 20 percent of U.S. hospitals employ real-time locating systems (RTLS) and/or enterprise-wide automated patient flow systems. The predominant hospital culture argues that healthcare is about people, not products, which is not completely true. It is about people showing compassion for people by providing the product of quality care. The decision to embrace industrial performance solutions that help deliver that care is by no means selling out to commercialism.

Most hospitals adopt people-oriented performance-improvement programs that focus heavily on behavior. Yet Six Sigma, Lean Management, etc. were conceived in the belief that optimum performance is achieved when people and technology are humming along in harmony.

Traditional cost-cutting methods have reached the point of diminishing return. The elimination of wasted space may be the quickest and best alternative available for generating income in tough times. In fact, health reform will demand that hospitals make the most of what they already have in virtually every category of operation; it also seeks a higher level of operational accountability and transparency with regard to managing patient safety and efficiency. As for cost, the price tag of capturing up to 20 percent of current wasted capacity with operational technology is a pittance compared to a new wing at $1 million to $2 million per bed. A capacity management system can be in place in less than three months, versus three years for a new wing. The ROI is much shorter too. RTLS, for example, can pay for itself within a year.

The “real-time enterprise” — an automated environment where all physical operations are monitored in real time so companies can react to problems within seconds — has been gaining popularity in industry over the last decade, but it's a relatively new concept to healthcare. The nearest equivalent was the “just-in-time” inventory movement of the 1990s when hospitals and suppliers worked closely to manage the flow of supplies in order to reduce inventory costs and processing time. Today, the opportunity to optimize physical operations is much broader, and the time lapse for monitoring the deployment of all resources is virtually down to zero.

In hospitals, real-time capacity management merges automated patient flow and advanced RTLS technology with business intelligence (BI) software and analysis. The resultant system can track patients, staff, physicians, assets, rooms and transfers simultaneously with feedback provided to managers and executives via desktop dashboards. This provides a live “moving picture” of the entire operation, either in a hospital or system basis. It would mean that no staffed bed sits idle, the need for hallway boarding of patients in the emergency department is reduced, no mobile device goes missing and no patient goes unattended — or, worse, is turned away because of a capacity deficit.

It has long been established that technology has greatly advanced the treatment of individuals. Perhaps it's time to explore how it can aid in the rest of their care and how much it costs to deliver it.

About the author

Anthony Sanzo, a former hospital and health system CEO, is president and CEO of TeleTracking Technologies. To learn more about TeleTracking Technologies solutions: