Posted by: Knightbird | December 2, 2016

Using a Demand/Capacity Curve in Lean Thinking

In a medical center I had responsibility for, daily productivity for five family practice medical providers had a daily average of 52 visits from 55 patient appointment slots of 30 minutes each. The Capacity Curve was 55. Demand was 52. So we were OK, correct? Actually not. Collecting actual data indicated that there was a huge patient bypass traffic number. This facility was the only one in a community with 3,100 residents. With an average per patient visit number of 4.2, our actual demand should have been 218 patients per day (4.2 x 3,100/250). Some of the patients sought services in the emergency room, which actually compensated the organization at a rate $200 less than regular appointments.

Many patients could not get appointments, so they bypassed our facility in favor of service providers in Anchorage, where many of them flew as part of their jobs on a very regular basis. Without improving our Capacity Curve, we would be unable to capture the lost demand. What kind of options are available to us?

The obvious tactic tried before was to exhort the providers to see more patients. Were they lazy by limiting their daily patient access to 11? I didn’t think so. The providers worked long, hard hours on a 7 day basis. With a limited number of providers and an obligation to maintain an emergency room 24 hours a day year around, this ate up a lot of capacity.

They literally could not see more patients. So we had to find out the reason and fix it. One obvious solution is that there is actually the potential for 16 patients’ slots of 30 minutes each in an 8-hour day. Conversations with provides quickly pinpointed 2 problems. Accessing an Electronic Health Record that wasn’t updated regularly and had links to other records that took considerable time to navigate meant that 20 minutes of an appointment was spent on the EHR. The other major problem was that administrative and clerical tasks had to be assumed by the provider. So when they were in their appointments and afterwards, they were following up on deferred tasks.

As a Lean Executive, I also saw a lot of other problems in additional to the obvious ones. Pull systems for labs, pharmacy, patient records and billing/coding records were dysfunctional, adding time to appointments. And as any Lean Practitioner with considerable experience knows, fixing the obvious problems will bring other problems to sight. It’s a given.

A simple Demand/Capacity curve used improperly led to the dismissal of a medical director. Throughput could not be improved because of the capacity constraints.

The solutions were obvious. With providers in rural Alaska earning a substantial salary, one solution was easy. Provide a medical assistant for each provider. That simple fix frees up the other 6 slots and improves annual capacity by 7,500 patient slots. If each patient brings in $500 in revenue (not a real number), the annual revenue increase is $3,750,000. Value is created without expense because revenue increases. We do have 5 new employees, but they have created daily value of $15,000, which is far less than their cost.

A second solution lay in improving the IT system and the Electronic Health Record Functioning. Some of the work might be given to the MA, but that is just shifting a problem. You really want to fix the problems and reduce the access time. How did I know there were problems? I went and looked. Going to the Gemba is a crucial requirement for being a Lean Executive. I watched as one Community Health Aide in a Village Clinic tried to explain a problem to the EHR Manager. He insisted the problem could not exist. I saw it on the screen and despite the denial, it did exist.

Fixing this issue could advance another huge increase in productivity. The average family practice appointment is 20 minutes in length. Average provider facetime with a patient varies, but 13 minutes of uninterrupted access gets to answers quickly, if set up properly. More complex issues might take more time, but then there are very simple issues that are finished in a shorter period of time. With an MA taking vitals, arranging for records access and screening phone calls/mail/messages for critical ones, an experienced practitioner can finish as many as 26 appointments in a day and still go home within 15 minutes of the clinic closing.

Sustaining a 20-minute appointment with up to 26 patients a day will be able to see 11,250 additional patients, or $5,625,000 in additional revenue at $500 per visit. Through addressing 2 issues and increasing the Capacity Curve, we have brought in additional Demand and increased revenue by $9,375,000.

I actually didn’t need any more money when I presented this proposed solution to the board of directors. One of my recommendations for the EHR was purchase of a new one. A company executive who was not on board and had a relationship with the board chair challenged the statement and said that the company could not afford the projected $3 million expense for a new EHR. Remember, once the 2 issues are addressed, the revenue increase is an annual one. In 5 years, the return on the two investments is almost $50 million.

To me, it was sad that the board could not see the huge potential. I had already identified the source for funding the EHR without any additional appropriation, and proposed a solution for ensuring that the regular updates required for the ICD-10, a statement of medical provider codes for medical services provided, were done when received. The Value created with huge, with a minimal increase in staff, and payment coming from existing inefficiencies.

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