Theory of Constraints

THEORY OF CONSTRAINTS

I currently work for myself but I will speak on one of my first “real” jobs. I worked as a Certified Nursing Assistant for a few years. I worked in nursing homes and hospitals and saw essentially the same problems on different scales in both environments, lack of staffing and adequate pay. Here, I will focus on hospitals

Throughput Hospitals revenue comes from insurances, both private and public (government). HOWEVER, the government agency that regulates hospitals (CMM) withholds 10% of total payment. This money is withheld on a yearly basis (I think) and is only disbursed *if* and only *if* hospitals meet or exceed several (last time I worked in a hospital, there were about 20) benchmarks. Some of them included length of stay, patient satisfaction, pain management and accreditation.

If the hospital fell short of any of the benchmark, the money (for the services already provided) would be reduced. As you can imagine, this effected everything, as everything is budgeted already to the bone. Food services, laundry, phone and cable services, medication, and cleaning, all of this is affected as departments are (probably) already working with a limited and strict budget.

INVENTORY From my perspective, inventory was skilled labor (nursing).

OPERATING EXPENSE Again, labor costs. Hospitals operate 24/7 with hundreds of staff (nursing, security, food, maintenance). The highest cost is labor with the added burden of overtime. Although the administration would like to eliminate overtime, it is impossible to run any health care organization without overtime. Things/life happens and people do not show up for work. Unlike other industries where workers can probably take on more work, a nurse can only adequately work with 2-3 patients, especially depending on what’s wrong with the patient. You are dealing with people’s lives and mistakes can cost a life. Having a nurse work with 4+ patients can be life threatening.

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