Statement of Operations

The operations function in an enterprise involves activities required to convert inputs to desired outputs. Operations management is based on a systems approach in which a process is viewed as follows:

A health care enterprise consists of a number of operations processes that must be managed. These processes may include not only delivery of medical services but also procurement of materials and supplies, maintenance of patient records, hiring/training/deployment of human resources, [Page 519]processing of accounts payable and receivable and, in some cases, preparation and delivery of food services and housekeeping services.

In a health care setting, the inputs to a process may be patients needing services, blood or tissue samples requiring testing, or data that must be posted into appropriate patient and billing records. The transformation process typically consists of physical activities involving treatment of patients, analysis of laboratory specimens, processing of records, and so on. The outputs reflect completed activity that adds value to the enterprise such as improved patient health or updated information.

Operations management is critical because the operations function is the part of the organization where most assets and people should be employed. Effective operations management involves a number of activities related to the inputs, transformation process, and outputs.

With regard to inputs, forecasting and capacity planning are necessary to estimate and accommodate the anticipated levels of demand. A hospital or clinic must have some idea of the volume of patients that will require services. This information is necessary to plan for the resources that will provide those services. A laboratory must anticipate workloads in order to have sufficient staff and equipment for the testing and analysis that must be done. Similarly, the anticipated volume of transactions must be known or estimated to provide necessary computer facilities and personnel to maintain information systems supporting admissions, discharges, billing records, and so forth. In general, the more that is known about the inputs to a process, the better. Manufacturing companies have recognized this concept for many years, and some manufacturers have established supply chain relationships with customers and suppliers to reduce uncertainty regarding the quantity and quality of inputs to their production systems.

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