A GENERAL ALGORITHM FOR SELECTING OPERATIONS
IMPROVEMENT TOOLS
Healthcare Operations Management presents an array of techniques, tools, and methods
for achieving operational excellence. How does the practitioner choose from this broad
selection? As in clinical care, there is a mix of art and science in choosing the best
approach.
A general algorithm for selecting tools is presented below. This algorithm will be helpful
in selecting tools, but the success of any operations improvement project is dependent on
the practitioner’s skill in tool use and an environment that is supportive of change and
strives for operational excellence.
This tool can be used in one of two ways. Either go directly to the tool logic map and
trace the appropriate logic to determine the best tool or navigate the text below. Your
answers to questions asked at points in the text will direct you to another section via
hyperlinks. These decision points are indicated with the process-mapping symbol for
decisions—the diamond.
Eventually, the best set of tools will be determined and references will be given to the
appropriate chapter and section in Healthcare Operations Management.
Start
A. Issue Formulation
First, formulate the issue you wish to address. Determine the current state and the desired
state. For example:

Competitors have taken 5 percent of our market share in obstetrics, and we
want to recapture the market.

The pediatric clinic lost $100,000 last year, and we want to break even next
year.

Public rankings for our diabetes care put our clinic below the median, and we
want to be the in top quartile.
Frame the problem correctly to ensure that the outcome is the right answer to the right
question rather than the right answer to the wrong question. Consult all relevant
stakeholders.
You can use a number of effective decision-making and problem-solving tools to:

frame the question or problem;

analyze the problem and various solutions to the problem; and

implement those solutions.
The tools and techniques identified below provide a basis for tackling difficult,
complicated problems (see Chapter 6).

The decision-making process: a generic decision process used for any type of
process improvement or problem solving (Plan-do-check-act [PDCA], definemeasure-analyze-improve-control [DMAIC], and project management all follow
this same basic outline.)
— Framing: Use to ensure that the “correct” problem or issue is being
addressed.
— Gathering intelligence: Find and organize the information needed to address
the issue (data collection).
— Concluding: Determine the “solution” to the problem (data analyses).
— Learning from feedback: Ensure that learning is not lost and that the solution
works (holds the gains).

Mapping tools
— Mind mapping: Use to help formulate and understand the problem or issue.
— Process mapping, activity mapping, and service blueprinting: Use to picture
the system and process steps.

Root-cause analysis (RCA) tools
— Five whys technique and fishbone diagrams: Use to identify causes and root
causes of problems and determine how to eliminate those problems.
— Failure mode and effects analysis (FMEA): Use this more detailed root
cause-type analysis to identify and plan for possible and actual failures.

Data analysis: All of the following tools, techniques, and methodologies require
data and data analysis (see Chapter 7).
— Data collection techniques: use to ensure that valid data are collected for
further analysis.
— Graphic display of data: use to “see” the data.
— Mathematic descriptions of data: use to compare sets of data and for
simulation.
— Statistical tests: use to determine whether differences in data exist.
— Regression analyses: use to investigate and define relationships among
variables.
— Forecasting: use to predict future values of random variables.
B. Strategic or Operational Issue
Next, decide whether the issue is strategic (e.g., major resources and high-level staff will
be involved) or part of ongoing operations.
If the issue is strategic, go to step C. If it is operational and has a large size and scope, go
to step D. Otherwise, go directly to step E.
C. The Balanced Scorecard for Strategic Issues
To implement a major strategy effectively, develop a Balanced Scorecard to link
initiatives and measure progress (see Chapter 4). The Balanced Scorecard should include
the following elements:

Strategy map: use to link initiatives or projects to achieve the desired state.

Four perspectives: initiatives and projects that span the four main perspectives of
the Balanced Scorecard: financial, customer/patient, operations, and employee
learning and growth.

Metrics: use to measure progress; include both leading (predictive) and lagging
(results).
If the Balanced Scorecard contains a major initiative, go to step D, project management;
otherwise, go to step E, basic performance improvement tools. If the Balanced Scorecard
approach significantly resolves the issue, go step J , holding the gains.
D. Project Management
The formal project management methodology should be used for initiatives that typically
last longer than six months and involve a project team (see Chapter 5). Project
management includes the following tools:

Project charter: a document that outlines stakeholders, project sponsor, project
mission and scope, change process, expected results, and estimated required
resources

Work breakdown structure (WBS): a listing of tasks that will be undertaken to
accomplish the project goals, with assigned responsibilities and estimated
durations and costs

Schedule: linking of tasks according to precedence and relationship, and
identification of the critical path that determines the overall duration of the project

Change control: a method of formally monitoring progress and making changes
during the execution of a project

Risk management: an identification of project risks, and plans to mitigate each
risk
If the project is primarily concerned with improving quality or reducing variation, use the
project management technique and tools described in step G, quality and Six Sigma. If
the operating issue is large enough for project management and primarily concerned with
eliminating waste or improving flow, go to step H, Lean. If the issue relates to evaluating
and managing risk or analyzing and improving flow, go to step I, simulation. If the
project focuses on supply chain issues, go to step J, supply chain management. If the
project focus does not encompass by Six Sigma, Lean, simulation, or supply chain
management, return to step E and use the basic performance improvement tools within
the larger project management system.
E. Basic Performance Improvement Tools
Basic performance improvement tools can be used to improve and optimize a process
(see Chapter 6). In addition to RCA, the following tools can be helpful in moving toward
more effective and efficient processes and systems.

Optimization using linear programming: use to determine the optimal
allocation of scarce resources.

Theory of constraints (TOC): use to identify and manage constraints in the
system. The TOC technique consists of five steps.
1. Identify the constraint (or bottleneck).
2. Exploit the constraint: determine how to maximize the performance of the
constraint without major system changes or capital improvements.
3. Subordinate everything else to the constraint: synchronize other nonbottleneck resources (or steps in the process) to match the output of the
constraint.
4. Elevate the constraint: do something (e.g., capital expenditure, staffing
increase) to increase the capacity of the constraining resource until it is no
longer the constraint. Something else will be the new constraint.
5. Repeat the process for the new constraint.

Force field analysis: use to identify and manage the forces working for and
against change (applicable to any change initiative, including TOC, Six Sigma,
and Lean).
If these tools provide an optimal solution, go step J, holding the gains. However,
sometimes the operating issues are so large that they will benefit from the formal project
management discipline. In this case, go to step D. If the project is relatively small and
focuses on eliminating waste, go to step G, Lean, where the kaizen event tool can be used
for quick improvements.
F. Quality and Six Sigma
The focus of quality initiatives and the Six Sigma methodology is on improving quality,
eliminating errors, and reducing variation (see Chapter 8).

DMAIC: the process improvement or problem-solving technique used in Six
Sigma. The DMAIC technique consists of five steps.
1. Define: define the problem or process (see step A, issue formulation).
2. Measure: determine the current state of the process (see Data and
Statistics, below).
3. Analyze: analyze the collected data to determine how to fix the problem or
improve the process.
4. Improve: make changes to improve the process or solve the problem.
5. Control: ensure that changes are embedded in the system (see step J,
holding the gains).
Note that at any point in the process you may need to return to a previous step.
Once you complete the process, start the loop again.

Seven basic quality tools: use in the DMAIC process to improve the process or
solve the problem.
1. Fishbone diagram: use to analyze and illustrate the root causes of an
effect.
2. Check sheet: use this simple form to collect data.
3. Histogram: use this graph to show frequency distributions.
4. Pareto chart: a sorted histogram.
5. Flowchart: a process map.
6. Scatter plot: use this graphic technique to analyze the relationship between
two variables.
7. Run chart: use to plot of a process characteristic in chronological
sequence.

Statistical process control (SPC): an ongoing measurement of process output
characteristics to ensure quality; enables the identification of a problem
situation before an error occurs.

Process capability: a measure of whether a process is capable of producing the
desired output.

Benchmarking: the determination of what is possible based on what others are
doing; use for comparison purposes and goal setting.

Quality function deployment (QFD): use to match customer requirements
(voice of the customer [VOC]) with process capabilities, given that trade-offs
must be made.

Poka-yoke: mistake proofing.
Once these tools have produced satisfactory results, proceed to step J, holding the gains.
G. Lean
Lean initiatives typically focus on eliminating waste and improving flow in the system or
process (see Chapter 9).

Kaizen philosophy: the process improvement technique used in Lean. The
kaizen technique consists of the following steps.
1. Specify value: identify activities that provide value from the customer’s
perspective.
2. Map and improve the value stream: determine the sequence of activities
or the current state of the process and the desired future state. Eliminate
non-value-added steps and other waste.
3. Flow: enable the process to flow as smoothly and quickly as possible.
4. Pull: enable the customer to pull products or services.
5. Perfection: repeat the cycle to ensure a focus on continuous improvement.

Value stream mapping: use to define the process and determine where waste
is occurring.

Takt time: a measure of time needed for the process based on customer
demand.

Throughput time: a measure of the actual time needed in the process.

Five Ss: a technique for organizing the workplace.

Spaghetti diagram: a mapping technique that shows the movement of
customers (patients), workers, equipment, and so on.

Kaizen blitz or event: use to improve the process quickly, when project
management is not needed.

Standardized work: written documentation of the precise way every step in a
process should be performed; a means of ensuring that things are done the same
way every time in an efficient manner.

Jidoka and andon: techniques or tools used to ensure that things are “done
right the first time.”

Kanban: use this scheduling tool to pull rather than push work.

Single-minute exchange of die (SMED): a technique for increasing the speed
of changeover.

Heijunka: leveling production (or workload) so that the system or process can
flow without interuption.
Once these tools have produced satisfactory results, proceed to step J, holding the gains.
H. Simulation
Simulation is used to evaluate “what if” situations. Usually it is less expensive and
speedier than changing the real system and evaluating the effects of those changes (see
chapters 10 and 11).

The simulation process consists of the following steps.
1. Model development: develop a model of the process or situation of
interest.
2. Model validation: ensure that the model accurately represents reality.
3. Simulation and analysis of output: run the simulation and analyze the
output to determine the answers to the questions asked, optimize the
process, or manage risk.

Monte Carlo simulation: typically used to evaluate and manage the risks
associated with various decisions based on random variables.

Discrete event simulation (DES): based on queuing theory; use to model
system flows to improve the system.
Once these tools have produced satisfactory results, proceed to step J, holding the gains.
I. Supply Chain Management
Supply chain management (SCM) focuses on all the processes involved in getting
supplies and equipment from the manufacturer to use for patient care (see Chapter 13).
SCM is the management of all activities and processes related to both upstream vendors
and downstream customers in the value chain. Effective and efficient management of the
supply chain requires an understanding of all the following:

Tools for tracking and managing inventory

Forecasting

Inventory models

Inventory systems

Procurement and vendor relationship management

Strategic SCM
Once these tools have produced satisfactory results, proceed to step J, holding the gains.
J. Holding the Gains
Once successful operational improvements have been completed, three tools can be used
to ensure that these changes will endure:
1. HR planning: a plan to use employees in new ways after an improvement
project is completed
2. Managerial accounting: a study of the expected financial consequences and
gain after an operations improvement project has been implemented
3. Control systems: sets of tools for monitoring the performance of a new process,
and methods for taking corrective action if desired results are not achieved
End
Visual Algorithm for Use of the Tools, Techniques, and Methodologies in Healthcare
Operations Management
Develop and use a
balanced scorecard (4)
Start
Issue formulation
(6)
Data collection
and analysis (7)
Use formal project
management approach (5)
Yes
Yes
Yes
Is the issue
strategic?
Focus on
improving
quality or reducing
variation?
No
Focus on
reducing waste
or improving
flow?
Focus
on “what if”
issues?
No
Data collection and
analysis is used in
conjunction with a
number of
operations
improvement tools
and their use is
indicated by this box
No
No
Focus on
supply chain
Yes
Yes
Large
project?
Use six sigma tools (8)
Data
No
Focus on
scheduling?
Yes
Scheduling
(12)
Data
Yes
Use
simulation
(10)
No
Use lean tools
(9)
Data
Data
Apply basic process
improvement tools (11)
No
Data
Hold the gains
(14)
End
Yes
Use SCM
(13)