John F. Kros, PhD, is a professor of marketing?and supply chain management in the College of Business at East Carolina University in Greenville, North Carolina.?He also is the coauthor of Statistics for Health Care Professionals: Working with Excel.

Evelyn C. Brown, PhD, is a professor in the Department of Engineering and Associate Dean for Research in the College of Technology and Computer Science at East Carolina University, Greenville, North Carolina.

Tables and Figures xi

Preface xxi

The Authors xxxi

PART I STRATEGY 1

Chapter 1 Health Care Operations and Supply Chain Strategy 3

Health Care Operations and Supply Chain Management 4

Purchasing, Logistics, and Vendor-Managed Inventories 7

Efficiency, Effectiveness, and Value 8

Competitive Dimensions of Health Care 12

The Bullwhip Effect in Health Care 14

MiniCase: The Bullwhip Effect in Health Care Organizations 18

Chapter 2 Financial Aspects of Health Care Operations and Supply Chain Management 21

Health Care Finance and Operations/Supply Chain Management 22

Income Statement/Operating Statement 24

Balance Sheet 27

Statement of Cash Flows 32

Basic Financial Ratios and Metrics 35

Time Value of Money 47

Break-Even Analysis 49

Crossover Analysis 53

Chapter 3 Managerial Accounting Aspects of Health Care Operations and Supply Chain Management 61

Managerial Aspects of Health Care Operations and Supply Chain Management 62

Managerial Accounting 62

Activity-Based Costing 65

Supply Chain Management behind the Scenes: Cost Drivers at Hospitals 69

PART II PROCESS DESIGN AND ANALYSIS OF HEALTH CARE OPERATIONS 75

Chapter 4 Data and Statistical Tools for Health Care Operations Improvement 77

Descriptive Statistics for Describing Data Sets 78

Graphical Methods of Data Description 78

Numerical Methods of Data Description 81

Hypothesis Testing: Analyzing the Difference of Two Means 101

Pareto Analysis 116

Box-and-Whisker Plots 117

Tornado Diagrams and Sensitivity Analysis 129

Chapter 5 Problem Solving and Decision-Making Tools in Health Care Operations 143

Health Care Operations and Supply Chain Management in Action: How Legal Decision Makers Use Decision Models 144

Framing the Decision Problem 146

Components of a Decision-Making Problem 146

Payoff Tables 149

Decision-Making Criteria without Probability Assessments 151

Decision-Making Criteria with Probability Assessments 159

Expected Value of Perfect Information 162

Modeling 177

Decision Trees 179

Chapter 6 Simulation 201

Introduction 202

Process Flows 202

Probability Distributions 203

Random Number Generation 210

Discrete-Event versus Continuous Simulation 211

Monte Carlo Simulation 213

Agent-Based Simulation 215

Simulation in Health Care 215

Queuing Analysis 216

Chapter 7 Process Improvement and Patient Flow 229

Introduction 230

Process Mapping 231

Value Stream Mapping 233

Use of Maps and Charts in Health Care 240

Staffing 242

Workload Management 243

Productivity and Efficiency Analysis 245

Common Health Care Productivity and Efficiency Measures 248

Improving Productivity and Efficiency 249

MiniCase: Improving Process Flow to Improve Service-Level Performance Statistics 253

Chapter 8 Facility Layout 257

Introduction 257

Layout Considerations 258

Types of Layouts 262

Muther Diagrams 264

Workload Management 266

Evaluating Different Types of Layouts 267

Basics of Optimization 270

Optimization Using Excel Solver 272

Optimizing Facility Layout and Design 280

PART III MANAGING HEALTH CARE OPERATIONS QUALITY 287

Chapter 9 Managing Quality in a Health Care Setting 289

What Is Service Quality? 290

Quality Planning, Control, and Improvement 291

Quality and Financial Performance 292

Seven Tools for Quality Control 294

Six Sigma Concepts 305

Six Sigma and Lean 311

MiniCase: Delayed Room Cleaning Dilemma 320

Chapter 10 Quality Control and Improvement 323

Design of Quality Control Systems 324

Process Quality Control 324

Variables Control 327

Using Control Charts 331

Process Capability 334

Total Quality Management and Continuous Improvement 337

International Organization for Standardization Certification 338

Malcolm Baldrige Award 340

PART IV PLANNING AND CONTROLLING HEALTH CARE OPERATIONS 351

Chapter 11 Lean Concepts in Health Care 353

Introduction 354

What Is Lean? 354

Controlling Waste 355

Controlling Flow with a Kanban System 357

Kaizen Events 359

Value Stream Mapping 362

Measures and Tools 362

Adverse Effects of Becoming Too Lean 364

MiniCase: Using Lean Concepts to Improve Inpatient Care 366

Chapter 12 Forecasting for Health Care Management 369

Analyzing Data Using Time Series and Regression Models 370

Linear and Nonlinear Trends 371

Seasonality in Data 372

Naive Forecasting 376

Moving Averages 378

Weighted Moving Averages 381

Exponential Smoothing 383

Autocorrelation 387

Regression as a Forecasting Technique 393

Multiple Regression Model 402

Measuring Accuracy 409

Measuring Forecasting Errors 423

Chapter 13 Project Management 431

Introduction 432

Role of Project Manager 432

Objectives and Trade-Offs 433

Planning and Control in Projects 435

Project Scheduling 437

Critical Path Method 440

Gantt Charts 448

Program Evaluation and Review Technique 451

Implementation 453

MiniCase: Implementing Electronic Medical Records at St. Hampton's Hospital 457

Chapter 14 Aggregate Planning, Scheduling, and Capacity Management in Health Care 461

Aggregate/Central Planning 462

Resource Planning and Control 464

Scheduling and Capacity Management 468

Workforce Scheduling 468

Dispatching Rules 473

Job Sequencing 474

Johnson's Rule 475

Service Facility Location Analysis 486

Center of Gravity Method 487

Chapter 15 Inventory Management 501

Introduction 502

Purpose of Inventories 502

Costs of Inventories 504

Economic Order Quantity 506

Independent versus Dependent Demand 509

Periodic Review Systems 510

Continuous Review Systems 511

ABC Inventory Management 515

Inventory Management Technology 519

Index 525