Skip to content

OM in the News: A Stopwatch in the Operating Room?

September 12, 2015

stopwatchMost businesses know the cost of everything that goes into producing what they sell — essential information for setting prices.  “Medicine is different. Hospitals know what they are paid by insurers, but it bears little relationship to their costs”, writes The New York Times (Sept. 8, 2015). Now, thanks to a University of Utah project, its hospital is getting answers, information that is not only saving money but also improving care. The cost issue has taken on new urgency as the U.S. accelerates the move away from fee-for-service medicine and toward a system where hospitals will get one payment for the entire course of a treatment, like hospitalization for pneumonia.

The linchpin of Utah effort is a computer program with 200 million rows of costs for items like drugs, medical devices, a doctor’s time in the operating room and each member of the staff’s time. The hospital has been able to calculate, for instance, the cost per minute in the emergency room (82 cents), the surgical intensive care unit ($1.43), and the operating room for an orthopedic surgery case ($12). With such information, as well as data on the cost of labor, supplies and labs, the hospital has pared excess expenses and revised numerous practices for more efficient care. Harvard’s Michael Porter called the accomplishments “epic progress.”

The hospital began by looking at how much supplies cost — bandages, sutures, medications. Then it started tracing use of those items to individual patients. It added in labor costs, a more complicated question. Porter told the hospital to go into rooms with a stopwatch and time how long each staff member spends on each procedure and with each patient.

With its software, the hospital is also finding simple ways to improve outcomes and reduce costs. When doctors looked at their costs per day, they were stunned to see how much they were spending on lab tests. Each was cheap, $10-$20, but the total bill came to about $2 million a year. It turned out that 20-50% of lab tests were completely unnecessary, ordered by residents with no questions asked.

Classroom discussion questions:

  1. How can stopwatch studies be used in hospitals?
  2. Why is it so difficult to control costs in hospitals?
2 Comments leave one →
  1. terry boardman permalink
    September 12, 2015 2:48 pm

    Been thru this many years ago- must be careful here with hyperbole of cost savings. I personally do not want an administrator in the surgical suite with a stop watch when my heart bypass surgery is in progress. That is what I told one consultant when he had a software program to tell nurses when their medium time is up in the surgery. This is not making widgets, this is life and death stuff AND each patient is very different.

    There are other ways than stopwatches in surgery to save hospital costs, including but not limited to reducing administrative overhead, consolidation of specialty services, better utilization of diagnostic procedures and better cost savings in lab tests. It takes a physician to monitor excessive use of lab tests. Make sure a capable physician is on your management staff and with the program. Residents , by their nature, will overuse certain lab tests , that’s how they learn. Only a qualified physician can monitor them. administrators should monitor business activities , not medical procedures.

  2. September 12, 2015 3:36 pm

    Excellent observations, Prof. Boardman! Still, how does one surgeon know whether he/she is much slower (or faster) than average, without time and motion studies to set baselines?

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

The Blog

The latest news on and the WordPress community.

Supply Chain Management Research

Andreas Wieland’s supply chain management blog for academics and managers

better operations

Thoughts on continuous improvement: from TPS to XPS

%d bloggers like this: