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DDBA 8560 - Seminar in Healthcare Managerial Decision Making
Walden University
1.1 Background
The healthcare system is a complex system that includes organizations,
people, institutions, and actors who seek to promote, maintain, and restore physical
health (World Health Organization, 2002). In the United States, healthcare delivery
today is rapidly changing. Although advances in medical technology have led to a
better understanding of diseases and their treatment, the efficiency, safety, and cost-
effectiveness of the delivery of healthcare have not improved comparatively (Rouse,
2008). This lack of improvement has garnered attention, particularly in regard to
decision making within the system. Decision making in healthcare is challenging
due to its complexity, yet it is essential because of the high stakes: doctors must
quickly choose the right course of action when the lives of their patients are in
danger, and hospital leaders must deliver quality care with limited resources while
generating sustainable revenues. Policy-makers must understand competing
priorities, comply with existing legislation, and manage competition for scarce
resources while designing policies that affect the entire healthcare system. It has
been suggested that disciplines such as systems engineering, with experience in the
systematic design, analysis, and improvement of complex systems (Grossmann et
al., 2011), are essential for improving healthcare system performance.
While recent studies suggest the prudence of utilizing a systems engineering
approach to solving the problems in healthcare, little is known about the results of such
an application. The typology could be used to a) inform hospital healthcare
administration education and staff development, (b) influence the outcomes of
decisions, (c) influence hospital job role development and clarification, and (d) add to
theory development in the application systems analysis in healthcare.
1.2 Overview of the Healthcare System
The healthcare system in the United States has many stakeholders with
sometimes, conflicting interests. Figure 1 provides a simple overview of the
healthcare system. At the highest level, the healthcare system can be divided into
two sections: providers and suppliers and payers. Providers and suppliers include
hospitals (doctors, nurses, administrators, and allied health professionals), clinics,
rehabilitation centers, nursing homes, research organizations, pharmaceutical
companies, educators, and equipment manufacturers. These organizations provide
healthcare services. The payers are the purchasers of healthcare; payers include
employers, healthcare consumers, the federal government (through programs such as
Medicaid and Medicare), and insurance companies. The relationships between these
components are nonlinear; in fact, the healthcare system has been described a
complex adaptive system (Rouse, 2014).
Figure 1 Overview of the Healthcare System in the United States
A complex adaptive system is an assembly of individual components with the
ability to act in a manner that is not always anticipated. The components’ actions are
interconnected, so that one component’s actions change the circumstance for other
components (Plsek, 2012). For example, the health care system contains systems of
systems. There are hospitals, nursing homes, and other providers previously
mentioned, which interact nonlinearly and on different scales with patients, families
of patients, and government, and often produce unintended consequences. These
consequences include adverse drug reactions and re-hospitalizations (Lipsitz, 2012).
Snowden and Boone (2007) and Plsek (2012) suggested accepting the unpredictable
nature of complex adaptive systems and making allowances to respond to emerging
patterns and opportunities.
Healthcare is underperforming in many aspects: coordination of care, cost,
safety, efficiency, and value (Grossman, 2011). Despite the improvements in
technology that has allowed increased ability to share information, sharing medical
information remains difficult. Lack of coordination can lead to duplicate and
unnecessary test procedures, hospital readmission, and a waste of time and resources
on the part of the health providers, fixing avoidable problems. A study by the
American Journal of Obstetrics and Gynecology estimates the costs of unnecessary
and harmful procedures to be nearly $1 billion per year (Robinson et al., 2009). One
national study estimated that patients only receive the correct treatment half the time
(McGlynn et al., 2003) Additionally, more than “98,000 Americans die and more than
one million patients are injured each year as a result of broken health care processes
and system failures” (IOM, 2000; Starfield, 2000).
The National Academy of Engineering and Institute of Medicine have
suggested a systems approach to the healthcare system and suggested the utilization
of systems engineering tools to improve health care (Institute of Medicine, 2000). The
studies assert that a systems view maintains a perspective where overall effectiveness
and efficiency in reaching the goals depend on “identification, understanding and
management of interrelated processes as a collective system” (Ravitz, 2013). This
thesis approaches decision making in the healthcare system through a systems lens. It
focuses particularly on hospitals within the healthcare system.
The purpose of this study was to create a comprehensive framework for
decision making in healthcare systems. A systematic review of literature was used to
create the initial framework. Information gathering interviews were conducted to
obtain anecdotal evidence and discover whether any patterns emerged with regard to
decision making roles.
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