Queueing for essential medical attention at an emergency department (ED) department isn’t just stressful – it can be dangerous.
In 2017/18, £125 billion was spent on the National Health Service (NHS) in England, close to 10% of UK GDP. Yet the British Medical Association has said that 2.9 million people (or 15% of all hospital attendees) waited more than four hours and almost 6,000 people waited more than 12 hours at EDs around the UK in 2017. This is despite the fact that the NHS implemented a target, which requires EDs to admit or discharge 95% of patients within four hours. This target has not been met since 2015 and is currently suspended until April 2019.
Waiting is a fact of life in business and in an ED. But what can hospitals learn from companies? Take commuters waiting for takeaway coffees. The competition in the market would motivate coffee shops to reduce waiting times and prices at the same time, because most commuters would choose to visit a cheaper outlet with a shorter wait. Coffee shops with long wait times would eventually go out of business.
However, patients rarely have the option or willingness to shop around for healthcare services, consider wait times or mull over price (since insurance, private or national, pays the medical bills). So what’s the best, most cost-effective way to reduce waiting times in healthcare?
Dr Tolga Tezcan, London Business School (LBS) Associate Professor of Management Science and Operations, has devoted his career to the ‘science of waiting’. His latest paper, with LBS colleague Dr Nicos Savva, Associate Professor of Management Science and Operations, and Ozlem Yildiz, Assistant Professor of Business Administration at Darden School of Business, University of Virginia, explores why we wait so long at ED departments and offers a solution.
We discovered when you take into account quality and waiting times, the yardstick payment system provides a disincentive to hospitals to increase capacity.
“Waiting sounds like a peculiar subject but it has a lot of ramifications for business,” says Dr Tezcan. “I got interested in the subject of waiting while working with UPS customer contact centres. Now I analyse hospitals. The underlying services are very different but the operational principles are the same. I quickly realised that it is not just about scarcity of resources that causes waiting in hospitals; there is also a structural problem in the system.”
The elements of waiting
There are three variables at play in waiting, whether in a coffee shop or a hospital waiting room.
Variability – the different times people arrive at ED varies, clustering into peak times and quiet spells. For example, Saturday nights are often extremely busy time for emergency services. And once a few long waits have been recorded they really drag the average wait time down, especially if a ward goes on to serve only a few patients at quiet times. Also, each patient’s condition can vary, with one requiring a few stitches while another may need a series of tests to reach a diagnosis.
Utilisation – the amount a resource is used for the time it is available. Managers want to maximise how much a resource is used, but reaching 100% will result in queues because there is no slack to deal with the variability in patients’ arrival times and case complexity.
Capacity – the amount of resources available to meet demand. Increasing capacity (for example hiring more doctors or adding beds) is the most powerful way of tackling waiting times, but typically this is the most expensive solution.
Most people attribute delays in accessing healthcare to insufficient capacity. Although upping investment in capacity would provide a solution, the sums would be stratospheric and it would be hugely inefficient, according to Dr Tezcan. On the flipside, investing huge amounts to alleviate delays at peak times would lead to facilities being underused at quieter times. A solution is a trade-off between those idle times and periods where some patients have to wait. Simply increasing capacity is not enough.
How business deals with waiting
Businesses have identified effective ways to handle this efficiency-delay trade-off and developed novel strategies that tackle the three variables in different ways. At FedEx, when a plane comes in loaded with packages, a team is ready to make sure the “unproductive” time the aircraft spends on the ground is minimised. The packages are organised into fuselage-shaped crates, speeding up the time on the ground through standardised processes. Variability for a firm like FedEx might include differently packed planes arriving at different times.
FedEx knows exactly when the plane is going to land and what needs to be done to put it back in the air. The company can calculate the cost of keeping planes grounded when sorting packages and compare this to the amount needed to hire additional people and equipment to better manage the capacity-waiting time trade off.
At Disney World, managers have tackled waiting times for rides by allocating express tickets, creating fixed appointments for visitors to go on popular rides. In both the FedEx and Disney cases, they have managed fixed capacity by controlling the variability. Disney doesn’t want everyone turning up straight after lunch or whenever they feel like it – leading to long queues.
We asked - Why not incentivise for waiting time and penalise hospitals that fall below average?
Even though such methods are more effective than increasing capacity, they still require initial capital and intellectual investment. Some business methods for reducing waiting have been introduced in healthcare, but persistent long delays show there is more to be done. How do we make sure hospitals invest to tackle delays in a way that is most beneficial to society as a whole?
The paper ‘Can Yardstick Competition Reduce Waiting Times?’ published in Management Science, has a deceptively simple solution that would encourage hospitals to draw upon the approaches taken by Disney World and FedEx.
Waiting times are inevitable but they could be shorter, according to Drs Savva, Tezcan and Yildiz. The key is how hospitals are reimbursed for the work they do. At present, hospitals are paid per treatment based on a yardstick cost, which is linked to performance relative to other equivalent hospitals. This approach incentivises hospitals to cut costs, because there is no reason for them to spend more than the amount received per patient based on the yardstick calculation. But Drs Savva, Tezcan and Yildiz concluded that yardstick payments designed this way lead to long waiting times.
“We discovered when you take into account quality and waiting times, the yardstick payment system provides a disincentive to hospitals to increase capacity,” says Dr Tezcan. “If you are a good hospital and you increase capacity, your costs will go up, but your payment will not because other hospitals maximise their profits by keeping their costs and capacity low.
“We asked, ‘why not incentivise hospitals to reduce waiting times by penalising ones that fall below a yardstick and rewarding others that perform better? This would encourage hospitals to improve their operations, utilising methods widely used in different business settings by creating an indirect competition on waiting times, in a way similar to how direct competition encourages coffee shops to be efficient. In addition, this solution would not require a heavy-handed interference (e.g. determining reasonable waiting time targets) by the regulator and would put the hospitals at the forefront of innovating their operations.”
The paper explains how to develop a reimbursement model for a system free at the point of use, such as an insurance-based system used US, or a state tax-payer funded system e.g. the NHS. The yardstick formula the authors came up with takes into account the size of a hospital’s catchment area, demand, the cost of waiting and capacity, and the cost per patient. They estimate it would incentivise hospitals to cut costs and waiting times if applied in the real world.
The hope is the yardstick formula developed in this paper will be particularly useful in EDs in the US and UK. It is aimed at regulators, with practical steps on how to use waiting-time information in the reimbursement formula. If this ambition is realised, arbitrary waiting time targets could be abolished and more realistic yardstick benchmarks introduced instead.
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