Dr.Rituja KaushalDepartment of Community

MedicinePCMS & RC ,Bhanpur

Contents

1 .Overview 2. Introduction3.Definition4.Application to health sector.5.Main features of OR.6.Phases of OR study.7.Major tools & techniques of OR .8.Scope of OR practices in health management .9.Selected techniques of OR with application in health

management.10.Management techniques/Methods.11.Individual explanation of each technique/Methods.

Overview :

 Many management techniques & methods

have been developed in the last few decades in business activities .These

methods have been adopted in public administration also & are finding numerous

application in the health field.

Methods such as personnel selection ,training & retraining ,motivational methods ,development of communication channels & skills , utilization

of knowledge of group dynamics ,leadership development , supervision ,team building &

conflict resolution , morale promotion etc .are all different methods designed to develop better

management & enable organizations to be efficient & effective.

Organization & Methods (O&M) is the well known analytical approach aimed at

operational improvement .Sociology ,psychology ,socia

l psychology ,educational technology ,economics & statistics have all

contributed to the development of management sciences.

Introduction :

In addition to these traditional methods , new management techniques have emerged in the last few decades ,

especially since World war II .Increased use of mathematical & statistical concepts &

methods thus emerged .

These quantitative & semi quantitative methods have been fruitfully employed in business ,

defense & industry.

The methods used may initially be less exact as the sophisticated quantitative techniques in

common usage may not be immediately applicable in the health field.

Such applications have already proved useful in increasing the efficiency by cost reduction as

well as ensuring better health care.

The discipline concerned with the application of quantitative mathematical methods & logic to find solutions to managerial problems – the operations Research – in the health field has developed recently.

The techniques of Operational Research have been applied and proven in many industries under different names.

For instance :- - ‘Lean’ in manufacturing. - ‘Supply Chain’ in logistics and - ‘Yield Management’ in airlines.

Operational Research has been studied in Health Care settings since 1952.

Definition :

An Operation can be defined as a set of interdependent or interacting activities that are

necessary for the occurance of a desired outcome.; both activities & outcome can be

treated as defined variables in this set of activities .

Operations Research (OR) is meant any formalized quantitative analysis whose purpose

is to improve efficiency in a situation where ‘efficiency’ is clearly defined.

“Operational Research is the scientific study of operations for the purpose of making better decisions.”

“The use of systematic research techniques for program decision making to achieve a specific outcome.”(Definition by WHO ,2003)

The OR methods are useful to know how to conduct & co-ordinate the various activities & operations within an organization , whether for production of goods or for providing services.

The intent of OR is to learn about management, administrative, cultural, social, behavioral,

economic and other factors that either exist as bottlenecks to effective implementation or could

be tested to drive insights into new, more effective approaches to programming.

The application of OR methods show that many of the commonly occurring problems have

similarities so that there are certain common types of solutions to various problems.The

formulation of models & obtaining solutions to get optimal results is thus greatly facilitated

because of commonality.

ApproachThe approach is to make use of available

scientific techniques to problems involving the operations of the system so as to provide

optimum solution to the problems.A mathematical model is constructed which is a

depiction of the interrelationships in mathematical terms of the the actual system under study.Some of the variables in such a model can be controlled & are amenable to manipulations , while some are constants or variables not amenable to changes but affect

the outcome of the system.

Application to health sector :

Simple methods like the time trends & statistical forecasting have been in use for quite some time .Work (activity) sampling & analysis ,time motion studies,equipment

utilization studies etc. are also in use .

OR methods have been applied to find solution to problems like determination of need of

maternity beds on the basis of Poisson distribution of admissions & no. of deliveries ,for improved bed allocation & utilization ,improved

health care & hospital services ,control of TB etc.

Techniques have also been developed for planning & implementation of complex projects in a co-ordinated manner to ensure efficiency by

reducing delays as well as cost . Several of these techniques of project management have shown their usefulness in completion of health

care like establishment of hospitals.

Main features of Operational Research :

1.OR is the inter disciplinary team approach to find out optimum result (return).

2.OR uses tools & techniques of scientific research/methods to arrive at the optimum solution.

3.OR tries to optimize the total output by either maximizing profit/revenues or minimizing the cost/loss.

4.OR emphasises an over all approach to systems i.e,total system approach.

5.OR provides BAD answer to the problem where worse could be given i.e, it cannot provide always perfect solution to the problems. Thus , OR believes in improving the quality of the solution.

Phases of the study :

1.Defining/Formulation of the problem – a)Description of the goal/objective of the study.

b)An identification of the decision alternatives of the system.

c)Recognition of the limitations ,restrictions & requirements of the system.

2.Model construction – a)Make most suitable model for representing the system.

b)Model should specify quantitative expressions for the objectives & the constraints of the problem in terms of

its decision variable.c) Model should fit into one of the common

mathematical models like transportation or queueing model etc to obtain a convenient solution .

d) A simulation model is adopted if mathematical relationships are too complex.

e) Some cases may require the use of combination of mathematical ,simulation & heuristic models.

3.Solution of the model - In mathematical models , this is achieved by using well defined Optimisation

technique.Model thus yield an optimum solution.Additional information concerning the behavior

of the solution due to changes in the systems parameters should be secured. This is usually referred

to as sensitivity analysis.

4.The fourth phase calls for checking model validity. A model is valid if despite its inexactness in representing the system,it can give a reasonable prediction of the

system’s performance.A common method for testing the validity of a model is to compare its performance with

some past data available for the actual system.

5.The fifth & the final phase of the study deals with the implementation of the

tested results of the model .It is imperative that the implementation phase be

executed through the cooperation of both the OR team & those who will be

responsible for managing & operating the system.

Management techniques/Methods :

1.Statisical techniques a.Time trends & forecasting b.Decision theory & tree

2.Activity analysis c.Time motion studies d. Work sampling & activity analysis e. Queuing theory f.Gantt chart & work schedule

3.Mathematical techniques

g.Simulation study/modelsh.Systems analysisi.Linear programmingj.Inventory controlk.Precedence & arrow diagrammingl.Network analysism.PERT & PEPn.CPM

4.Financial techniques

o.Monitoring expenditurep.Cost accounting & analysisq.DALYr.Cost benefit analysiss.Cost effectiveness analysist.Performance budgetu.PPBSv.Zero base budgetingx.Input output analysis

y.Outcome budgetz.Miscellaneousa1.Management objectives & appraisal by resultsb1.Management by exceptionsc1.Situational analysisd1.Current state assessmente1.SWOT analysisf1.Log frame analysis.

Time Trends & Forecasting : Simple statistical method commonly used in

epidemiology.Based on past experience ,predictions can be made about the expected occurance ,by using

mathematical methods.Such projections are similarly made by demographers with reference to population. In case of endemic diseases,epidemiologist can construct endemic curves based on incidence of a

disease & smoothen out the same by mathematical techniques & so establish the likely limits of variation.

Forecasting the demand for supplies of materials like vaccines , drugs etc.can also be similarly anticipated &

a state of preparedness maintained.

Decision Theory& Decision Tree :Decision theory is the body of analytical tools,including

logic & mathematical models,using probability theory & diagrammatic presentation for use in decision making.

Decision tree is a diagram that depicts key interactions among decisions & associated chance events,as the

decision maker understands them. The branches of the tree represent either the decisions

or the chance events.The base of the decision tree ,which may be drawn horizontally ,is the starting

point denoting an event which occurs by choice. A set of relative values for the predicted outcome of

each possible decision can be arrived at from the possibility of occurance.

All possible outcomes are valued.The highest value indicates the course most likely to produce the greatest benefit .The most rational decision then can be taken in terms of resource & the effectiveness.The use of method presupposes the effect that different decisions are likely to produce or else assumptions have to be made.Even if these data are not precisely known,the method is useful in a way.

It enables the formulation of a process that is rational,comprehensible,flexible & capable of showing the effect of variations in these presumptions.

In recent years the method has enabled policy makers to study alternative health strategies logically in disease screening,immunization etc.

Time Motion Studies : It is a simple technique of industrial engineering.Stopwatches are used for observing & timing the

physical work & movements carried out by a worker.A series of related tasks is similarly studied for

suggesting modifications to obtain maximum efficiency.Modification brings substantial reduction of physical efforts & being time saving.

So this method is a useful analytical tool for increasing productivity.Many tasks carried out by hospital nurses can be pooled so that their physical movement from place to place can be minimised .

Work Sampling & Activity Analysis : It is a method of sampling used to estimate the

utilization of equipment ,machines vehicles etc. It also includes the observation of workers to study the

activities ,which are carried out by them during the course of their work.

A large number of observations spread out over various parts of working time & for adequate time is required to get a valid estimate.Such analysis thus enables not only a scrutiny of activities undertaken but also suggest possible modifications.

The utilization of expensive equipment can also be improved & idle time reduced using the technique.

Queuing Theory :

In a factory when a series of processes is to be carried out sequentially the job has to move from one place to another in a given sequence.

The time required for the processes to be carried out at different places may vary. At some places ,more than one job may be handled simultaneously.

The jobs thus may join the “QUEUE” waiting their turn to be processed at different rates at different places.

An economic balance has to be developed between the cost of providing processing facility & the cost associated with job having to wait for that process.

GANTT chart –Work Scheduling : It is a useful technique especially where production

deadlines are to be met & a watch is to be kept on attainment of tasks on time.It is used to assist controlling the quantity of work in relation to time.It is used in planning,coordinating & monitoring progress of an activity that involves several parallel sub activities.

Time flow is indicated on the top of the chart .Below this ,horizontal lines are used to show different subactivities.The left end of the lines shows the initiation of activity & the length of each line is proportional to the period taken as indicated at the top.A heavy vertical line portrays the current date & keeps on moving to the right day by day.

A look at the chart quickly shows the progress on any date in comparison with what was to be achieved accord. to plan.

Simulation Model/Study :This model is a symbolic representation of an idealized

system.The impact of the changes on the total output can thus

be estimated.The method has found application in health field ,e.g

control of communicable diseases ,population control etc.The simulation study method has been used for planning & evaluation of immunization &sanitization programmes for control of typhoid fever & other bacterial diseases.

The limitation of such a study are that assumptions are made about specific condition of the community being stable.Readjustments are necessary if conditions change.

Systems Analysis :This approach recognizes the existence of

“SYSTEM” .A system can be defined as an arrangement &

set of relationships among multiple parts functioning as a whole.

The approach using system analysis is being increasingly used for decision making in public administration , following the proven benefit in decision making related to complex defense problems.

It has applications in health sector reforms and area development projects.

The system analysis helps health planning at different levels to be perceived as a set of interrelated steps in the policy –programme-project chain.

Health interacts with other components of social system & has multifactorial etiology.Individual& community health depends on many factors.It is the result of events & activities in many different components of the social system.

Thus these activities must be carefully considered in a total assessment for their additive,synergistic Or detrimental effect on health status.

Linear Programming : It is a special case of mathematical programming in

which the relevant components of the system are shown by linear functions.

The measure of function is a linear equation & the restrictions on resources are also expressed as linear equation or in equations.It is a useful tool for deciding the course of action for a problem in which there are competing alternative uses for limited resources.

This method is prescriptive i.e an optimum solution is suggested subjected to various financial,human or biological constraints.Thus this technique enables the facts & desired choices to be combined in a single,easy to comprehend result.

Inventory Control :

Application of quantitative methods for reduction of expenditure on maintaining a stock of different items & supplies required in a health institution or a hospital proves useful.

The obvious solution to avoid “out of stock” position will be to keep a large stock of all items available all the time.However ,this solution is associated with the high cost of carrying the inventory.

This cost includes the cost of money locked up in the items purchased & lying idle till they are used,the cost of storage,insurance,risk of pilferage,deterioration due to bad keeping quality,obsolescence etc.

These cost are usually substantial.Placing orders very frequently to maintain adequate stock is also associated with the cost of processing the order in terms of administrative effort ,receiving,inspecting & handling the material etc.

So to get over the problem , quantitative methods of optimal stock for different items was adopted as a way.

Precedence & Arrow Diagramming Method :PDM - This consists of constructing a project

network diagram using boxes or rectangles called nodes to represent the activity.These are connected with arrows ,which show the dependencies.This is also known as activity on node.The dependencies of various types…….

1.Finish to start2.Finish to finish 3.Start to start4.Start to finish

start

a b

d e

Finish

ADM – This consists of constructing a project network diagramme using arrows to represent the activities & connecting them at nodes to show the dependencies.Dummy activity is sometimes shown.A dummy is technically not an activity but a way of representing a dependency between nodes.The method is also called as activity on arrow.The method is less commonly used than PDM.

start

Finish

a

bc

de

f

Network Analysis :

Co-ordination is one of the basic requirement of management. Planning & monitoring the progress of a large no. of different interrelated activities necessary for the completion of a project with minimum time & minimum cost desirable.

Corrective actions can be taken in time if delays ,which are likely to upset the various schedules , are detected.

The activity list is comprehensive list,including all the activities to be performed on a project .

Activity sequencing involves identifying & documenting the logical relationships among scheduled activities.

These can be logically sequenced with project precedence relationships.The basic principle of Network analysis is a simple one.

It is to show diagrammatically the logical sequence in which different events necessary between the start & the end of a project need to take place .

The time required for accomplishment of different tasks can also be considered in Network analysis.When the element of time is introduced,this management technique becomes more powerful.Advantages of Network Analysis –

1.Widely known & Popular2.Simple to understand3.Well described in practical terms4.Applies to any project where activities can be

described sequentially.5.Inexpensive6.Highly qualified specialists are not required.7.Used in Health Service Application with advantage.

Programme Evaluation Review Technique (PERT) & Programme Evaluation Procedure (PEP):

Both techniques are post war innovations.Since then the technique has been used in a number of non repetitive one time projects of a complex nature without precedence.

PERT TECHNIQUE :1.Identification of various events necessary in the final

achievement of an objective.2.A directed network of flow diagram consisting of

events shown by circles/squares in their logical sequence.

3.Activities which are time consuming elements of the project are shown as arrows to connect these events.

4.Some events depend upon achievement of one single prior event while some other require the completion at two or more prior events.

5.An estimate of the time requirement of the different activities is made using a special method,which gives a 50% probability of correct estimate of the time .

Critical Path Method (CPM) : The primary objective from the beginning was the

reduction of costs.The technique generally involves complex projects but with prior experience.

CPM technique :1.The points in CPM technique/network represent

activities rather than events as done in PERT network.2.It is made of activities that cannot be delayed without

delaying the completion of the project.3.A float or slack is simply how much time an activity

can slip before it’s path changes to critical path.

4.The focus of CPM is on calculating float ,in order to determine which activity have the least scheduling flexibility.

5. The path ,which takes the longest time for completion between the beginning of the project & the completion , is the critical path.

6.In CPM ,time required for completion of the project is not only known but the presumption is that it can be controlled ,if necessary ,by provision of additional inputs.

7.By allocation of more resources withdrawn from non critical activities ,the time taken for a particular activity can be shortened .

S.No PERT CPM

1. Network design is based on events

Based on activities

2. Time requirements are estimated

Time requirements are to be known by past experiences in CPM

3. Shortest possible time requirement at any cost is the objective.

Here optimum mix of time & cost is vital in CPM to achieve economic returns.

Monitoring Expenditure :

A visual presentation (tabular display or graph) showing the sanctioned grants & monthly expenditure & progressive total is useful in monitoring expenditure.

Separate information may be necessary if the grants are distributed to various subordinate officers,departments or divisions .Timely action can then be taken to effect expenditure by following the procedure laid down.

The non utilization of grants during the financial year & the rush to utilize them in March before the financial year closes attracts criticism repeatedly.

Cost Accounting & Cost Analysis :

The use of such techniques has provided a tool for measurement of the cost of health services.

It has helped in creating an awareness of use of objective criteria & yardsticks for measurement of efficiency.

It enables a comparison to be made between the cost of similar & comparable services provided at different health centres & hospitals thus helping to pinpoint those which are not being rendered efficiently.

This is the first step in further study to know the cost structure ,components of unit cost & the reason for costliness.

Then suitable steps can be taken to bring about the economy.When expenditure incurred by various hospitals is compared it is found that there is a lot of variation in unit cost of similar types of treatment & services.

Such in depth studies may reveal that a lot of time is spent on unproductive activities.

Cost accounting is thus a valuable management tool to identify inefficient services ,locate wasteful use of resources,take corrective action & bring efficiency into the health care system.

Disability Adjusted Life Year :

Health economists & World bank developed DALY as a statistical measurement for the value of lives lived with disability.The primary focus of DALY is to measure the impact of diseases in terms of years of burden & loss.The DALYs calculate the present value of future years of life lost for individuals who either die or become disabled.

Cost Benefit Analysis :

In the process of allocation of resources for health sector in developmental planning , the benefits ,which are expected to result,should be estimated.If resources are to be allocated for health programmes ,their non availability for other prog. must be taken into account.

“Opportunity cost” is the term used to describe the loss to the community of failure to use the available resources ,technology or institution in the best possible way.

Benefits arising out of health prog. are the desired effects of the prog. Like the reduction in mortality ,morbidity & control or eradication of a disease.

A cost benefit analysis of preventive services of the intensified campaign against small pox in India during the period july 1973 to Dec.1975 has been shown to give a net benefit of about Rs.1058 million & eradication of smallpox in yearly saving of about Rs.728 million.

Cost Effectiveness Analysis :

This approach is similar to the cost benefit analysis.

In this method an attempt is made to compare the effectiveness however measured & the necessary cost associated with it of two or more alternative future resource commitments.

This type of analysis helps to identify the most efficient means of satisfying a certain requirement.

Performance Budgeting :Performance budgeting is the system of formulation of

expenditure in public administration with reference to functions , programmes , activities & tasks.

Various components involved are :

1.Stipulation of objectives2.Classification of progs. & activities3.Establishment of standard & norms4.Accounting procedures5.Decentralisation6.Review of performance ,reporting & information

support.

Zero base budgeting :Zero base budgeting is defined as an

operating ,planning & budgeting process which requires each officer to justify his budget demand from zero level upwards.

The onus of proving necessity of funds with acceptable justification thus lies with the officer who submits the demands.

Starting from a zero base of no funds for the prog. the sanctioning of every rupee needs justification even for ongoing prog.

Input –Output Analysis :

It is a descriptive method . Health consumes resources (inputs) in the form of staff , equipment etc.& produces outputs like treatment given ,deliveries conducted , immunization performed etc. An input output table can be constructed to show how much of each input is needed to produce a unit amount of each output.

Outcome Budgeting :

The budget ,which is presented & eventually approved by the Parliament ,proposes financial outlays for different activities to be carried out in the subsequent financial year.

In due course ,the amounts actually spent out of the sanctioned ones are accounted for & audited.

The government doesnot present the achievements arising from the expenditure.

Efficient conversion of outlays into outcomes would ,therefore,require making the delivery system effective with appropriate structures & processes,strengthening financial management system,increasing use of information technology & involvement of all the ministries in critical decision making & implementation process.

Starting with plan expenditure ,non plan expenditure will also be covered eventually.

Management by Objectives and Appraisal by Results :Appraisal of performance by the results

achieved is only one component of the total approach.

Management by objectives has been defined as a system wherein the superior & the subordinate managers of the organization jointly define its common goals,define each individual’s major areas of responsibility in terms of the results expected of him & use these measures as guides for operating the unit & assessing the contribution of each of it’s members.

So MBO can help management to provide beneficial results by wise adaption.Maximum return can be obtained with a minimum of managerial attention due to this selective approach.

Management by Exception :

In the technique of ‘Management by exception’ managerial attention should be focused on activities ,which are deviating from the normal,desired or excepted course beyond permissible limits of tolerance.

This process will be facilitated by exception oriented management information system.Targets & quantitative measures of assessment will have to be built into the information system.

The limits of tolerance for deviant performance will have to be established carefully ‘to ring the bell’ for managerial attention & decision making.Thus management by exception helps to identify & attend to events,processes,activities,units,sections etc. which are not giving expected results.

Situational Analysis :

It is an integral component of the management process to find out what the existing situation is,analyse the same,identify ,which aspect need changing,and then plan accordingly.This exercise has been to be carried out in routine practice .whether planning at the National level or at the the micro level.

Current State Analysis :The first & foremost important basic objective of

CSA is to assess your current institutional performance against ideal future vision in many different ways.

Gaps will be found between these two.Then action points are to be developed for the progress in a realistic,comprehensive fashion.

While developing these the internal & the external environmental factors are to be considered.

SWOT Analysis :

For bringing about an improvement of the performance of an organization ,strategic planning has to be carried out.Basic step for this is CSA.

SWOT analysis helps in this process.Another use of the analysis is to compare two institutes which may be competitors.

The analysis involves taking into consideration factors internal to the institution,like human resources ,their level of dedication ,motivation training etc.,Availability of material & financial resources,partnership & alliances with other institution ,public image etc.External factors include the social or cultural environment of operation ,attitudes towards issues involved.

Logical Framework:Also known as Log frame.This method is found

useful for bringing out clarity in the process of planning & evaluation.It has the advantage that it compresses the entire prog. being proposed in a summary format.

The process becomes “rational , efficient,clear,concise,methodical ,logical.The Log

Frame consists of matrix with 16 cells . The vertical columns mention Goal , purpose , outputs

& the activity clusters.Other cells they mention the objectively verifiable

indicators.It is a very exacting process & should be carried out as a participatory exercise by the team,which is to undertake the programme.

IFORS International Federation of Operational Research

Society

IFORS is an umbrella organization for Operational Research societies world-wide .

It represents 50 national societies including those in US, UK , France , Germany, Canada , Australia , New Zealand, Philippines , India , Japan and South-Africa.

ORSI Operational Research Society of India

Founded in 1957. The society is affiliated to the IFORS.Head quarter of ORSI is located in Kolkata. The society publishes a quarterly journal

OPSEARCH.

INFORMS Institute for Operations Research and the

Management Sciences

US–based organization. INFORMS started an initiative to market

the Operations Research profession better.

website : ” The Science of Better”.

This initiative has been adopted by Operational Research Society in UK.

website : “Learn about OR” .

INFORMS publishes twelve Scholarly journals about Operational Research.Including-1.Decision Analysis.2.Information System Research.3.INFORMS journal on computing.4.Interfaces: An International Journal of the

Institute for Operations Research and the Management Sciences.

5.Management Science: A Journal of the Institute for Operations Research.

C.O.R.T.

Center for Operations Research and Training

CORT established in 1991 is one of the leading research and training organization in India.

Its headquarter is in Varodara ,Gujarat.Broadly it covers area of health ,

demography and social and development issues.

CORT

CORT is responsible for running State Training and Resource Center (STRC) in the state of Gujarat.

CORT is actively involved in building research capacity of NGOs by organizing training workshops.

CORT