A Root Cause Solution for Much of What Ails Hospitals

Ellis Knight
8 min readFeb 6, 2023

Probably the only benefit of achieving a somewhat advanced age is the perspective it gives you on what needs to be done to correct the shortcomings in an area you’ve worked in all your professional life. For me, that’s healthcare and more specifically the management and operation of hospitals and healthcare systems. I am a physician (internist/hospitalist) who, in my mid-40s, recognized how broken was the system within which I was working. I then embarked on a second career where I tried to focus on the bigger picture and gradually moved away from the bedside to the boardroom and on into realms, I never believed I would find myself. I’ve done healthcare consulting, served as an advisor to healthcare technology vendors, and voiced my opinions on healthcare matters through the writing of several books. Now, as I look back, I realize some hard truths need to be recognized and dealt with that I truly believe are the root causes of what ails our hospitals and healthcare systems both in this country and beyond.

First, let’s start with the relentless pursuit of profit that drives most healthcare organizations in this country. I have written1 about how the healthcare economy within which we operate, through the dominance of a fee-for-service payment model, leads to many perverse incentives that are contrary to the underlying motivations that led most of us to a career in medicine in the first place. This analysis, however, has never been accepted by corporate interests (for-profit and not-for-profit healthcare delivery systems, commercial payers, and the multitude of outside vendors who look at healthcare as the pie which can be endlessly sliced to feed them all). Unfortunately, these corporate entities wield the most power and influence within the system and have served as a major obstacle to serious reform of the system.

Perhaps the only benefit of going through the Covid pandemic is that it revealed the dangers of continuing to follow this profit-centered pathway. As we now hopefully, come out of the worst of the pandemic, many hospitals today find themselves facing enormous financial losses and equally large challenges which boil down to how to do more, or at least as much, with less — less money, less staff, less infrastructure, and even less trust from the public who has for years driven demand from what they believed was the best healthcare system in the world.

Sadly, despite the truth about the corrosive effect of profiteering within the healthcare industry which was revealed during the pandemic, the leaders of many organizations continue to believe that a return to business as usual is possible. They refuse to recognize one of the other truths I have come to believe can serve as the cornerstone of a solution to our system’s challenges. The truth being, that healthcare is a fixed-cost industry and therefore we must focus on optimizing the flow of patients and procedures through the system, particularly within hospitals and other large components of the delivery system if we are to financially survive. To use the parlance of managerial accounting, we must now focus on the return on assets (ROA) e.g., staff, beds, buildings, and equipment, rather than the return on investment (ROI), since to be quite blunt, the investment dollars are drying up and spending their way out of this problem is not something most hospitals can afford.

The solution, therefore, is to look at proven methodologies, e.g., smoothing out the elective surgical schedule in a hospital across five, and preferably even seven days a week, so that the large backlog in elective surgeries that built up when hospitals had to divert their resources toward caring for those affected by Covid can be managed safely and effectively. I won’t go into the details of this method, but suffice it to say, the Institute for Healthcare Optimization (IHO)2 has developed a well-designed and tested method whereby natural variability in patient flow, think emergent cases, is separated from artificial variability in patient flow, think elective surgical cases. Once the natural and artificial variabilities in patient flow are separated each channel can then be managed through the application of modern operations management techniques, e.g., queuing theory, so that each channel flows more smoothly, safely, and efficiently through the system.

The benefits of effectively managing variability in patient flow through a surgical service have been demonstrated in many publicly reported cases 3.

These benefits include:

  1. Increased throughput of cases with associated increases in revenue.
  2. Increased patient satisfaction due to shorter wait times and less backup of patients in areas such as the emergency room.
  3. Increased staff satisfaction due to less variability in caseloads on a day-to-day basis and thus lower stress and burnout.
  4. Lowered costs through the avoidance of payments for overtime staffing and the use of travelers or contract providers.
  5. Allowing hospitals to systematically work through their backlog of elective surgeries postponed during the pandemic. Note that not catching up with this backlog will risk many of these patients going on to have a progression of their disease and develop comorbidities which may further complicate their surgeries.4
  6. And, most importantly — lower rates of morbidity and mortality when patients are cared for in the appropriate setting5, and with the appropriate ratios of caregivers to patients6,7.

So, what is the problem? Why aren’t more hospitals jumping on this bandwagon and adopting this methodology? Well, let me speak to this from personal experience (again with the benefit of age-acquired retrospection).

Many years ago, as the VP for medical affairs at a large teaching hospital in the southeast, I was interested in more than simply managing our credentialing department and keeping the coffee pot full in the doctor’s lounge. I found myself on the senior management team of a hospital that suffered from the many problems common to most similar facilities — emergency department overcrowding, patient dissatisfaction with long wait times, surgeon dissatisfaction with having their elective cases commonly “bumped” by emergency cases coming in from our busy Level I trauma service, and poor financial performance, particularly due to cost overruns in terms of staffing and loss of lucrative cases who often went to our competition that did not have the educational or community service commitments present at our hospital. Then, I signed up for an IHI (Institute of Healthcare Improvement) course on healthcare operations management and first met Dr. Eugene Litvak, who heads up the IHO. Dr. Litvak is an applied mathematician, who emigrated from Russia in the 1980s and first made a name for himself by streamlining the testing for HIV. Now he has turned his attention to the many problems plaguing hospitals and has created the Institute for Healthcare Optimization, a not-for-profit center in Boston that has worked with many of the best hospitals in the world, including in the US, Canada, and Scotland, to help them successfully apply the IHO variability management methodology outlined above.

When I engaged Dr. Litvak to help me apply this methodology at my hospital, things initially went very well. We were able to successfully separate the emergent/urgent cases from the elective cases and avoid admixing of cases that resulted in delays or cancellations of many elective cases. These initial rather straightforward changes improved our throughput as well as our revenues which increased by approximately $1.8 M over the next year.

It was only when we tried to smooth out the elective schedule by asking providers, i.e., surgeons, to adjust their schedules to a five-day-a-week routine with approximately the same number of cases scheduled for each day that things went off the rails. You see, surgeons don’t like to operate on Mondays or Fridays, and they certainly don’t like to operate on the weekends. Therefore, since many of our surgeons were in private practice at the time, we were unable to convince them to shift schedules to benefit the hospital and the patients we served. The hospital management was reluctant to force the issue out of a concern that the surgeons would take their cases to other hospitals that wouldn’t demand such draconian changes.

Now, don’t get me wrong, there are many surgeons and other proceduralists out there who are interested in smoothing throughput in the ER and gleaning the benefits of this technique. Those who practice in academic medical centers realize that hospital operations management needs to change and are willing to cooperate and help make that happen. Perhaps this has to do with the fact that in academia there are non-financial rewards that motivate providers, including surgeons, e.g., research, innovation, publication, and academic rank.

Also, note that the problem is not simply one of trying to convince surgeons to get on board with this methodology. Hospital managers, especially in community hospitals, are much more comfortable with more traditional techniques, e.g., the use of electronic bed tracking, moving many inpatient surgeries to the ambulatory sector, and even the construction of more operating rooms and beds. While these moves may be of some value, I firmly believe that they must be used to augment the use of the more foundational IHO model, i.e., once the variability in patient flow is smoothed, then these other steps can be done to ensure the maximal benefits are achieved.

Finally, much has changed since my hospital initially engaged the IHO, including the fact that more and more hospitals are realizing that providing value for their patients, which I simply define as quality per unit of cost, has now become an overarching mandate from many payers, especially the Centers for Medicare and Medicaid Services (CMS). In addition, more hospitals now employ surgeons and can better align incentives for them to smooth their schedules to achieve the many benefits the IHO model can bring for the hospital, the surgeons, and most of all their patients.

Since I first met Dr. Litvak and his team, I have become more and more convinced that promoting this model to others is one of the best ways I can fulfill my personal goal of advocating for healthcare improvements. It is certainly not a cure-all for what ails healthcare, but regarding hospitals, it is something that all in this sector of the system should consider as we strive to develop a high-value healthcare delivery system.

1. Knight E. Healthcare Economic Reform . 1st ed. American Association of Physician Leadership ; 2021.

2. Institute for Healthcare Optimization . Published 2023. www.ihoptimize.org

3. IHO Knowledge Center / Publications . Accessed February 5, 2023. https://www.ihoptimize.org/knowledge-center/publications/

4. Litvak E, Keshavjee S, Gewertz BL, Fineberg H v. How Hospitals Can Save Lives and Themselves: Lessons on Patient Flow From the COVID-19 Pandemic. Ann Surg. 2021;274(1). https://journals.lww.com/annalsofsurgery/Fulltext/2021/07000/How_Hospitals_Can_Save_Lives_and_Themselves_.11.aspx

5. Knight E. Prologue: Lewis Blackman: Lessons Learned from a Ninth Grader. In: Litvak E, ed. Optimizing Patient Flow: Advanced Strategies for Managing Variability to Enhance Access, Quality and Safety . 2nd ed. Joint Commission Resources ; 2018:XIII-XVIII. http://qsen.org/publications

6. Aiken LH, Cerón C, Simonetti M, et al. HOSPITAL NURSE STAFFING AND PATIENT OUTCOMES. Revista Médica Clínica Las Condes. 2018;29(3):322–327. doi:10.1016/j.rmclc.2018.04.011

7. Michtalik HJ, Yeh HC, Pronovost PJ, Brotman DJ. Impact of attending physician workload on patient care: A survey of hospitalists. JAMA Intern Med. 2013;173(5):375–377. doi:10.1001/jamainternmed.2013.1864

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Ellis Knight

Semi-retired physician and healthcare executive / consultant spending my time advocating for value-based care reform in the US healthcare system.