Past the Point of Speeding Up: The Negative Effects of Workload Saturation on Efficiency and Patient Severity

Abstract

Service organizations face a trade-off between high utilization and responsiveness. High utilization can improve financial performance, but causes congestion, which increases throughput time. Employees may manage this trade-off by reducing processing times during periods of high workload, resulting in an inverted U-shaped relationship between utilization and throughput time. Using two years of inpatient data from 203 California hospitals, we find evidence that patient length of stay (LOS) increases as occupancy increases, until a tipping point, after which patients are discharged early to alleviate congestion. More interestingly, we find a second tipping point—at 93% occupancy—beyond which additional occupancy leads to a longer LOS. These results are indicative of a workload-related “saturation effect” where employees can no longer overcome high workload by speeding up. Our data suggest that the saturation effect is due to an increase in the workload requirements of the remaining patients. Collectively, we find that the underlying relationship between occupancy and LOS is N-shaped. Consequently, managers who seek cost efficiencies via a strategy of high utilization in tandem with speeding up may find that their strategy backfires because there is a point at which employees are no longer able to compensate for a high workload by working harder, and throughput time counterproductively increases. We perform a counterfactual analysis and find that an alternate strategy of employing flexible labor when faced with high occupancy levels might be a more productive approach, and could save the hospitals in our sample up to $138 million over 23 months. This paper was accepted by Serguei Netessine, operations management.

Patient care effectiveness and financial outcomes of hospital physician contracting emphasis

“…Since it can be difficult for hospitals to employ different types of physicians, contracting can potentially provide a mechanism to deal with patient needs (Loughry & Elms, 2006). In line with this, a more flexible supply of healthcare professionals has been shown to improve patient care as reflected in shorter length of stay (Berry Jaeker & Tucker, 2016).…”

“…As the services literature highlights, process variation leads to inconsistent service quality (e.g., Frei, Kalakota, Leone, & Marx, 1999) and lower overall profitability (e.g., Heskett, Jones, Loveman, Sasser, & Schlesinger, 2008). Physicians must balance these standards with individualized care that meets patient needs (Berry Jaeker & Tucker, 2016). Physicians must balance these standards with individualized care that meets patient needs (Berry Jaeker & Tucker, 2016).…”

The value of process friction: The role of justification in reducing medical costs

“…During highly congested periods in hospitals, physicians often cut corners by discharging patients early, which results in a higher mortality rate (Kuntz et al, 2014). When congestion is extremely high, even if discharging a patient early is preferred, it is difficult for physicians to manage in practice (Berry Jaeker & Tucker, 2016). Moreover, trying to improve service quality by increasing available worker time can backfire because it may instead "induce service" that increases provider revenue without improving quality for customers (Debo et al, 2008).…”

“…This vector also includes control variables for the quarter-year (e.g., quarter 1 of 2010) of the visit to control for seasonality effects and time trends, based on clinical considerations (e.g., flu season), and in accordance with standard practice in the medical literature (e.g., Currie et al, 2016). Following prior research, we convert the daily census into an occupancy percentage (from 0 to 100%) by dividing the daily census by the maximum census in our study (Berry Jaeker & Tucker, 2016;Kuntz et al, 2014). We control for occupancy, which is the daily census of the hospital's ED in which patient i was treated, and include an occupancy-squared term because previous research has shown that occupancy can have nonlinear effects (KC & Terwiesch, 2012).…”

Task Selection and Workload: A Focus on Completing Easy Tasks Hurts Long-Term Performance

“…Using multiple settings within healthcare KC and Terwiesch (2009) show that service rates are endogenous to load. Multiple papers have built upon this finding: to replicate it in other contexts (Staats and Gino 2012), to show that quality may suffer due to load (Kuntz, Mennicken and Scholtes 2015), to show that workers may burn out due to load (Green, Savva and Savin 2012) and more generally show how load can alter behavior in an operating system (Tan and Netessine 2014;Berry Jaeker and Tucker 2015;Kim et al 2015). A key assumption in this line of work is that as individuals experience more load, they choose to work faster in the short-term, although this speeding up may negatively impact performance in the long-term.…”