Uncertainty in healthcare operations: How hospitals weather the perfect storm

Abstract

We focus on two of the many sources of uncertainty in healthcare operations, mix uncertainty – the variation in the complexity of care required by the patient mix, and volume uncertainty – the variation in the volume of care demanded by the patient population. Using an interdisciplinary perspective, we study the impact of mix and volume uncertainties on two important healthcare outcomes, length of stay and number of procedures, along with the mitigation impacts of the operational concepts of related focus and utilization levels. Based on large dataset of 830,853 patient discharges in 26 clinical departments across 731 hospitals in five U.S. Midwest states, our results indicate that mix and volume uncertainties each have a significant impact on patient care. We also find that related focus and department utilization levels have a mitigating effect on uncertainty in healthcare settings. Lastly, we find considerable heterogeneity in the effects of uncertainty across hospital types and departments. We discuss key research and managerial implications of our findings.