What is Production and Capacity Management (PCM) in healthcare and what is needed to succeed?

The ongoing long-term trend of an aging population and a shortage of available staff puts significant pressure on healthcare. The current combination of lower growth in tax revenues along with increasing personnel costs due to inflation exacerbates the situation. The demands for providing higher quality care with fewer resources are increasing. At the same time, it is necessary for healthcare providers to create an attractive work environment in order to retain and recruit the right expertise.

To address these challenges in the long term, it is crucial to continue prioritizing medical advancements and focus on preventive measures. In the short and medium term, the efficiency of existing healthcare can be improved with Production and Capacity Management (PCM).

Production and Capacity Management is a structured methodology aimed at, based on patient needs, controlling and continuously improving missions and optimizing capacity at all levels within the organization. The methodology takes into account available expertise and economic frameworks, with the goal of ensuring that the right patient receives the right care, of the right quality, at the right level, in the right place, at the right time, and at the right cost.

Here are the key points for success:

1. Ensure proper availability for our patients through needs planning.
2. Formulate clear missions for our employees.
3. Size the capacity correctly based on the mission.
4. Conduct an interactive and fact-based budgeting process with realistic goals.
5. Develop a sustainable staffing plan and create an attractive work environment.
6. Conduct continuous and systematic improvement work.
7. Implement broadly and effectively.

A fundamental requirement for effective PCM is to base capacity planning on actual patient needs. A common mistake is to focus too much on existing capacity instead of identifying and addressing actual needs. This can create unnecessary bottlenecks in the healthcare system. It's important not to mask the real need while ensuring that the right patients have access to care with support from medical prioritization.

A success factor is to provide easy visualization of inflows, waiting lists, and availability information along with needs planning tools that are easy to use for healthcare managers.

Clearly communicated missions and goals, based on patient needs, are crucial for planning the organization's capacity. The missions also need to be detailed to make the healthcare mission concrete for all employees.

It is also important to separate the inflow of patients from the potential "care debt" that has been accumulated over time in the waiting list. The long waiting list may seem unmanageable, but it may only require an extra visit per day per person to balance it and stop the waiting list from growing. Then a separate effort can be made to reduce the backlog that has accumulated over time.

Clear missions are also a fundamental requirement for monitoring, controlling, and continuously improving work to achieve efficient operations and production goals.

Healthcare is a professional service operation, where personnel costs constitute the largest part of the expenses. The trend towards specialization and multiprofessional care increases the complexity of planning. Our experience is that there is a great potential for improvement to be achieved by optimizing capacity at each healthcare unit.

Front-line managers know their operations best and should have the freedom and flexibility to design their capacity. At the same time, it is important to identify the right level of productivity that balances quality, cost, and work environment. To avoid getting stuck in inefficient work practices, it is necessary to continuously compare and challenge against the best healthcare units in the same category. Clearly defined healthcare categories with well-thought-out productivity goals for each category are valuable support in this process.

Budget processes in healthcare are often inadequate. They are done top-down and are mainly based on historical outcomes. The connection between the budget, patient needs, care missions, capacity, and available personnel is often weak.

When the budget does not sufficiently reflect the operations, clinical managers lack understanding and ownership of the budget goal. Poor communication and lack of transparency lead to decreased trust and less cooperation between operations and finance regarding economic/clinical priorities. As a result, some healthcare units become chronically underfunded and "crash" while there are opportunities for sustainable savings in other units.

An important component is to enable front-line managers to take control and ownership of their budget by being able to cost-calculate their capacity plan from the bottom up in a simple way. With more realistic and fact-based budget goals, a stable foundation is built for more effective financial management.

The staffing needs of a healthcare unit are a product of the capacity plan and the current work time model. In practice, the availability of the right expertise is often the critical factor in healthcare. Many healthcare units struggle with overtime, extra weekend shifts, and hiring shortage skills to meet staffing needs and capacity plans. A clear gap analysis of the staffing situation is crucial to identify skill shortages in time. Early identification of bottlenecks allows proactive measures to be taken to avoid shortage costs and reduce the strain on existing staff.

A uniform methodology and transparency regarding staffing status and productivity throughout the organization build trust and provide a solid foundation for cooperation between different units, which is particularly important during critical periods like summer.

The fundamental solution to challenging staffing situations is, of course, the ability to retain and recruit new staff. Offering sustainable staffing conditions and sufficient time for development and recovery are fundamental elements for a long-term sustainable solution.

For many healthcare units, the starting point is challenging, with an imbalance between needs, missions, capacity, budget, and staffing. It is important to understand that production and capacity management do not solve all problems immediately, but at the same time, there are no shortcuts – you just have to start where you stand.

A systematic and continuous improvement process where employees are involved and successes are celebrated along the way is the best strategy. Systematic improvements where employees are encouraged to participate and contribute new ideas promote innovation and creativity, which strengthens engagement and contributes to an attractive work environment.

The implementation of PCM can start on a small scale, but to realize the real benefits, ambitious widespread adoption is required, both horizontally across all types of healthcare activities and vertically at all levels from healthcare unit to political leadership.

To enable widespread adoption in healthcare, it is important that system support and work methods are not too complex and that it is easy to do the right thing. To avoid duplication of work and maximize the effect, clear organization of work is necessary, and PCM needs to be integrated with existing management systems. PCM requires strong anchoring and ownership in the line organization, but it is also critical to bring together healthcare, finance, and HR in a common process and platform.

In summary…

Production and Capacity Management (PCM) is an important component for healthcare to meet long-term challenges in delivering higher quality care with fewer resources. For patients, taxpayers, and healthcare personnel, it is critical that needs, missions, capacity, budget, and staffing are balanced to enable good and efficient care with an attractive work environment. To realize the benefits of PCM, widespread adoption is required, which in turn places demands on work methods and system support that make it easy to do the right thing!