How to Improve Operational Efficiency in Healthcare

As healthcare administrators guide their organizations through post-pandemic realities, they are challenged to improve patient outcomes without diminishing the financial resilience of their organizations. But workforce shortages and escalating costs are hindering healthcare executives’ efforts to deliver those results, according to recent research. All of this adds up to a pressing need for healthcare organizations to spruce up their overall operational efficiency. So leading health systems are starting to improve their cost management and care quality—at the same time—by leveraging innovative technology to streamline processes throughout back-end business and clinical operations.

Read on to find out how modern healthcare organizations are achieving those gains in operational efficiency.

What Is Operational Efficiency?

Operational efficiency is the set of principles and approaches by which an organization can optimize its processes, reduce its costs, and get the most out of its resources—whether those resources consist of personnel, equipment, or materials. This efficiency is typically achieved through intentional, multidisciplinary improvement efforts that refine workflows and reduce waste.

Time stands as one of the most important sources of waste that healthcare organizations can minimize. Operational efficiency initiatives frequently focus on automation that does away with manual work and reduces bottlenecks that cause employees to waste time on trivial tasks, rework, or idle waiting. Efficiency efforts also seek to minimize materials wasted due to spoilage or errors. With both the time and materials sources of waste in mind, quality control frequently becomes a key component of improving operational efficiency. Higher-quality standards can minimize the waste of time and materials that occurs when a process or product demands rework or replacement due to avoidable mistakes.

What Is Operational Efficiency in Healthcare?

In healthcare, operational efficiency refers to the discipline of maximizing productivity and minimizing waste as a healthcare organization carries out its mission of delivering high-quality patient care. As with any operational efficiency improvement effort, healthcare organizations seek efficiency gains by improving their processes and workflows, while keeping a close eye on how they allocate limited resources. Tying improvements to quantifiable quality standards is an important part of this work, as quality-focused efficiency initiatives help reduce the kinds of errors that not only lead to wasted materials and effort, but also could potentially threaten patient health.

It may seem counterintuitive, but improving operational efficiency even in back-office operations can positively influence patient care, as well as the bottom line. For example, streamlining administrative processes, such as appointment scheduling, can hasten patient flow and cut down on wait time. Healthcare organizations can boost efficiency by improving the way they track human and physical resources, ensuring that they are getting the best utilization out of their staff, fixed assets, and inventory. Furthermore, implementing technology, such as electronic health records (EHR) and telemedicine, helps shrink the resources needed to deliver care, access records, and bill for the work.

Key Takeaways

• Healthcare operational efficiency improvement focuses on quality control and collaboration across complex departments and systems.
• Healthcare organizations use methodologies, such as lean management and Six Sigma, to improve efficiency by reducing waste and refining processes.
• Process automation and sound data management are crucial to minimizing manual work and accelerating decision-making in operational processes.
• Challenges to higher healthcare efficiency include complex, fragmented systems that don’t interoperate well, highly variable patient flows, and increasing compliance demands.

Healthcare Operational Efficiency Explained

Improving efficiency might sound like it would involve purely cost-cutting, but in healthcare it can go much deeper. When hospitals and other health systems concentrate on streamlining operations, they often become able to deliver higher-quality care more effectively and sustainably. Operationally efficient organizations are better at communicating with patients, sharing information across departments, and keeping patients moving through administrative and clinical queues—from intake through treatment and billing—with as little delay as possible.

This enhances patient outcomes and boosts the bottom line. Operationally efficient healthcare organizations tend to waste fewer supplies due to careless errors; they are better at scheduling staff and expensive equipment, raising both resources’ utilization rates; and they waste less time on bureaucratic workflows or manual back-office work.

Healthcare organizations often achieve this kind of efficiency by employing the kinds of management and quality improvement strategies that were pioneered in manufacturing companies. For example, many healthcare organizations apply Six Sigma, a methodology that rests on a five-step approach called DMAIC (define, measure, analyze, improve, and control operational processes). Renowned healthcare organizations, such as Yale-New Haven Medical Center, Mount Carmel Health System, and Boston Medical Center, have all saved millions of dollars and improved employee and patient satisfaction by using Six Sigma to address business management issues and cut down on medical errors.

Lean management techniques that focus on eliminating waste and process bottlenecks are also a favored pick for boosting operational efficiency at healthcare organizations. In one recent example, Penn State Health’s Milton S. Hershey Medical Center used lean concepts to minimize length of stay at its 600-bed facility. The investments it made to improve care-team communication and streamline patient admissions and discharges helped the organization outperform the top quartile of academic institutions on this front.

Whether using Six Sigma, lean management, or other improvement methods to bolster efficiency, healthcare organizations tend to do best when they support decision-making with data. Collecting and analyzing data on key performance indicators and patient care metrics can help healthcare administrators identify the biggest drains on efficiency and systematically track how improvements impact performance. To produce the data needed to fuel such analyses, healthcare organizations must invest in technology, such as EHR systems, strong inventory and supply chain management systems, and scheduling systems.

Most recently, approaches to maximizing efficiency at healthcare organizations have gravitated toward automation and artificial intelligence (AI) technology. Simple automation, such as robotic process automation (RPA), can help minimize the amount of time back-office workers spend on repetitive manual tasks when submitting claims to insurers, billing patients, and recording financial details into accounting systems. Automated systems are also crucial for tracking and proving compliance with the many regulations that govern healthcare organizations. Meanwhile, the advanced pattern recognition and deep learning capabilities of AI-enabled technology is being used in healthcare to increase the efficiency of everything from how staff is scheduled to how facilities management tracks and executes preventative maintenance on valuable assets.

Why Is Improved Operational Efficiency in Healthcare Important?

With hospitals and health systems under pressure because of rising costs and economic headwinds, healthcare administrators are seeking ways to maintain high patient-care standards without breaking the bank. Improving operational efficiency has emerged as a key strategy for achieving that balance.

According to an S&P Global analysis, health system operating expenses outpaced revenue gains by nearly five points from 2021 to 2022; during that time, expenses grew by 17% while revenue rose only 12.5%. A large portion of the expense growth came from rising salaries, and analysts estimate that workforce shortages will put even more strain on healthcare systems in the coming years. Systematic efforts by healthcare organizations to improve operational efficiency can help rebalance those finances by reducing costs and eliminating wasteful spending. That’s key in an industry that the Peter G. Peterson Foundation estimates squanders nearly 25% of its spending through “administrative waste, inefficient spending on clinical care, or operational waste.”

Health systems could rein in that waste with the right operational efficiency efforts. In one recent example, the Cleveland Clinic saved $150 million by bolstering its business intelligence capabilities and using data from throughout its business to help it cut back on unnecessary tests, streamline workflows, and strengthen patient care coordination. In most instances, such efficiency efforts improve patient care while reducing costs. Kaiser Permanente, for example, said its use of data analytics to refine operational processes resulted in a 30% reduction in hospital readmissions and a 25% decrease in emergency department visits among high-risk patients.

Common Challenges in Healthcare Operational Efficiency

Healthcare organizations face a number of challenges that impede their ability to improve operational efficiency. Siloed data and processes and a lack of system interoperability make it difficult to unify efficiency efforts, while rising expenses driven by staff shortages and growing supply chain costs make it tough to invest enough to move the needle on efficiency. Factor in the administrative burden of compliance, the unpredictability of patient flow, and an inherent resistance to change at many organizations and it becomes clear that efficiency-focused health administrators have their work cut out for them.

• Fragmented systems and processes:

  The prevalence of fragmented systems and processes is a major roadblock to operational efficiency. Many healthcare organizations struggle with siloed departments, unconnected information systems, and disjointed workflows that stand in the way of access to a holistic view of operations, from back-end infrastructure to care delivery. One recent study found that nearly half of healthcare data is underutilized when healthcare leaders are making clinical and business decisions. Another survey showed that 60% of hospitals and health systems use 50 or more software solutions for healthcare operations alone. This fragmentation can cause an organization to run duplicate tests, delay treatments, and increase the burden on administrative staff. For example, when clinicians and billing specialists have to hunt through multiple platforms to find the right information about a patient—either to order a prescription or send a bill—that squanders everyone’s billable time and delays treatment.

• Resource allocation and management:

  Whether the resources in question are physical equipment, working staff, or financial instruments, ineffective allocation and management can thwart healthcare operational efficiency. When health systems and hospitals don’t efficiently manage how they allocate these resources, they wind up either letting expensive resources be underutilized or incurring patient bottlenecks and staff burnout. The unpredictability of patient volume can exacerbate this issue, as many organizations struggle to match resources with peaks and troughs in demand. Healthcare organizations can meet these challenges by doing a better job of centralizing resource management to improve cross-departmental sharing of underutilized resources and to cut down on waste by addressing universal problems, such as duplicated testing. They may also consider using predictive analytics to reveal hidden trends in patient demand, or establishing dynamic scheduling to optimize resource availability for both high- and low-demand times.

• Patient flow and capacity management:

  Unpredictability in patient flow makes capacity management a perennial challenge for hospitals and health systems, which often struggle with bottlenecks arising as patients move from admission to discharge. This creates overcrowded emergency rooms and waiting areas, delays in care, and even underutilization of specialty departments as clinicians wait for their patients to be transferred. The situation is only going to grow worse as the global population rises, chronic disease incidence increases, and unexpected public health crises elevate demand—but in unforeseeable ways. According to industry figures, the average length of stay for patients admitted to a hospital has climbed 10% since 2019. Unfortunately, the flow of patients is highly unpredictable. One analysis in Europe found that the variability rate for planned hospital admissions can range from under 10% to as high as 40%. A 40% variability rate, for example, means that a hospital that averages 100 admissions per day might see 60 admissions one day and 140 the next day. At the individual ward level, though, admission variability was much higher: It ranged from 29% to as much as 79% at some hospitals.

• Regulatory compliance and documentation:

  Hospitals and health systems must comply with hundreds of different regulatory requirements spanning numerous operational domains, including reporting, payment models, use of EHRs, hospital and clinical conditions, privacy and security, and program integrity. The administrative burden is heavy and, in the U.S. alone, estimates show that the industry collectively pays tens of billions of dollars each year to comply and document adherence to regulations. According to the most recently available data from the American Hospital Association (AHA), compliance costs hospitals $1,200, on average, for each patient admission. AHA analysis finds that the average-size hospital dedicates 59 full-time employees to regulatory compliance.

• Technology integration and utilization:

  Technology integration and utilization stands as a significant challenge for healthcare organizations seeking to achieve operational efficiency. While many health systems are aware of the potential efficiency benefits they can achieve using digital technology, many struggle to implement new technologies and fold them into existing technical architectures. According to one study, about 88% of healthcare CIOs agree that working with disparate IT systems and applications complicates their job. Meanwhile, a separate survey of healthcare leaders and young professionals found that six of the top 10 success factors for providing new, more efficient ways of delivering care involved technology issues, such as staff and patient adoption, data management standards, data sharing, and system interoperability.

• Financial and staffing constraints:

  Economic headwinds and widespread staffing shortages—particularly among qualified clinicians—will continue to both challenge and motivate operational efficiency initiatives. According to a McKinsey & Company analysis, by 2025 U.S. health systems will face a shortage of 200,000 to 450,000 nurses for direct patient care, creating a 10% to 20% gap between healthcare employment needs and available nurses. At the same time, AHA reports that these and similar shortages, plus other inflationary concerns, are causing a growing chasm between patient payment averages and the average costs for delivering services. For example, in 2023, average payments for inpatient behavioral services were 34% below costs across all payers; for more expensive outpatient burn and wound services, the gap was 43%.

• Patient experience and engagement:

  As health systems strive to standardize processes and speed up care to bring costs down, they must simultaneously deliver personalized, high-quality patient care. This creates tension that manifests in various ways that can negatively affect patient experiences: Pressure on care providers to see more patients can lead to rushed appointments; resource allocation conflicts can arise between patient care and administrative tasks; technology implementations can delight some patients but inadvertently create barriers for those with less tech literacy. Similarly, digital solutions that provide patients with more control and agency over their medical information and appointment scheduling, for example, can present some patients with health-literacy hurdles and other communication barriers, while other, more tech-savvy patients’ high expectations for quick access, personalized care, and digital solutions cause them to chafe at the limitations of health systems that have yet to adopt advanced technologies. Navigating these multifaceted challenges requires healthcare organizations to innovate thoughtfully, ensuring that efficiency initiatives don’t compromise the quality of their patients’ experiences.

• Change management and organizational culture:

  One of the biggest killers of operational improvements is the “why can’t we leave good enough alone” attitude. When healthcare professionals are used to traditional ways of working, it can be tough for them to buy into adopting more efficient methods. The complexity of healthcare systems and the diversity of operational stakeholders lends itself to resistance to change when they are faced with implementing new processes or technologies. That means that a big part of successfully improving efficiency is an investment in change management that helps to alter organizational culture to truly “sell” the value of planned changes.

• Training and skill development:

  As organizations institute new technology and processes, they must be prepared to invest in training that helps staff adjust to the new systems. And they may need to anticipate a temporary decline in productivity and efficiency, which the learning curve is likely to impose. Healthcare organizations should play the long game on this challenge—understanding that training and skill development requires investment in the short term but will pay dividends in the long term.

• Emergency preparedness and crisis management:

  Hospitals and health systems must balance cost management and other efficiency initiatives with the mission-critical need to be fully prepared for emergencies and crises. Emergency readiness challenges operational efficiency improvement because of the resource-allocation conflicts that inevitably arise as decision-makers attempt to divide funds between daily operations and their emergency preparedness. Hospital leadership must figure out how to maintain redundancies and excess capacity, which runs counter to lean operational models. Striking a good equilibrium will require collaboration among stakeholders spanning the healthcare enterprise, including finance, legal, compliance, clinical, and administrative operations. Some of the emergency preparedness considerations that should be incorporated into budgets and operational plans include the resources and time necessary to run drills and simulations, which disrupt normal operations and pull staff away from their daily work. Organizations will also need to expend resources to document preparedness activities and keep plans up to date to comply with regulatory demands. Finally, coordination with external responder agencies adds another layer of complexity to the operational challenge of effective emergency management.

5 Strategies for Improving Operational Efficiency in Healthcare

There is no one-size-fits-all strategy for improving operational efficiency in healthcare because each organization has unique operational realities and hurdles to address. Still, consistent themes emerge within those organizations that successfully minimize waste and get the most out of their resources. Some of the most common tactics and techniques for enhancing operational efficiency involve streamlining administrative processes; optimizing supply chain management, which helps to minimize wasted materials and lower spending to acquire supplies; disciplined financial management, which supports both the efficient execution of financial diligence and the budgeting and forecasting necessary to make smart operational decisions; and advanced IT hardware and software infrastructure capable of enabling all these efficiency initiatives. And at the heart of everything, organizations need a spirit and culture of continuous improvement to make the kinds of ongoing incremental changes that support lasting improvement.

1. Streamline Administrative Processes

Health systems can significantly improve operational efficiency by eliminating manual work (as much as possible) to make it easier to find patient data, cut down on paperwork, and improve communications. Streamlining efforts should encompass both back-office and clinical settings to maximize resource efficiency. Here are some common ways to do this:

• Automate routine tasks: Whether the tasks in question manage patient flow or maintain inventory, healthcare organizations grow more efficient as they jettison manual work. For example, RPA software can streamline referrals processing, which cuts down on patients’ wait time between appointments and saves on the organization’s labor costs.
• Optimize data management: A recent survey found that only a little over half of healthcare leaders are satisfied with the way their organizations manage data quality. Improving healthcare data management is vital because better availability, integrity, and usability of data across operational disciplines can fuel faster decisions and more task automation.
• Reduce paperwork: Unnecessary paperwork costs healthcare administrative departments billions of dollars in wasted time, not including the cost of storage and records management. Organizations that digitize patient and financial records, as well as the workflows that depend on such paperwork, can cut costs and the operational burden of handling physical documents.
• Streamline communications: Implementing automated digital systems that enable faster information sharing, both internally and with patients, cuts down on administrative work and improves patient experiences for most people. Providing these solutions gives health system staff more time to focus on higher-value interactions with patients and important administrative work.

2. Enhance Financial Management

Enhancing healthcare financial management can elevate operational efficiency by optimizing resource allocation, streamlining billing processes, and creating sound financial analytics that enrich administrative decision-making. Effective budgeting, cost control measures, and revenue cycle management can reduce waste and improve cash flow. These disciplines also make it easier to free up funds needed for strategic investments in technology and staff, leading to better patient care as well as smoother organizational financial performance. Below are some common ways to boost financial management.

• Optimize cost management: Healthcare organizations that use financial analytics to identify cost-savings opportunities in procurement and other operational functions can rein in their expenditures and free up funds for long-term investments. Bringing discipline to cost-benefit analyses can help prioritize spending when resources are constrained.
• Improve financial reporting and analysis: Integrated financial management software with real-time data access can automate routine financial reporting tasks, help to reduce errors, save time, and create a single organization-wide data repository that enables better-informed decision-making. Improved financial reporting and analysis also speeds up and increases the accuracy of a wide range of regulatory compliance activities.
• Enhance budgeting and forecasting: The stronger a healthcare system’s budgeting and forecasting capabilities, the easier it will be to plan more accurate resource allocation and minimize waste. Advanced financial analytics and rolling healthcare forecasts can help providers anticipate patient demand, optimize staffing levels, and manage supply chains more effectively. This positively impacts efficiency and financial resilience.

3. Optimize Supply Chain Management

The way that a health system interacts with and manages its suppliers can significantly help—or hurt—its ability to operate efficiently. When an organization establishes good visibility throughout its supply chain and closely manages its suppliers and contracts, it can eliminate waste and unnecessary expense on many fronts. Strong healthcare supply chain management reduces errors and delays in procurement and distribution, identifies opportunities to negotiate favorable terms for volume discounting, and can even execute on those opportunities. The following steps for optimizing supply chain management are crucial touchstones for operational efficiency.

• Implement advanced inventory management systems: The real-time tracking and automation offered by advanced hospital inventory management systems can help healthcare organizations optimize stock levels and minimize waste. When integrated with EHR and enterprise resource planning (ERP) systems, inventory management software can help maximize efficiency gains by providing supply chain managers and other business leaders with end-to-end visibility and control over inventory and related processes.
• Leverage supplier relationship management (SRM): Fostering collaborative partnerships with suppliers helps healthcare organizations ensure that they are consistently procuring quality products and services, that they are optimizing vendor contract terms, and that they are ready to respond quickly to supply chain disruptions. Effective supplier relationship management ensures smooth operations and resource allocation, which, in turn, reduces costs and boosts patient care.
• Optimize procurement processes: Implementing a centralized procurement process can help a health system acquire goods and services, more quickly identify volume discounts, and bring a higher level of discipline to cost management. Pairing this approach with technology that automates inventory management and ordering supplies can lessen the administrative work necessary to support this operational function and minimize errors that could disrupt delivery of supplies crucial to patient care.
• Foster supply chain visibility: Healthcare organizations must build systems and processes that facilitate supply chain visibility if they want to improve the efficiency of their supply chain management function. By investing in technology that boosts real-time tracking from the factory to the distribution channel or warehouse, organizations can create greater transparency around the supplies that keep their operational processes running smoothly and respond rapidly to changing conditions. For example, implementing blockchain to provide an immutable record of pharmaceuticals and medical supplies could help an organization enhance traceability of products and help inventory managers respond to recall incidents by enabling them to quickly find and remove the affected items.

4. Enhance IT Infrastructure and Security

Modern IT systems lay the foundation for many operational efficiency improvement initiatives. A robust and secure IT infrastructure makes it possible for staff to access a unified data store—without compromising patient data or system availability. Advanced technologies, such as cloud infrastructure, automation, and AI-enhanced analytics, have become modern workhorses for eliminating manual work, enabling seamless communication, and helping to ensure that sensitive digital health data and devices are available and ready. Below are five important ways healthcare organizations can enhance their IT capabilities.

• Invest in reliable hardware and software: Consistent automation, digital communication, and data analytics all depend on reliable hardware and software. By installing high-performance servers, fast and dependable storage solutions, and advanced networking equipment, healthcare organizations help to ensure that their operational processes aren’t hung up by outages or poor application performance.
• Use technology to accelerate new operating models: The AHA has found that significant change in the U.S. “healthcare economy” in recent years requires health systems to adapt, in part, by embracing new operating models and by focusing technology investments to support those models. For example, the right communications and centralized data platforms led one Philadelphia-area hospital system to develop a “virtual care operations center” that coordinates all staffing, bed availability, patient transfers, and procedure scheduling for its many departments and five locations.
• Embrace process automation: Truly embracing automation means going beyond simple administrative tasks, such as emailing patients or sending bills. It means investing in technology, such as ERPs, which can draw data from many subsystems to form a unified database that fuels the automation of far more complex tasks, such as insurance claims processing. Plus, IT operations can use process automation internally to automate system administration, cybersecurity threat detection and remediation, and configuration of new hardware devices.
• Implement robust cybersecurity measures: Advanced, healthcare-specific cybersecurity measures should be incorporated into all digital systems to safeguard against data breaches, ransomware attacks, and the risk of running afoul of increasingly strong regulatory requirements for patient privacy. Cybersecurity incidents can disrupt operations and incur expenses from incident response, system unavailability, staff downtime, and fines from privacy and health regulators. Ransomware alone has become debilitating for many health systems. In the U.S., 141 hospitals experienced disruption due to successful ransomware attacks in 2023. Robust cybersecurity monitoring and controls can provide greater assurance that breaches will not wreak havoc in healthcare operations.
• Leverage data analytics: Peak operational efficiency relies on data-driven decision-making, so it follows that investment in data analytics can help health systems reap significant operational gains. Data analytics can help improve clinical processes involving patient management, decision tracking, and medicine tracking, and can be leveraged to help make better decisions in managing finances, inventory, supply chains, assets, and facilities.

5. Foster a Culture of Continuous Improvement

Fostering a culture of continuous improvement can help healthcare organizations derive efficiency gains through realistic, incremental changes. Many healthcare organizations build up this culture through defined methodologies, such as lean management and Six Sigma. But even ad hoc improvements, as long as they are ongoing, can help health systems and hospitals develop the necessary culture. The more small wins that operational staff can rack up, the more likely they will be to become change ambassadors who encourage colleagues to embrace positive change and, thereby, begin to embed continuous improvement into the DNA of the organization. Three components are central to this cultural development process.

• Empower employees to contribute: Encouraging healthcare staff at all levels to identify and address inefficiencies is likely to yield excellent ideas for streamlining processes, reducing waste, and optimizing resource allocation. After all, these are the people engaged directly in the work. But the experience of having their ideas solicited, and used, to improve operations does far more, too—it inculcates the idea that they can make a difference and that they are empowered to do so. Little else can drive an organization more effectively toward a continuous improvement culture. One way to start on this path is by training operational staff and management in lean and Six Sigma principles. Additionally, cross-functional improvement teams that include a diverse set of employee perspectives could prove especially helpful in launching innovative efficiency projects.
• Provide training and development opportunities: Training is the secret sauce of operational change. No matter what the discipline, training helps staff keep their skills up to date, promotes best practices that fuel efficiency, and empowers them to consistently seek better ways to get their work done. Ongoing learning motivates employees to identify and address inefficiencies, adapt to new technologies, and contribute to process improvements, strengthening the culture of process improvement.
• Regularly review performance: Consistently evaluating processes, outcomes, and individual contributions helps organizations monitor the impact of changes on operational performance. Setting measurable goals, and then reviewing individual and collective progress toward those goals, creates a feedback loop that helps organizations adjust their operational strategies over time, based on proven outcomes. At the same time, that feedback loop reinforces a culture of continuous improvement.

From Finance to CRM, NetSuite Has Healthcare Covered

Regardless of a healthcare organization’s unique characteristics and circumstances, improving efficiency requires a holistic view of operations that can come only from a unified database that seamlessly integrates all the enterprise’s data. NetSuite’s cloud-based ERP system offers a full line of business management software that operates with a single, centralized data store, giving healthcare organizations the foundation they need to make big operational efficiency gains.

NetSuite’s financial management solution, for example, makes it possible for health systems and hospitals to accelerate their processing of financial transactions. Its consolidated financial data can bolster budgeting and forecasting to help administrators make informed changes to their operational processes. NetSuite integrates with other business applications, too, including order management, customer relationship management, inventory management, supply chain management, procurement, and more to provide executives with end-to-end visibility into operational performance. NetSuite’s healthcare and life sciences version offers healthcare organizations tools to automate financial and administrative workflows, streamline compliance reporting, and improve data transparency, including with audit trails. This industry-tailored system helps healthcare executives make data-driven decisions to drive operational efficiency improvements that span all facets of the organization.

From fragmented systems and resource allocation issues to patient-flow variability and regulatory burdens, health systems face a wide range of operational challenges. By embracing technological advancements and optimizing processes, hospitals and other healthcare organizations can overcome these stumbling blocks and move toward more efficient operations. The most efficient health organizations tend to focus on reducing waste. By minimizing errors and maximizing planning and scheduling of human resources, health systems can optimize their efficiency, achieving more cost-effective care delivery and better patient outcomes.

Operational Efficiency in Healthcare FAQs

What is an example of operational efficiency in healthcare?

Good examples of operational efficiency in healthcare emerge from the use of lean management principles and techniques, such as value-stream mapping. In value-stream mapping, administrative teams strive to visualize the entire patient journey, from admission to discharge, and then identify steps that add value and those that don’t. The goal is to reduce wait times and improve patient flow.

What is the difference between efficiency and productivity in healthcare?

Whereas productivity focuses on the volume and quality of output produced in a certain time, efficiency measures output relative to quality and cost. Both are important for healthcare organizations, which value high speed and low cost but must maintain a level of quality that keeps patients safe, at a price point that doesn’t break the bank.

What is the difference between efficiency and effectiveness in healthcare?

Effectiveness is usually focused on the desired outcomes in real-world conditions, whereas efficiency measures how well those outcomes can be achieved while minimizing the resources it takes to get things done. So, for example, effective patient flow could be achieved by putting 10 more doctors on staff at a clinic at all times, but efficient patient flow might keep staffing the same but use automation to reduce wait times and increase flow.