Deck 14: Operations Analysis and Benchmarking

Question 1

A key point to remember in defining an operational analysis is to focus on metrics that can be influenced by management action.

Answer 1

True

Question 2

Hospitals serving a large proportion of Medicare, Medicaid, or indigent patients should focus operational analysis on maximizing charges.

Answer 2

False
Keeping expenses within an externally imposed (and not controllable) constraint is a reasonable approach for analysis. This is a common situation for hospitals that serve a large proportion of Medicare, Medicaid, and indigent patients. Consequently, operations analysis in the hospital setting often focuses on producing the maximum number of outputs per unit of input to work within a revenue constraint.

Question 3

Cost per unit should be the major focus of operations analysis in hospitals facing increasing revenue constraints in today's market.

Answer 3

False
While a concern in managing operating expenses is important considering the fact that revenue for hospitals and other healthcare organizations are not increasing at the same rate as inflation for operating expenses, cost per unit should not be the only focus of an operations analysis. In some situations where labor markets are competitive, it may not be possible for management to have a significant impact on the price per hour paid for employees. In that case, operations analysis must take into account both the cost per unit of output and the units of the input per unit of output.

Question 4

The important part to consider when taking an operational analysis to the department level is to use a measure of output that is relevant to that department.

Question 5

Data Envelopment Analysis (DEA) is a recommended technique for hospital managers attempting to create a benchmark with data from organizations of varying scale.

Question 6

Operations analysis should focus on which metrics?

A) Profitability
B) Metrics influenced by management action
C) Metrics aligned with strategic objectives
D) All of the above

Question 7

Time fames for monitoring operational performance should look across a full year because:

A) A year long analysis takes into account seasonal variations in volumes
B) Monthly analysis provides a less variable average
C) Comparison with quarterly averages will hide occasional errors in management
D) None of the above

Question 8

Comparison of fiscal year to date measures between the current year and prior years are valuable because:

A) The current month provides more detailed insight to operational performance
B) It provides context for seasonal variations in observed results
C) Neither a nor b
D) Both a and b

Question 9

Which type of analysis of operational metrics can identify changes in performance over time?

A) OLS Regression
B) Data Envelopment Analysis
C) Trend analysis
D) Stochastic Frontier Analysis

Question 10

Benchmarks established using a hospital's own historical performance data are:

A) Industry benchmarks
B) External Benchmarks
C) Derived benchmarks
D) Internal benchmarks

Question 11

How does an operations analysis determine what a "good" value is for an operational metric?