Theory of constraints for publicly funded health systems
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Theory of constraints for publicly funded health systems Somayeh Sadat & Michael W. Carter & Brian Golden
Received: 4 January 2012 / Accepted: 23 July 2012 / Published online: 21 August 2012 # Springer Science+Business Media, LLC 2012
Abstract Originally developed in the context of publicly traded for-profit companies, theory of constraints (TOC) improves system performance through leveraging the constraint(s). While the theory seems to be a natural fit for resource-constrained publicly funded health systems, there is a lack of literature addressing the modifications required to adopt TOC and define the goal and performance measures. This paper develops a system dynamics representation of the classical TOC’s system-wide goal and performance measures for publicly traded for-profit companies, which forms the basis for developing a similar model for publicly funded health systems. The model is then expanded to include some of the factors that affect system performance, providing a framework to apply TOC’s process of ongoing improvement in publicly funded health systems. Future research is required to more accurately define the factors affecting system performance and populate the model with evidence-based estimates for various parameters in order to use the model to guide TOC’s process of ongoing improvement. Keywords Theory of constraints . Publicly funded health systems . Goal . Performance measures . System dynamics
S. Sadat (*) Center for Research in Healthcare Engineering, Department of Mechanical and Industrial Engineering, University of Toronto, 5 King’s College Road, Toronto, Ontario, Canada M5S 3G8 e-mail: [email protected] M. W. Carter Center for Research in Healthcare Engineering, Department of Mechanical and Industrial Engineering, University of Toronto, Toronto, ON, Canada e-mail: [email protected] B. Golden Rotman School of Management, University of Toronto, Toronto, ON, Canada e-mail: [email protected]
1 Introduction Theory of constraints (TOC), first developed in manufacturing by Eliyahu Goldratt [1], views systems and processes as series of dependent events. Analogous to the fact that a chain is only as strong as its weakest link, all systems have at least one and at most a few constraints that limit system performance [2]. TOC emphasizes that improving the constraint’s performance directly results in enhancing total system performance [3]. Thus, TOC provides insight on process improvement efforts by focusing the improvement efforts on the root cause of the problem (the constraint), as opposed to picking random or “low-hanging” fruits. TOC’s process of ongoing improvement has five steps. First, system constraint, which keeps the system from achieving more of its goal, is identified. Second, since the constraint’s output is the limiting factor of the whole system’s output, the constraint is exploited to squeeze the most out of it. For physical constraints, such as the production capacity of a machine in a production line, the exploitation step ensures that the const
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