The Health Sector can Save Hundreds of Millions

Savings in the public sector need not result in lower quality of service offerings. NHH professor Mikael Rönnqvist has been involved in the development of a planning system that can save the public health sector hundreds of millions of kroner annually, while simultaneously increasing the quality of service.

15.04.2008 - Knut André Karlstad

In 1950, 8% of Norway's population was over 67 years old, today this portion of the population has reached 13%. After 2010, when the largest cohorts of baby boomers retire, this portion will increase, to 19% in 2030 and 22% in 2050. This elderly population wave will be one of the largest political challenges in the years to come, and not just in Norway.

Unhappiness in Danderyd

The following situation, in home care service, occurred around the turn of the century in Danderyd, just outside of Stockholm:

During the morning meeting each day, 45 minutes were spent making changes to the daily work plans, due to a high rate of sick leave and unforeseen modifications occurring during the night. This wore on the personnel who were often assigned new tasks, and on the management who wasted large amounts of unnecessary time creating new work plans. Because the most vocal staff got away with simpler tasks in these morning meetings, many felt that the system was unfair and it led to frustration among the personnel. The short-term sick leave rate was high, and large facilities became reliant upon substitutes and temporary personnel. For the patients this led to, at worst, home caregivers not arriving and lives being lost.

Karin Lidén was one of those mainly responsible for the home care service and she experienced this problem first hand. Through her husband, she came into contact with Patrik Eveborn and Mikael Rönnqvist, who at the time were at the Linköping University. They worked with systems for operational analysis and were searching for real, practical projects. The timing was perfect.

"This was around 2001. We were on the look out for approaches to problems which could be interesting when we met the representatives from Danderyd. They described the problem and we built a simple prototype with planning support (optimizing, a map and information database) for home service," tells Rönnqvist, who is now a professor at Norges Handelshøyskole (NHH) in Bergen.

Mikael Rönnqvist has designed a system which saves the health sector hundreds of millions of kroner.

Foto: Helge Skodvin

A difficult game of solitaire

The system was designed in such a way that it created the most optimal plans possible based upon different work tasks, routes, safety, transportation requirements, distance between patients with varying means of conveyance, and a range of other factors.

"The home caregivers perform many different tasks: cleaning, washing, food preparation, medicating, etc. Different competences are needed for the different tasks. Some must be able to speak another language, some must be the same gender as the patient, and if heavy lifting is required there must be two individuals," explains Rönnqvist (pictured).

This was like managing a game of solitaire as far as when it had been necessary to plan each morning. But Laps Care, the system, made it so that morning meetings were no longer essential.

But the Game of Solitaire is Won

The planning time decreases a great deal and now takes about 5 minutes. Morning meetings are no longer required; instead personnel receive briefings which tell them how they should work. Disputes in the morning meetings have disappeared and the sick leave rate has decreased," says Rönnqvist.

It was not just the staff in the health sector which marked the difference. The quality of care for the patients has been raised. Patients are now, for instance, receiving less variation in home caregivers to enable stronger relationships to be built. It is a win-win situation.

Another important factor is that if home care services are better utilized, many of the elderly can live in their own homes longer. First, this gives better quality of life to the patient and second, it saves the public money because there will no longer be a need to build as many retirement homes.

Big savings

20-30 million Euros total have already been saved on the 200 systems operating now, planning for roughly 4,000 personnel," says Rönnqvist.

About 200 million kroner in taxpayers' money can thereby be dispensed in other ways. During 2008 the full version of the system will be implemented in all of Stockholm with an additional 700 systems and 15,000 personnel, and coming to Norway and Finland afterward. Today, development and sales occur through the company, TietoEnator, which took over the system and development in 2006. A total calculation of the savings within a few years amounts to 90 million Euro (approximately 700 million Kroner).

Nominated for an award

n March, it was made public that Rönnqvist, Everborn, Lidén and three others who have been involved in the process have been nominated as finalists for the prestigious Franz-Edelman Award. The award, given by the Institute for Operations Research and the Management Sciences (INFORMS) in the USA, is an outstanding honour recognizing projects where operational analysis is the underlying theme, and which have changed companies, branches, and people's lives.

The project, which started in Linköping, seven years ago, will be presented alongside five other finalists in Baltimore in mid-April. All the finalists will have articles published in the highly renowned science periodical, Interfaces.

"We had written an article about our work earlier, which we sent in to INFORMS. We advanced further to the semi-finals, and again further to the final where we are one of six. It is a great prestige," concludes Rönnqvist.

Rönnqvist has previously been involved in the development of systems that can save millions of Kroner for the forest industry, also helping with operational analysis. Now, similar research can make the government's job a little simpler when the elderly wave flows over the country in a few years.

Sources:
ssb.no
informs.org

Translated by Jessica Hartenberger