The Situation:

Big City Hospital (BCH) has recently acquired two community hospitals in their metro area: CH1 & CH2. Management of same practices are being consolidated under one practice manager across the three facilities. The Obstetrics Unit’s practice manager has undertaken the task of examining and (re)allocating bed capacity across the three facilities. The three facilities have admission rates as follows: BCH=7.2/day; CH1=3.2/day; CH2=4.4/day. The LOS for the three facilities are 2.73, 3.24, and 2.93 days respectively. Currently, the number of beds in each facility are: BCH(29), CH1(18), and CH2(20).

Operational Performance Consideration Factors:

1) American College of OBGYN recommends an average level of occupancy to be less than 75% to ensure timely access to a bed.

2) Healthcare policy professionals and many hospitals have established an average occupancy target level of 85%.

3) Clinical standards call for the average delay for those who do wait to be less than 3 hours.

4) There are no standards for a target probability that a patient will have to wait for a bed but the practice manager feels that one should be established.

Strategic Options to Consider:

1) Leave clinical operations untouched and only consolidate the non-clinical administrative/support functions;

2) Consolidate CH1 and CH2 into a single facility;

3) Consolidate all three facilities into a single one.
For options (2) & (3), the decision must be accompanied by the number of beds that are allocated to the unit(s).

Assumptions:

· For initial analysis purposes, we can assume that standard queueing model assumptions hold, with the understanding that a more detailed study will have to be undertaken to fine-tune bed allocation decisions once the strategic choice is made.

· It is safe to assume that the demand will not change for any of the hospitals, and that any of the three hospitals can be considered as interchangeable by the patients/referring physicians.

· Any facility consolidation will result in the consolidated demand to be the sum of the individual facilities.

· The LOS for the consolidated facility in Option #2 will be the demand-weighted average of the two facilities’ LOSs.

· The LOS for the consolidated facility in Option #3 will be the same as BCH’s current LOS.