Application of Theory of Constraints in Healthcare Systems

Supply Chain Management

Zafar Khan
Western Kentucky University

Introduction
The Theory of constraints (TOC) was first developed by Eliyahu Goldrat in 1984
for manufacturing industrie2s (Sadat et al., 2013). Theory of constraints is basically a set
of management principles that help identify constraints in a system and also bring about
changes to eliminate them (Taylor et al., 2003). TOC not only identifies the constraints,
it also emphasizes on improving the constraint performance, which results in improving
the total system functioning (Sadat et al., 2013). The theory of constraints prohibits from
improving local efficiency of a process, its focus is on the overall improvement of the
system. The application goal of TOC for any for profit-organization is to increase profits
by improving the throughput, reducing inventory, and operating expenses (Taylor et al.,
2003). The traditional focus of business is often to reduce cost, but in TOC, the focus is
on making profit through increased throughput (Lubitsh et al., 2005). TOC has been
developing since its introduction in 1984 (Lubitsh et al., 2005). The application of TOC
to any operational environment has five key concepts, Identify the constraint, exploit the
constraint, subordinate everything else to constraint, elevate the constraint, and go back
to step 1(book).
Every system has constraint/bottleneck, and it is the weakest link in the system.
The performance of the system can be defined by the rate of the weakest link (constraint).

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The bottlenecks in the system are sometimes physical, such as machines or parts with
least capacity. Other constraints in the system can be the policy of the organization or
external constraints, such as market or the demand of the customers (Lubitsh et al., 2005).
Exploiting the constraint means, to get most of the constraint. There are always certain
ways to increase the effectiveness and throughput of the constraint. The third focusing
step of TOC insists on subordinating the non-constraints to the constraint. This ways
there will be a support to the constraint. All the non-constraint resources are operated to
the pace of the constraint to avoid overtime and starvation of the constraint (Sadat et al.,
2013). The fourth step of TOC is to elevate the constraint, for example, an identical
machine can be installed for the purpose of increasing the capacity of the constraint. This
will automatically increase the system output (Sadat et al., 2013). At any stage, the
constraint may shift in the system, for this reason the final step focuses to overcome
inertia and start over from the first step to identify the new system constraint (Sadat et al.,
2013). The five focusing steps of Theory of constraints is important for implementing it
to any system.
Literature Review
The current healthcare system in the United States of America suffers from low
quality, high costs and poor access (Taylor & Nayak, 2012). There have been recent
reforms in the healthcare system, but still it does not address the problems of the system.
The executive leadership at the hospitals is trying to implement programs and strategies,
such as the Thinking Process, Lean Production/Six Sigma, and TOC (Taylor & Nayak,
2012). It is always important to have a goal before implementing any theory to a system.
According to researcher Gupta and Kline (2008), the goal of an organization is to make

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money at present and in the future, and TOC further argues that this goals is the same for
all organization either they are for profit or for non-profit. To achieve this goal, the
organizations must provide a good working condition to the employee and must satisfy
the customer (Gupta &Kline, 2008).
Identifying the constraint in the system is vital. Identifying and exploiting the
constraint/bottleneck is examined, it has several benefits (Lubitsh et al., 2005). The first
benefit of identifying the constraint in advances helps reduce the variability in the system.
Secondly, the material going through the buffer located before the bottleneck does not
require a rework, and it saves time and effort. Also, having a buffer before constraint
helps a smooth overflow and its saves the bottleneck from random disturbance (Lubitsh
et al., 2005). Researchers Lubitsh, Doyle and Valentine argue that the exploitation of the
constraints (waiting list, improving throughput of patients) in health care systems can
improve the overall productivity with out reducing the quality of care. The researchers
further argue that this will reduce the workload of the staff. There are many chains and
processes in healthcare systems, which lack synchronization (Lubitsh et al., 2005). For
example, some patients are admitted unnecessarily early, so surgeons and theater staff
may not be able to operate since there is no space for the patient, who needs urgent
surgery. Implementation of TOC can eliminate this problem, the patients will have a
quality care and the staff will not have to work extra, or sit idle even when there are other
patients.
Step1: Identifying the constraint

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The constraint in this example can be identified by the wait times of the patients. The
process with the greatest wait time is the constraint. The process is the Psychiatric
Evaluation of the patients, and the constraint in this system is the psychiatrist.
Step 2: Exploit the constraint
The second step of TOC process it to exploit the constraint. The department must take an
action to increase the capacity of the psychiatrist to reduce the patient wait time
accordingly. This process should include the elimination of non-clinical activity, which is
waste of valuable times. The psychiatrist should only focus on evaluating the patient and
refrain from other activities, which are not related to the patient care. Another reason for
longer wait time is that many patients miss or cancel the appointment but the psychiatrist
is not informed and valuable times is wasted. When a patient misses or cancel an
appointment, the staff should immediately reset the schedule for other patient. This way
the time can be utilized in which one of the patient does not show up. The psychiatrist
should call new patients to schedule or make reminder calls to the patient one-day before
their appointment. The department should synchronize the flow of information, between
the patient, the department and the psychiatrist.
Step 3: Subordinate everything else to the constraint
Once the constraint is exploited, all other non-constraints resources must be subordinated
to the constraint. For instance, patients miss appointments because they claim that they
forget, the staff should remind them of their appointments. This way the psychiatrist will
not sit idle, and the staff can give appointment to new patient and charge, which will
increase the profit. The clinical support staff should have the capacity to take calls, make
calls, cancel appointments, make new appointments and inform the psychiatrist about the

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schedule regularly. The psychiatrist cannot take more then one patient at a time, and
cannot sit idle when someone cancel or misses the appointment. Its like starving or
overloading the constraint.
Step 4: Elevate the constraint
The healthcare setting pays the psychiatrist good amount of money. If they increase the
capacity of the psychiatrist, it means they have to pay more money, or if they did not
handle the schedule efficiently, it is losing money. They healthcare system should elevate
the constraint to improve the throughput. A good solution for this healthcare system is to
increase the number of people in the clinical staff for better customer service and
scheduling. The psychiatrist charges the healthcare system more than they pay a staff
member. To take full advantage from the constraint, they must hire more people that can
help in the support staff. The paper work that the psychiatrist fill must be given to the
clinical staff, this will save the time of the psychiatrist and will reduce the patient wait
time. Lack of psychiatrist nursing staff is another factor for the long waiting time. The
nursing staff can help the psychiatrist with the paper and basic checkup process.
Step 5: Overcome the inertia and go to step 1
Once the constraint is identified and broken, the management should look for more
improvements. They must identify and break new constraints that might have happened
and repeat the 5 step process again (Gupta & Kline, 2008).
The policies of most organizations that provide services are based on the traditional cost
reduction strategy (Gupta &Kline, 2008). The recommendation of TOC solution to the
existing systems seems difficult because of the organizational structure and policy

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constraints. Therefore many organizations are only thinking of TOC as a theory (Gupta
&Kline, 2008).
The University of Michigan Hospital tackled the problem of inefficient admission
and discharge system by the application of TOC. The delays in discharging patients
caused hours of delay in admitting new patients. The new incoming patients had to wait
for their rooms to get ready and it will take an average of three hours. The constraint in
this procedure for the hospital was the scheduling of the housekeepers for cleaning the
discharged patients rooms. A team was organized and it was able to identify this
constraint in the schedule. The team applied Theory of Constraints and was able to reduce
the waiting time of the incoming patients to only 21 minutes. By the correct application
of TOC, the hospital was able to reduce the incoming patient inventory and increasing the
output of the whole system (Motwani et al., 1996). The University of Michigan Hospital
improved the utilization of its operating rooms by the use of Theory of Constraints. The
operating rooms of the hospitals were more than capacity and there were confusion about
the timing of the operations. The constraint was identified and changes were made in the
scheduling process. The scheduler of the operating rooms were asked to work closely
with the different groups of surgeons, so they can become familiar with the surgeon. The
scheduler will put give extra time to the operation, so there is always a buffer for the next
patient in time. The scheduler also worked with the cleanup team to expedite the cleaning
process after every operation so it could be ready for the next patient. These examples
clearly show that methodologies, developed for manufacturing and production settings
could be adopted in service providing systems.

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Theory of constraints was implemented in the ENT department in a hospital in the
United Kingdom. The reason of the application of TOC was to reduce the waiting time
and improve the throughput of the system (Lubitsh et al., 2005). In the ENT department,
nurses were leaving their jobs and took other jobs. The bottleneck for the ENT
department was the lack of nurses in the inpatient ward area. After the constraint was
identified, a team was setup, which included, the nurses, management, and consultants to
monitor the retention and recruitment in the ward areas. It was identified that the
workload forced the nurses to quit their jobs, and similarly new nurses were hesitant to
take the jobs because of the work. The team came up with the solution of hiring
healthcare assistant to offload some of the nurses work. A support group was also formed
for counseling and to support the nurses in the time of difficulty. ENT department has
many activities and nurses were responsible for performing these activities. This created a
problem of poor communication lack of synchronization in the department. This also
increased the waiting list of the patients. After the implementation of TOC, new support
staff was hired and the scheduling of the patients was improved. It ultimately resulted in
improving the overall performance of the healthcare system (Lubitsh et al., 2005). The
above examples show the impact of TOC in the healthcare system such as waiting lists
and system throughput (Lubitsh et al., 2005).
Discussion
TOC challenges the traditional business practices by requiring thinking in new
ways about old problems. Operational and financial units of organizations will be
improved if TOC concepts are applied to the operation management of the organization
(Gupta &Kline, 2008). Healthcare systems have long waiting lines and the patients are

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never happy with such long waiting times. Sometimes its the policy of the organization
that creates the problem of long waiting list, or sometimes it the miscommunication
between the patients and the healthcare providers. Healthcare support staff must be hired
to reduce the confusion of the scheduling. Nursing staff can also help the practitioners to
give more time to the patients by shifting the basic paper work to the nurse staff.
Applying the concepts of TOC to already existing complex systems is very hard. The
changes that organizations expect are dramatic, although with TOC the changes are
incremental and it takes time. For this reason the people with higher ranks in the
healthcare system does not take TOC into practical implementation. Some healthcare
organization applies TOC only to address departmental issues, but for Theory of
constraints to be successful, it has to be implemented widely in the whole system.
Organizational changes are very rare and hard, but with the recent research and results of
TOC application, healthcare systems are applying TOC to all the departments (Lubitsh et
al., 2005).
Conclusion
Theory of constraints has the ability to improve the healthcare systems that have several
constraints. TOC focuses on the improvement of these constraints in any system.
However, there are still some hurdles that need to be addressed to fully put this theory
into application in healthcare systems. The concepts of TOC can be applied to healthcare
systems, to identify the goals, constraints and achieve maximum performance. In most of
the cases in healthcare systems, the constraints are policies and procedure not physical
capacity or machinery. The performance of service providing organizations can be
measured by the operating cost, throughput and inventory. Like in a shop floor, the

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techniques of TOC can be applied in healthcare systems to exploit the constraint and
subordinate the resources to the constraint. On the other hand, the patient expect effective
communication and short wait times in all the departments of healthcare systems. With
the increasing costs of healthcare systems, the patients feedback is very important.
Hospitals are forced to evaluate and change their policies and procedure to meet the
patient expectations. The importance of the application of TOC concepts becomes more
important for healthcare systems to implement them.
References
Gupta, M., & Kline, J. (2008). Managing a community mental health agency: a theory of
constraints based framework. Total Quality Management, 19(3), 281-294. doi:
10.1080/14783360701601850
Lubitsh, G., Doyle, C., Valentine, J. (2005). The impact of theory of constraints (TOC) in
an NHS trust. Journal of Management Development, 24(2), 116-131. doi:
10.1108/02621710579482
Motwani, J., Klein, D., & Harowitz, R. (1996). The theory of constraints in services: part
2 examples from health care. Managing Service Quality: An International
Journal, 6(2), 30-34. doi: 10.1108/09604529610109738
Naor, M., Bernardes, E.S., & Coman, A. (2013). Theory of constraints: it is a theory and
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Ryan, A., Hunter, K., Cunningham, K., Williams, J., OShea, H., Rooney, P., & Hickey,
F. (2013). STEPS: lean thinking, theory of constraints and identifying bottlenecks
in an emergency department. Irish Medical Journal, 106 (4), 105-107.

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Sadat, S., Carter, M.W., & Golden, B. (2013). Theory of constraints for publicly funded
health systems. Health Care Management Science, 16, 62-74. doi:
10.1007/s10729-012-9208-9
Taylor, L.J., Moersch, B.J., & Franklin, G.M. (2003). Applying the theory of constraints
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