The doctoral dissertations of the former Helsinki University of Technology (TKK) and Aalto University Schools of Technology (CHEM, ELEC, ENG, SCI) published in electronic format are available in the electronic publications archive of Aalto University - Aaltodoc.

Resource Constraints in Health Care – Case Studies on Technical, Allocative and Economic Efficiency

Fredrik J. Eklund

Dissertation for the degree of Doctor of Science in Technology to be presented with due permission of the Department of Industrial Engineering and Management for public examination and debate in Auditorium TU1 at Helsinki University of Technology (Espoo, Finland) on the 2nd of May, 2008, at 12 noon.

Dissertation in PDF format (ISBN 978-951-22-9338-4)   [1749 KB]
Dissertation is also available in print (ISBN 978-951-22-9337-7)


The scarcity of resources and the need to produce more with less is an ever-present reality for managers of health care organisations. Trends in healthcare costs are a widely acknowledged concern among policy-makers worldwide. Many factors will contribute to the evolution of future health care systems. They include changing demand and demand patterns, developments of medical technology, citizens' expectations of readily available high-quality services, the availability and capacity of health care resources, the purchasing power of citizens, and financing mechanisms.

In the study, six cases – representing the operative and conservatory area of special care, an open care system, a major regional diagnostic support function, elderly care systems and a regional health care system – are analyzed. The main contributions of operations management to resource constraint problem are related to, but not limited to, how capacity of resources can be measured and managed. This study provides insight and a model for how resource constraints can be identified in all health care service production processes as well as in patient episodes. Applying technical, allocative and economic efficiency analysis provides tools for identifying and reducing the impact of resource constraints. Reducing the impact or eliminating bottlenecks increases the total capacity of a process or system with interdependent resources. The benefits of the analysis increase as its scope analysis is extended to include the regional service network.

Efficiency improvement efforts should focus on constrained resources, as a system's capacity can only be increased by increasing the capacity of these resources. Capacity is almost exclusively limited by personnel resources, but the capacity of personnel is rarely sufficiently analyzed. This is due to insufficient management tools and results in an inability to manage operations according to its constrained resources. Once resource constraints have been identified and quantified, the means for increasing capacity of bottlenecks are subject to improvements of technical and/or allocative efficiency. Here the benefits and potential of OM are significant.

The study shows that there may be significant room for improvement of both technical and allocative efficiency in many areas of health care. Excessive focus is placed on the efficient management of non-constrained resources for which information is more readily available. This is likely to result in optimisation of non-constrained resources, which may be synonymous to sub-optimisation. Maximizing the use of non-constrained resources may impose new resource constraints.

Economic efficiency depends on technical and allocative efficiency. Thus, improvements of technical and allocative efficiency are highly likely to render improvements of economic efficiency. On the regional level, economic efficiency improvement potential is likely to be subject to significant resource reallocation efforts. This study highlights the importance of maintaining a throughput- or process-oriented management mindset as opposed to mere focus on costs. Nevertheless, the importance of a more comprehensive state of analysis, which combines process and financial information, is strongly advocated.

Keywords: operations management, health care, resource constraints, technical efficiency, allocative efficiency, economic efficiency

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© 2008 Helsinki University of Technology

Last update 2011-05-26