FACS - HOSPITAL AND HEALTHCARE 
Solutions to Improve Operating Margins

The relation of capital costs vs. operating costs poses an interesting consideration in estimating what capital expenditures will add value. Several factors are considered in determining whether the present value of savings in operating costs will be greater than the outlay for capital expenditures. These factors include interest rates, discounting, and present value associated with the following conditions:

• The change of any hospital activity center or product line includes a new capital configuration and altered     operating/managerial techniques.  • For the redesign of any hospital activity center there is a set of original capital outlay costs, call them C's.     There may also be an associated set of cost savings of various kinds, call them S's. • The sum of all the C's is the capital outlay the hospital must make initially to bring out process     improvements.  • The S's are savings spread over future years, hence must be discounted back to present value equivalent.  • If the present value of all the S's are greater than all the C's the capital project is economically feasible.

The CADAFIS - FACS methodology identifies product and service units, activities, process flow, frequency and time of intra- and inter-departmental transactions. Analyses of simulated functions may be confined to one department (intra-departmental) activity, or a process which would involve inter-departmental activities such as administration, clinical, dietary and other departments. There are over 20,000 repetitive and customary tasks that are performed by the staff in a typical 200-bed hospital. There are many opportunities to improve upon these tasks or groups of tasks commonly referred to as processes.

The unique aspect of CADAFIS - FACS methodology is that it is a relaxed simulation technique. The CADAFIS simulation avoids use of abstract numbers and formulas that would confuse the process. What purpose is served to apply complex algorithms where there is no clarity in concepts and problems to which they are being applied? Thus, the approach is relaxed with people talking about problems and the ways to solve them. Analysis is directed to the workflow of a product or service. CADAFIS facilitates the planned activities which bring about proposed improvements. CADAFIS involves the staff participants in scrutinizing their ties to suppliers, support activities, inventory management, reasoning behind workstation setup and flow of personnel, information, materials, and facility layout. The facility cost index is brought into the equation in determining whether to renovate, repair or build new. Many re-engineering projects fail because they do not observe the economics of the real world, and that is: staff must be to involved in both capital and operating cost considerations because each affects the other.

 Case Studies - Hospitals 

 Case Studies - Industries