Applying Simulation Modeling to the Hospital Environment

15 March, 2018


Most hospitals in the U.S. and Canada face capacity planning challenges. Every situation is nuanced.


Needs vary with geography, patient demographics, workforce, and financial strength, but one thing is certain: the complexity of providing the right patient care is an obstacle to effective capacity planning.

Harnessing the Power of Raw Data with Simulations

The fundamental complexity of patient care is challenging to understand and difficult to plan strategically. Why? Because unlike industries such as aviation or energy, in a hospital setting there is less control over inputs; hospitals inherently operate with greater variability than many other industries.

Each patient requires (and deserves) individualized care, people respond to treatment in different ways, and the demand for services can be erratic. Anticipating needs and planning accordingly is not a simple question of supply and demand.

Nonetheless, leadership is charged with optimizing available resources for the best outcome for each patient. Yet, the information needed to make the right choices is challenging to gather and difficult to interpret. In some cases, data is unavailable.

In others, the sheer volume of raw data overwhelms decision-makers, leading to more questions than answers.

Johns Hopkins Medicine (JHM) and General Electric (GE) are two healthcare organizations on the frontlines of capacity planning.

Together, they’re exploring new approaches and technologies to apply simulation and analytics to enhance decision making – and investment planning – in an industry full of variability. GE has developed a proprietary simulation modeling program that makes sense of disparate data from different source systems to create a “digital twin” of the hospital that is used to test alternatives, make decisions and develop a capacity plan.

This simulation program enables leaders to ask hundreds of hypothetical questions, explore possible scenarios, and study capacity planning options in a low-risk environment.

A $7.7 billion integrated global health enterprise and one of the leading healthcare systems in the U.S., JHM is an early adopter of this approach.

During a year-long program, JHM and GE worked together to test many alternatives to create an action plan to achieve JHM’s specific capacity goals. The program explored new opportunities, growth and financial strength to inform the capacity plan.

“Defining the work that needs to happen now for an organization to reach a future goal is critical,” explains Dr. David Efron, Chief, Division of Acute Care Surgery (Trauma, Critical Care, Emergency and General Surgery), Johns Hopkins Medicine and the Medical Director of the JHH Capacity Command Center.

“Yet, within the healthcare system there are many grey areas: products, caregivers and providers are all dynamic and multi-dimensional. These nuances matter.”

From a planning perspective, running simulations can help answer the questions “How will the organization perform if we make a particular change?” and “How will a decision impact the organization as a whole?”

Running simulations can also inform the work that needs to be done today to enable an organization to pursue the goals stated in three, five and ten year plans. It is a vehicle to test ideas and align those ideas to a strategy.

“Leadership and academics want ‘proof’ during any decision making process,” adds Dr. Efron. “Simulation offers that proof, as well as the steps needed to achieve a goal. And while running pilot programs is not new to Johns Hopkins, the ability to run simulations is a different experience. We’re motivated because simulation is helping us to visualize what we want to achieve as an organization.”

Solutions for Complex Challenges

“Informed decision making is the goal of running simulations,” explains Bree Theobald, Principal, GE Healthcare Partners. “Previously, most organizations operated in silos, leaving departments and units without the information they needed to consider the impact their decisions had on other departments of the hospital, from both an operational and financial perspective. Hospitals did not have the tools to think as a whole… as a system.”

Another key factor: care delivery networks are ever-more integrated. Leaders who “grew up” handling single facilities now manage a portfolio of clinics, outpatient centers and hospitals, as well as employed physician groups, community hospital affiliates, and adjunct research facilities – all within an intricate bureaucratic structure.

In addition, the standard of care changes constantly and those changes ripple through care teams, creating impacts that are awkward to gauge and assess. Compounding the issue are reduced healthcare reimbursements and the consolidation of hospitals that create even larger campuses and more intricate systems.

Many organizations reflect a structure of six or seven hospitals within one enterprise, each with its own history, budget, priorities, directives, needs and data.

“Today, we’re managing in a very different environment than ten or even five years ago,” explains Jim Scheulen, Chief Administrative Officer, Emergency Medicine and Capacity Management, Johns Hopkins Medicine. “It would be irresponsible not to take advantage of all the tools available. Healthcare is different and we need to think about it in different terms than we have in the past. Historically, we might think about bed occupancy, but we didn’t think about it in terms of utilization of a limited resource.

Today, more than ever, we have to optimize use of those resources rather than just bemoan circumstances.

Running simulations showed us there is no magic bullet, no single solution to improving utilization. It revealed that we need to implement a number of process improvement actions in order to have a meaningful impact.”

According to Geoff Martin, Managing Principal and COO, GE Healthcare Partners, “Simulation applies aspects of system engineering, mathematical modeling and statistical analysis to gain a thorough, 360-degree view on questions and issues. The result is data availability and data transparency.”

The complexity and constant change of the healthcare environment makes it essential to design capacity strategies that are flexible and efficient. Understanding the many capacity scenarios a health system will face, and the optimal responses within each scenario, can help leadership determine the right investments to make – whether that’s the number of beds, elevators or surgeons.

Running simulations can help organizations avoid the pitfall of spending more money while simply moving staff and patients around, resulting in no improvement in efficiency or cost savings.

Answers to Key Questions

“As part of long-range planning, many hospitals bet on growth,” explains Martin. “Simulation lends insights to expansion and construction plans, and these insights can potentially stop an organization from investing in facilities and capacity that aren’t needed.

With the findings simulations provide, leadership can identify bottlenecks and under-used facilities, and evaluate solutions. In some cases, clients use their ‘digital twin’ to plan for optimal resource allocation during periods of change, such as economic downturns.”

Despite the fact that hospitals now possess a wealth of data, it is nearly impossible for leadership to make sense of all available information. Simulation can take data and transform it into meaningful information that is actionable.

The findings that result from a robust simulation approach can help organizations explore issues prior to investing resources. And, by cutting through anecdotal information, greater objectivity is introduced into discussions about growth.

“Analytics cannot happen with raw information,” adds Theobald. “Running simulations confirms possibilities and viabilities, as well areas of concern. It can also clarify what is not a concern, freeing up resources to focus on pressing issues.”

Hospitals in particular require a systems-thinking approach that helps decision makers understand the nuances of major and minor changes.

Quantifying costs – such as the funding required to staff a hospital bed each year – is simply the beginning. Simulation findings also support decisions that can reduce waste. 

“One of the beneficial aspects of simulation modeling is that it allows you to ask specific questions, as well as hypothetical ones, in a non-confrontational, non-threatening manner,” explains Scheulen. “Say, for example, your organization wants to build a new emergency department or grow a department.

Simulation allows you to run a variety of scenarios while asking certain questions, such as how big the emergency department would have to be to hit specific metrics. This is where simulation is particularly valuable.”

One of the more common pitfalls of growth is adding capacity when recruiting new surgeons. For example, how does an organization weigh the checks and balances in determining if it has capacity for another neurosurgeon?

Prior to recruiting new surgeons, providers can use simulation to determine if the facility has enough capacity for each surgeon to be productive. They can explore how adding patients into a model will increase volume – and identify potential bottlenecks.

In the case of transplant surgeons, even minor, unforeseen factors can play a tremendous role across a hospital.

When considering adding a new transplant surgeon to a team, hospitals can use simulation to determine the impacts on medicine, with long and unforeseen pre-transplant hospital stays, as well as significant post-operative care and readmissions.

These patients receive care through an entire spectrum, and determining available capacity beforehand can prevent delays and crises down the line.

“In the past, modelling was expensive and time-intensive,” concludes Theobald. “GE’s simulation modeling puts efficiency into the enterprise. It supports capacity planning, informing decisions on where to invest time, resources and funding.”

Bringing Leadership Together

According to Max Garifullin, Analytics Manager, General Electric, “In the past, strategic planning questions – especially those concerning new programs – were usually evaluated from a financial or operational perspective, with few insights available about long-term viability.”

Running simulations brings leaders together. By testing many opinions, it allows more leaders to “feel heard.” Testing ideas may diffuse the tension that builds during capacity planning to support more productive conversations, especially when trade-offs are required.

The ability to ask questions within a simulation is a different way of managing an organization, shifting how leadership traditionally weighs options.

“When we ran the emergency department and hospital-wide simulations, there were a number of choices that could affect our ability to meet demand,” explains Scheulen. “Specific actions were recommended to reach long-term goals. We were able to prioritize based on such factors as cost, ease of implementation and likelihood of success – and gauge how some actions are easier to accomplish in some circumstances than others. We developed a matrix of potential solutions that we have used in our efforts to create capacity.”

Increased Efficiencies

Today, hospitals must operate more efficiently. Often, when an organization “fixes” one area, it creates bottlenecks or problems in another. Running simulations allows hospitals to spot this phenomenon in advance.

According to Dr. Efron, “The reason why simulation is so powerful is that everybody gains clarity about how their work impacts the organization as a whole. Previously, we had a myopic view in which we only dealt with the crisis in front of us.

Without simulation, it’s impossible to know all the variables, stresses and needs across the entire organization. When decisions are made in a large organization in one area, there is usually an impact elsewhere – but we don’t see it or feel it.

Simulation shows us all the possible impacts. Yes, there is still uncertainty in the system, but simulation findings reduce ambiguity. It takes debate out of the process.”

For JHM, running simulations is not only a matter of testing strategic ideas, but also of weighing hundreds of combinations of options to develop an action plan.

“Healthcare is too complex to make decisions based on intuition or what worked in the past,” concludes Scheulen. “These are decisions that will ultimately affect people’s lives, and hospitals should use every tool possible to achieve the best outcomes.

What’s at stake if we don’t get it right? The risk is not succeeding in process improvements and making the wrong decisions.

Simulation opens the door to thinking about how we use the resources of our entire system. Without simulation our ability to plan and consider new ideas is limited.”