IDEAS home Printed from https://ideas.repec.org/a/inm/oropre/v67y2019i6p1543-1563.html
   My bibliography  Save this article

Managing Portfolio of Elective Surgical Procedures: A Multidimensional Inverse Newsvendor Problem

Author

Listed:
  • Hessam Bavafa

    (Wisconsin School of Business, University of Wisconsin–Madison, Madison, Wisconsin 53706; School of Medicine and Public Health, University of Wisconsin–Madison, Madison, Wisconsin 53726)

  • Charles M. Leys

    (School of Medicine and Public Health, University of Wisconsin–Madison, Madison, Wisconsin 53726)

  • Lerzan Örmeci

    (Department of Industrial Engineering, Koç University, 34450 Sariyer-Istanbul, Turkey)

  • Sergei Savin

    (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104)

Abstract

We consider the problem of allocating daily hospital service capacity among several types of elective surgical procedures in the presence of random numbers of urgent procedures described by arbitrary finite support distributions. Our focus is on the interaction between two major constraining hospital resources: operating room (OR) and recovery bed capacity. In our model, each type of surgical procedure has an associated revenue, stochastic procedure duration, and stochastic length of stay (LOS). We consider arbitrary distributions of procedure and LOS durations and derive a two-moment approximation based on the Central Limit Theorem (CLT) for the total procedure duration and the daily number of occupied beds for a given portfolio of procedures. An important novel element of our model is accounting for correlation among the surgical and patient LOS durations for the procedures performed by the same surgical team. We treat the available OR and recovery bed capacity as nominal, allowing them to be exceeded at a cost. The resulting model is a novel, multidimensional variant of the inverse newsvendor problem, where multiple demand types compete for multiple types of service capacity. We characterize the optimal number of elective procedures for single-specialty hospitals and derive an optimality bound for a “front-end” capacity management approach that focuses exclusively on OR capacity. For a setting with two dominant procedure types, we provide an analytical characterization of the optimal portfolio composition under the condition that the revenue from each procedure is proportional to the expected use of hospital resources. We also derive a general analytical description of the optimal portfolio for an arbitrary number of procedure types. For the general case of an arbitrary number of procedure types in the presence of urgent procedures, we conduct a numerical study using data that we have collected at a medium-sized teaching hospital. Our numerical study illustrates the composition of the optimal portfolios of elective procedures in different practical settings, and it investigates the quality of the CLT-based approximation and the effectiveness of the front-end approach to hospital capacity management.

Suggested Citation

  • Hessam Bavafa & Charles M. Leys & Lerzan Örmeci & Sergei Savin, 2019. "Managing Portfolio of Elective Surgical Procedures: A Multidimensional Inverse Newsvendor Problem," Operations Research, INFORMS, vol. 67(6), pages 1543-1563, November.
    • Handle: RePEc:inm:oropre:v:67:y:2019:i:6:p:1543-1563
    DOI: 10.1287/opre.2019.1848
    as

    Download full text from publisher

    File URL: https://doi.org/10.1287/opre.2019.1848
    Download Restriction: no
    File URL: https://libkey.io/10.1287/opre.2019.1848?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Nan Liu & Van‐Anh Truong & Xinshang Wang & Brett R. Anderson, 2019. "Integrated Scheduling and Capacity Planning with Considerations for Patients’ Length‐of‐Stays," Production and Operations Management, Production and Operations Management Society, vol. 28(7), pages 1735-1756, July.
    2. J. G. Dai & Pengyi Shi, 2019. "Inpatient Overflow: An Approximate Dynamic Programming Approach," Manufacturing & Service Operations Management, INFORMS, vol. 21(4), pages 894-911, October.
    3. Jonathan E. Helm & Mark P. Van Oyen, 2014. "Design and Optimization Methods for Elective Hospital Admissions," Operations Research, INFORMS, vol. 62(6), pages 1265-1282, December.
    4. Ivo Adan & Jos Bekkers & Nico Dellaert & Jan Vissers & Xiaoting Yu, 2009. "Patient mix optimisation and stochastic resource requirements: A case study in cardiothoracic surgery planning," Health Care Management Science, Springer, vol. 12(2), pages 129-141, June.
    5. Mehmet A. Begen & Maurice Queyranne, 2011. "Appointment Scheduling with Discrete Random Durations," Mathematics of Operations Research, INFORMS, vol. 36(2), pages 240-257, May.
    6. Christiane Barz & Kumar Rajaram, 2015. "Elective Patient Admission and Scheduling under Multiple Resource Constraints," Production and Operations Management, Production and Operations Management Society, vol. 24(12), pages 1907-1930, December.
    7. René Bekker & Paulien Koeleman, 2011. "Scheduling admissions and reducing variability in bed demand," Health Care Management Science, Springer, vol. 14(3), pages 237-249, September.
    8. Sandeep Rath & Kumar Rajaram & Aman Mahajan, 2017. "Integrated Anesthesiologist and Room Scheduling for Surgeries: Methodology and Application," Operations Research, INFORMS, vol. 65(6), pages 1460-1478, December.
    9. P T Vanberkel & R J Boucherie & E W Hans & J L Hurink & W A M van Lent & W H van Harten, 2011. "An exact approach for relating recovering surgical patient workload to the master surgical schedule," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(10), pages 1851-1860, October.
    10. Scott Carr & William Lovejoy, 2000. "The Inverse Newsvendor Problem: Choosing an Optimal Demand Portfolio for Capacitated Resources," Management Science, INFORMS, vol. 46(7), pages 912-927, July.
    11. Gabriel R. Bitran & Susana V. Mondschein, 1995. "An Application of Yield Management to the Hotel Industry Considering Multiple Day Stays," Operations Research, INFORMS, vol. 43(3), pages 427-443, June.
    12. Sergei V. Savin & Morris A. Cohen & Noah Gans & Ziv Katalan, 2005. "Capacity Management in Rental Businesses with Two Customer Bases," Operations Research, INFORMS, vol. 53(4), pages 617-631, August.
    13. A. Bruin & R. Bekker & L. Zanten & G. Koole, 2010. "Dimensioning hospital wards using the Erlang loss model," Annals of Operations Research, Springer, vol. 178(1), pages 23-43, July.
    14. Federico Ciliberto & Richard C. Lindrooth, 2007. "Exit From The Hospital Industry," Economic Inquiry, Western Economic Association International, vol. 45(1), pages 71-81, January.
    15. P T Vanberkel & R J Boucherie & E W Hans & J L Hurink & W A M van Lent & W H van Harten, 2011. "An exact approach for relating recovering surgical patient workload to the master surgical schedule," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(10), pages 1851-1860, October.
    16. Diwakar Gupta & Lei Wang, 2008. "Revenue Management for a Primary-Care Clinic in the Presence of Patient Choice," Operations Research, INFORMS, vol. 56(3), pages 576-592, June.
    17. Cardoen, Brecht & Demeulemeester, Erik & Beliën, Jeroen, 2010. "Operating room planning and scheduling: A literature review," European Journal of Operational Research, Elsevier, vol. 201(3), pages 921-932, March.
    18. Peter J. H. Hulshof & Martijn R. K. Mes & Richard J. Boucherie & Erwin W. Hans, 2016. "Patient admission planning using Approximate Dynamic Programming," Flexible Services and Manufacturing Journal, Springer, vol. 28(1), pages 30-61, June.
    19. Felix Papier & Ulrich W. Thonemann, 2010. "Capacity Rationing in Stochastic Rental Systems with Advance Demand Information," Operations Research, INFORMS, vol. 58(2), pages 274-288, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pereira, Daniel Filipe & Oliveira, José Fernando & Carravilla, Maria Antónia, 2023. "Design of a sales plan in a hybrid contractual and non-contractual context in a setting of limited capacity: A robust approach," International Journal of Production Economics, Elsevier, vol. 260(C).
    2. Deligiannis, Michalis & Liberopoulos, George, 2023. "Dynamic ordering and buyer selection policies when service affects future demand," Omega, Elsevier, vol. 118(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Seokjun Youn & H. Neil Geismar & Michael Pinedo, 2022. "Planning and scheduling in healthcare for better care coordination: Current understanding, trending topics, and future opportunities," Production and Operations Management, Production and Operations Management Society, vol. 31(12), pages 4407-4423, December.
    2. Xiangyong Li & N. Rafaliya & M. Fazle Baki & Ben A. Chaouch, 2017. "Scheduling elective surgeries: the tradeoff among bed capacity, waiting patients and operating room utilization using goal programming," Health Care Management Science, Springer, vol. 20(1), pages 33-54, March.
    3. Thomas Schneider, A.J. & Theresia van Essen, J. & Carlier, Mijke & Hans, Erwin W., 2020. "Scheduling surgery groups considering multiple downstream resources," European Journal of Operational Research, Elsevier, vol. 282(2), pages 741-752.
    4. van den Broek d’Obrenan, Anne & Ridder, Ad & Roubos, Dennis & Stougie, Leen, 2020. "Minimizing bed occupancy variance by scheduling patients under uncertainty," European Journal of Operational Research, Elsevier, vol. 286(1), pages 336-349.
    5. Shuwan Zhu & Wenjuan Fan & Shanlin Yang & Jun Pei & Panos M. Pardalos, 2019. "Operating room planning and surgical case scheduling: a review of literature," Journal of Combinatorial Optimization, Springer, vol. 37(3), pages 757-805, April.
    6. Sean Harris & David Claudio, 2022. "Current Trends in Operating Room Scheduling 2015 to 2020: a Literature Review," SN Operations Research Forum, Springer, vol. 3(1), pages 1-42, March.
    7. Steffen Heider & Jan Schoenfelder & Thomas Koperna & Jens O. Brunner, 2022. "Balancing control and autonomy in master surgery scheduling: Benefits of ICU quotas for recovery units," Health Care Management Science, Springer, vol. 25(2), pages 311-332, June.
    8. Michael Samudra & Carla Van Riet & Erik Demeulemeester & Brecht Cardoen & Nancy Vansteenkiste & Frank E. Rademakers, 2016. "Scheduling operating rooms: achievements, challenges and pitfalls," Journal of Scheduling, Springer, vol. 19(5), pages 493-525, October.
    9. Guido, Rosita & Groccia, Maria Carmela & Conforti, Domenico, 2018. "An efficient matheuristic for offline patient-to-bed assignment problems," European Journal of Operational Research, Elsevier, vol. 268(2), pages 486-503.
    10. Gökalp, E. & Gülpınar, N. & Doan, X.V., 2023. "Dynamic surgery management under uncertainty," European Journal of Operational Research, Elsevier, vol. 309(2), pages 832-844.
    11. Santos, Daniel & Marques, Inês, 2022. "Designing master surgery schedules with downstream unit integration via stochastic programming," European Journal of Operational Research, Elsevier, vol. 299(3), pages 834-852.
    12. Fügener, Andreas & Hans, Erwin W. & Kolisch, Rainer & Kortbeek, Nikky & Vanberkel, Peter T., 2014. "Master surgery scheduling with consideration of multiple downstream units," European Journal of Operational Research, Elsevier, vol. 239(1), pages 227-236.
    13. Brittney Benchoff & Candace Arai Yano & Alexandra Newman, 2017. "Kaiser Permanente Oakland Medical Center Optimizes Operating Room Block Schedule for New Hospital," Interfaces, INFORMS, vol. 47(3), pages 214-229, June.
    14. Minglong Zhou & Melvyn Sim & Shao‐Wei Lam, 2022. "Advance admission scheduling via resource satisficing," Production and Operations Management, Production and Operations Management Society, vol. 31(11), pages 4002-4020, November.
    15. Veneklaas, W. & Leeftink, A.G. & van Boekel, P.H.C.M. & Hans, E.W., 2021. "On the design, implementation, and feasibility of hospital admission services: The admission lounge case," Omega, Elsevier, vol. 100(C).
    16. Anjomshoa, Hamideh & Dumitrescu, Irina & Lustig, Irvin & Smith, Olivia J., 2018. "An exact approach for tactical planning and patient selection for elective surgeries," European Journal of Operational Research, Elsevier, vol. 268(2), pages 728-739.
    17. Na Geng & Xiaolan Xie, 2022. "Managing Advance Admission Requests for Obstetric Care," INFORMS Journal on Computing, INFORMS, vol. 34(2), pages 1224-1239, March.
    18. Ahmadi-Javid, Amir & Jalali, Zahra & Klassen, Kenneth J, 2017. "Outpatient appointment systems in healthcare: A review of optimization studies," European Journal of Operational Research, Elsevier, vol. 258(1), pages 3-34.
    19. Ana Batista & Jorge Vera & David Pozo, 2020. "Multi-objective admission planning problem: a two-stage stochastic approach," Health Care Management Science, Springer, vol. 23(1), pages 51-65, March.
    20. Liping Zhou & Na Geng & Zhibin Jiang & Shan Jiang, 2022. "Integrated Multiresource Capacity Planning and Multitype Patient Scheduling," INFORMS Journal on Computing, INFORMS, vol. 34(1), pages 129-149, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:oropre:v:67:y:2019:i:6:p:1543-1563. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.