Key Takeaways
- The Theory of Constraints (TOC) can be used in psychiatry to identify and address improvement obstacles.
- Pinpoint the biggest constraint in your practice and focus on solving it systematically to improve overall performance.
- Consider the entire workflow when making changes, and avoid isolated fixes that don’t address the broader system.
Thus, I’ll explore how to apply TOC concepts to your practice. Think about a typical patient journey: making an appointment, checking in, seeing the psychiatrist, and handling post-visit clinical and financial tasks. By looking at this process through the TOC lens, we can identify bottlenecks and find ways to improve.
It’s puzzling that such a powerful approach, proven in so many industries, hasn’t made its way into behavioral health thinking. I remember speaking with a mentor who had a long career in academic medicine. He candidly admitted, “We would have taught you about business during your training—if only we knew anything about it.”
Define Your Practice Management Goal
For most businesses, “The Goal” is pretty straightforward: make a profit. After all, if a business doesn’t bring in more money than it spends, it won’t be around for too long. In healthcare, though, things are a bit more complex. We often juggle multiple goals at once because, like clergy or government work, our mission involves a higher calling.
That means we can’t pursue one objective at the expense of others—we need to strike the right balance. So, what does that look like in practice management? What are the key goals we need to focus on?
- Profit. To make money and build value in our practice. Without profitability, practices will close or get acquired, causing complications for individuals who need care. Responding to an American Medical Association (AMA) survey of acquired private practice owners, 80% sold their organizations to larger health systems due to payment issues. We need to make more than we spend to continue delivering care, employ our staff, and keep our doors open.
- Patient Care. The value we deliver is patient care (that is why they show up at our office) both objectively through measures of health and patient improvement, as well as the patient’s subjective perception that we have provided value to them. The care that we render is bounded by the professional standards (i.e., “the standard of care” that may find its way into practice guidelines) and legal constraints at a state and federal level.
We’re often weighing the costs and benefits of one goal against another. While these goals might seem obvious, defining them clearly helps us prioritize tasks and identify the obstacles (or constraints) that stand in our way. Once we know what we’re aiming for and understand what’s holding us back, we can focus on removing those barriers and making real progress.
Think of Practice Operations as a System of Inputs and Outputs
Think of your practice as two interconnected systems: one for patient care and another for revenue generation. Each system has its own inputs and outputs, and understanding these can help you spot constraints that disrupt the flow. I like to picture it as a pipeline with different segments. There’s the flow needed for revenue, the data flow for patient care, and the actual patient care flow during visits.
When we focus on improving the flow through each segment, we can better understand costs associated with obstacles—whether it’s delayed revenue or incomplete care encounters. In manufacturing, unfinished work (or work in progress) is like inventory that comes with carrying costs. In a practice, this could mean unpaid services due to claim issues, or time lost dealing with aging accounts. It also applies when we’re missing key medical information to complete an encounter or spending too much time on documentation.
Understanding the true costs of work in progress helps us balance profitability with quality care.
So, what are the real costs of delayed or incorrect payments from insurance or patients? What about the impact of patients waiting for appointments, sitting in the waiting room, or waiting in the exam room? How much does it cost in time and resources to retrieve information or prepare charts? And what’s the hidden cost of having a high-value resource, like a psychiatrist, tied up with low-level tasks like data entry?
In each case, it’s not just about the direct costs. Consider how these bottlenecks reduce overall efficiency and delay your practice’s goals.
Identify and Remove Bottlenecks (Constraints)
A bottleneck is anything—whether it’s a process, person, or tool (like software)—that slows down the overall flow of your system. The key is first to spot the bottleneck and then understand what’s causing it. Is it a staffing issue, a technical limitation, or an inefficient process? Once you know, you’re on your way to fixing it.
The TOC offers a clear method for tackling these roadblocks. The idea is simple: Focus on one constraint at a time and make it your top priority until it’s resolved.
Here’s how you can approach it:
- Identify the constraint: Pinpoint the biggest bottleneck in your system.
- Exploit the constraint: Get the most out of it without any major investments.
- Subordinate everything else: Align all other processes to support fixing that bottleneck.
- Elevate the constraint: If needed, increase the capacity of the bottleneck.
- Repeat: Once you resolve the first bottleneck, look for the next one.
It’s an ongoing process, but each step helps you streamline operations and keep things flowing smoothly.
Avoid Local Optimization
When improving parts of your practice operations, it’s essential to keep your big-picture goals in mind. You might tackle individual tasks or milestones along the way, but always stay focused on overall performance improvement. This mindset helps you understand how changes in one area affect others—both upstream and downstream—in your workflow.
I learned this lesson early in my career through a striking example of what can go wrong with “local optimization.” Our practice was struggling with a growing number of overdue accounts, so I flagged the issue for our office manager. A week later, he proudly showed me a report with dramatically reduced aging over 90 days. The catch? He had simply written off all the outstanding patient and insurance payments. He didn’t address why claims were going unpaid in the first place or whether those old claims could still be collected.
The takeaway: Be careful how you approach optimization. It’s important to delegate tasks, but don’t completely hand off responsibility for improving your systems. Stay involved to ensure the right problems are being solved.
Understand the Impact of Upstream and Downstream Improvements
While following the process of removing constraints, where do you start? It’s important to be able to understand how improvement in downstream processes may have little impact if upstream constraints still exist. For example, if you are working on greater patient throughput in your office process and you optimize the exam room and check out process without addressing problems in the waiting room and during check-in you may have no impact on throughput. When addressing constraints it is useful to start at the beginning of the pipeline and work from input to output. That being said, the area with the greatest constraint to throughput should always be addressed first.
Identifying the true constraint is so important because without understanding the point of decreased flow, optimizing upstream or downstream may create more problems. For example, if you create more flow at the beginning of the process while not addressing a constraint in the middle, you have further burdened an already constrained step.
The following diagram demonstrates the effects of local optimization without considering total throughput as well as the effects of upstream and downstream improvements.
Break Through Constraints and Achieve a Better Practice
By clearly defining your practice’s goals and visualizing the flow of work, you can spot bottlenecks more easily and understand what’s causing them—whether it’s people, processes, or software. With this approach, you’ll be well on your way to creating a smoothly running practice.
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