Co-authors:

Florinda Frentescu, BNurs.(Monash),BSc.(Monash)

Senior Nurse Manager | MBA Candidate, Melbourne Business School | HealthTech Co-Founder | Harvard Business School (Sustainability) | Monash Science Alum | Bastas Academy for Healthcare Leadership Alum

Dr Alwin Tan, GAICD, MBBS, FRACS, EMBA (Melbourne Business School)

Senior Surgeon | Governance Leader | HealthTech Co-founder |
Harvard Medical School — AI in Healthcare |
Australian Institute of Company Directors — GAICD graduate |
University of Oxford — Sustainable Enterprise

Institute for Systems Integrity

Intellectual Contribution and Attribution

The concepts, frameworks and original thinking developed in this publication form part of the intellectual contribution of the Institute for Systems Integrity (ISI). ISI encourages their use, discussion and further development in research, policy and practice. Where concepts, frameworks or original ideas developed in this publication are reproduced, applied, adapted or built upon, appropriate acknowledgement of the Institute for Systems Integrity and citation of the originating publication is respectfully requested.

The Operational Integrity Loop™: A Practical Model for Matching Demand, Capacity and Constraints Before the Patient Finds the Failure

THE STOCK CAN BE THERE.

THE STAFF CAN BE ROSTERED.

THE BED CAN EXIST.

THE THEATRE CAN BE RUNNING.

THE EQUIPMENT CAN BE AVAILABLE.

EVERY DEPARTMENT CAN BE BUSY.

EVERY KPI CAN EVEN BE GREEN.

AND THE PATIENT CAN STILL BE STUCK.

Why?

Because having resources is not the same as having flow.

Having staff is not the same as having the right capacity.

Having capacity is not the same as having capacity at the constraint.

And making every department more productive does not necessarily make the whole organisation more productive.

This is where operations becomes interesting.

One of us has spent years managing staffing, patient acuity, beds, supplies and hospital operations.

The other has spent more than two decades watching patients move through complex surgical pathways involving clinics, investigations, theatres, recovery, wards, pathology, oncology and follow-up.

We have been looking at the same problem from different ends.

DO WE HAVE WHAT THE WORK REQUIRES?

WHAT IS STOPPING THE WORK FROM MOVING?

We believe good operations requires both questions to be answered at the same time.

Because the purpose is not simply to keep resources busy.

THE PURPOSE IS TO MOVE THE WORK SAFELY, RELIABLY AND WITH THE LEAST AVOIDABLE FRICTION.

THE PROBLEM WITH “EVERYONE IS BUSY”

Walk through almost any hospital and you will see extraordinary activity.

Nurses moving between patients.

Doctors reviewing.

Theatres running.

Beds occupied.

Phones ringing.

Coordinators solving problems.

Patients arriving.

Patients waiting.

Everyone appears busy.

That can create an assumption:

Busy = productive.

But operations does not work that way.

A queue is busy.

A traffic jam is busy.

A storeroom full of the wrong inventory is full.

A roster can be full and still lack the skill required for the work arriving.

A hospital can have beds and still lack usable capacity.

ACTIVITY TELLS US SOMETHING IS HAPPENING.

FLOW TELLS US WHETHER THE SYSTEM IS ACHIEVING ITS PURPOSE.

That distinction matters.

START WITH DEMAND — NOT THE ROSTER

One of the easiest operational mistakes is beginning with what we have.

We have:

this many nurses,

this many beds,

this many theatre sessions,

this much inventory,

this many appointments.

Then we try to fit the work into it.

But operations should also begin from the other direction.

What work is actually arriving?

How many patients?

What acuity?

What procedures?

What skills?

What equipment?

What supplies?

What downstream beds?

What discharge requirements?

And importantly:

When?

Because 20 patients spread evenly across ten hours is not operationally identical to 20 patients arriving in three concentrated waves.

The total demand is identical.

The operational problem is not.

VOLUME TELLS US HOW MUCH WORK EXISTS.

VARIABILITY TELLS US HOW DIFFICULT THAT WORK MAY BE TO MANAGE.

THEN ASK WHAT CAPACITY YOU ACTUALLY HAVE

This sounds simple.

It isn't.

Imagine a hospital has ten empty beds.

Does it have capacity for ten patients?

Not necessarily.

Can those beds be staffed?

What is the available skill mix?

What acuity can safely be managed?

Is equipment available?

Is medical support available?

What patients are already on the ward?

What demand is expected later?

The same applies to people.

Ten staff members are not ten identical units of capacity.

Experience differs.

Skills differ.

Workload differs.

Availability differs.

The same applies to inventory.

Having 5,000 items in a storeroom is irrelevant if the one critical item required for the next procedure is missing.

This gives us an important distinction:

PHYSICAL CAPACITY IS WHAT YOU HAVE.

USABLE CAPACITY IS WHAT YOU CAN ACTUALLY DO WITH IT.

Good operations manages the second.

AND THEN FIND THE CONSTRAINT

Suppose demand is understood.

Capacity is understood.

The next question is:

WHAT IS STOPPING THE WORK FROM MOVING?

This is the constraint.

And it may not be where the organisation first assumes it is.

The emergency department may be crowded because inpatient beds cannot accept patients.

The ward may appear blocked because discharge processes downstream are delayed.

The theatre may be waiting because recovery is full.

Recovery may be full because ward capacity is constrained.

A procedure may be delayed because one critical item is unavailable.

A clinic may have capacity while imaging does not.

The visible queue tells us where flow stopped.

It does not necessarily tell us where the problem started.

That distinction is critical.

THE QUEUE IS A SIGNAL.

IT IS NOT ALWAYS THE DIAGNOSIS.

THIS IS WHERE LOCAL EFFICIENCY CAN BECOME SYSTEM INEFFICIENCY

Suppose theatre becomes 15% more productive.

Fantastic.

But recovery is already the constraint.

What happens?

We send patients towards the bottleneck faster.

Suppose ED processes patients faster.

But wards cannot absorb them.

What happens?

The queue moves.

Suppose outpatient clinics see more patients.

But diagnostic services cannot absorb the investigations generated.

Again, the queue moves.

One department has improved its KPI.

The patient journey may not have improved at all.

This is why operations cannot only optimise departments.

YOU CAN MAKE EVERY PART OF A SYSTEM MORE EFFICIENT AND STILL FAIL TO IMPROVE THE WHOLE.

The unit of performance has to include the journey.

SO WHAT DO WE ACTUALLY DO?

This is where we believe healthcare needs a more practical operating discipline.

Not another dashboard.

Not another committee.

Not another retrospective investigation after something has already gone wrong.

A simple cycle that operational leaders can use repeatedly.

We call it:

THE OPERATIONAL INTEGRITY LOOP™

SEE → TEST → FIND → PROTECT → LEARN

Five questions.

Repeated continuously.

1. SEE THE DEMAND

Before asking how busy we are, ask:

WHAT IS ACTUALLY ARRIVING?

Look beyond averages.

What is happening today?

What is likely to happen over the next shift?

What has changed?

Consider:

patient numbers,

acuity,

admissions,

discharges,

theatre demand,

emergency demand,

staff absence,

inventory consumption,

equipment availability,

supplier disruption,

and known downstream pressures.

The purpose is not perfect forecasting.

That is impossible.

The purpose is situational awareness.

A forecast that says “20 patients” is less useful than knowing that ten may arrive between 3 pm and 5 pm.

A roster showing adequate numbers is less useful if the required skill mix is unavailable when demand peaks.

An inventory report showing sufficient stock is less useful if consumption has suddenly changed.

DON'T JUST ASK HOW MUCH DEMAND WE HAVE.

ASK WHAT KIND, WHERE, WHEN — AND HOW CERTAIN WE ARE.

2. TEST THE CAPACITY

Now ask:

WHAT CAN WE ACTUALLY DELIVER SAFELY?

Not theoretical capacity.

Not funded capacity.

Not beds printed on a report.

Not names appearing on a roster.

Usable capacity.

Ask:

Do we have the staff?

Do we have the skills?

Do we have the beds?

Do we have the equipment?

Do we have the supplies?

Do we have the time?

Do we have the supporting services?

Can the downstream system absorb what the upstream system is about to produce?

This is where staffing and bed-management experience becomes important.

The question is not simply:

“How many staff do we have?”

It is:

“Do we have the capability required for the work that is arriving?”

That is a much more useful operational question.

3. FIND THE CONSTRAINT

Now ask:

WHAT IS LIMITING FLOW RIGHT NOW?

This is where organisations need discipline.

Because when pressure rises, the instinct is often:

Do more everywhere.

More staff.

More beds.

More clinics.

More theatre.

More activity.

But adding capacity away from the constraint may produce very little improvement.

Worse, it can increase pressure on the actual constraint.

So find it.

Where is the queue growing?

Where is work accumulating?

Where are patients waiting?

Where are staff repeatedly intervening?

Where does demand exceed usable capacity?

Where does one delay create several downstream delays?

Where is the system repeatedly borrowing resources?

FIND THE THING LIMITING THE SYSTEM BEFORE ASKING THE REST OF THE SYSTEM TO WORK HARDER.

4. PROTECT THE FLOW

Once the constraint is visible, act.

Not next month.

Not after the quarterly review.

Operational management happens while the work is happening.

Can staffing be moved?

Can work be resequenced?

Can the constraint be protected from unnecessary work?

Can critical inventory be secured?

Can an alternative supplier be activated?

Can discharge activity begin earlier?

Can a downstream service be warned before the queue reaches it?

Can non-urgent activity be adjusted?

Can another team help?

Can information move earlier?

Can tomorrow's demand be changed?

This is where operational leadership becomes practical.

The objective is not to keep every resource equally busy.

The objective is to protect the movement of the whole system.

GOOD OPERATIONS PUTS CAPACITY WHERE FLOW NEEDS IT — NOT SIMPLY WHERE THE ORGANISATIONAL CHART SAYS IT BELONGS.

AND SOMETIMES PROTECTING FLOW MEANS NOT PRODUCING MORE

This can feel counterintuitive.

If recovery is full, pushing more cases through theatre may not improve system performance.

If wards cannot accept patients, accelerating one upstream process may simply create another queue.

If the downstream service cannot absorb more demand, increasing upstream output may worsen congestion.

This is why leaders need visibility across boundaries.

The operational question is not:

“Can my department do more?”

It is:

“WHAT HAPPENS TO THE SYSTEM IF WE DO?”

That one question could prevent a remarkable amount of local optimisation.

5. LEARN BEFORE TOMORROW

This may be the most important part.

At the end of the shift, organisations naturally ask:

What went wrong?

We should ask something else as well:

WHAT NEARLY WENT WRONG?

Where did flow almost stop?

Which item nearly ran out?

Where did staffing almost become inadequate?

Which bed nearly became unavailable?

Where did somebody need a workaround?

Which queue suddenly grew?

What assumption turned out to be wrong?

Which constraint appeared repeatedly?

What did experienced staff notice before the dashboard did?

Then ask:

WHAT ARE WE CHANGING BEFORE TOMORROW?

Because if the same operational problem appears every day and people solve it manually every day, we have not solved the problem.

We have normalised it.

SEE → TEST → FIND → PROTECT → LEARN

That is the loop.

SEE THE DEMAND.

What is actually arriving?

↓

TEST THE CAPACITY.

What can we safely and reliably deliver?

↓

FIND THE CONSTRAINT.

What is limiting flow?

↓

PROTECT THE FLOW.

What can we change before the queue becomes failure?

↓

LEARN BEFORE TOMORROW.

What nearly failed, and what will we change?

↓

Then begin again.

Because demand changes.

Capacity changes.

Constraints move.

And good operations must move with them.

THE CONSTRAINT WILL MOVE — THAT IS NOT FAILURE

This is another important point.

Imagine we solve a theatre constraint.

Excellent.

Now recovery becomes the constraint.

Improve recovery.

Now beds become the constraint.

Improve bed flow.

Now discharge becomes the constraint.

That does not mean improvement failed.

It means the system changed.

The constraint moved.

This is why operational improvement is never really finished.

The question is not:

“Have we eliminated all bottlenecks?”

We won't.

The better question is:

“Can we see the current constraint quickly enough to respond intelligently?”

That is operational maturity.

THE INTERFACES MAY MATTER MORE THAN THE DEPARTMENTS

There is another reason whole-system thinking matters.

Patients frequently get stuck between teams.

ED → ward.

Theatre → recovery.

Recovery → ward.

Ward → rehabilitation.

Hospital → home.

GP → specialist.

Specialist → imaging.

Imaging → specialist.

One team finishes.

The next is not ready.

Nobody necessarily performed badly.

But the patient waits.

Systematic reviews of hospital flow repeatedly identify coordination, communication, discharge and capacity-demand problems as important barriers.

That suggests something important.

THE MOST IMPORTANT PART OF YOUR OPERATING MODEL MAY BE THE SPACE BETWEEN TWO BOXES ON YOUR ORGANISATIONAL CHART.

Yet interfaces often receive less management attention than the departments on either side.

That needs to change.

STOP CELEBRATING 100% UTILISATION WITHOUT ASKING WHAT IT DID TO FLOW

We understand why leaders want expensive resources used efficiently.

Nobody wants theatres sitting empty unnecessarily.

Nobody wants avoidable unused capacity.

Nobody wants excess inventory expiring on shelves.

Nobody wants waste.

But healthcare contains variability.

Cases take different lengths of time.

Patients have different needs.

Emergencies arrive unpredictably.

Staff become unavailable.

Discharges change.

Supply chains are disrupted.

When every part of a variable system is pushed towards maximum utilisation, there may be very little room left to absorb that variability.

Then waiting grows.

Queues grow.

Pressure grows.

The objective therefore should not simply be:

MAXIMUM UTILISATION.

It should be:

RELIABLE THROUGHPUT AT SAFE AND SUSTAINABLE UTILISATION.

Those are not necessarily the same thing.

THIS IS NOT JUST A HEALTHCARE MODEL

The language changes across industries.

The operating problem often does not.

A hospital has:

patients,

staff,

beds,

equipment,

inventory,

constraints,

flow.

A warehouse has:

orders,

people,

inventory,

equipment,

constraints,

throughput.

A manufacturer has:

demand,

labour,

materials,

machines,

constraints,

output.

Different environments.

Same fundamental questions:

What demand is arriving?

What usable capacity do we have?

Where is the constraint?

How do we protect flow?

What did we learn?

That is why operations thinking is so powerful.

It teaches us to stop looking only at individual resources and start looking at how the entire system works together.

THE DASHBOARD SHOULD TELL US WHERE THE PATIENT IS STUCK

Boards and executives need metrics.

But perhaps some of our operational dashboards answer the wrong questions.

They tell us:

occupancy,

activity,

labour cost,

theatre utilisation,

appointment numbers,

inventory,

length of stay.

Useful.

But we would add another set:

Where is demand exceeding capacity?

Where is the queue growing?

What is today's constraint?

How long has it been the constraint?

Which interface is slowing flow?

How often are people manually compensating?

What nearly failed yesterday?

What are we doing about it today?

Because governance should not discover the operating problem only after the patient experiences it.

TOMORROW MORNING, ASK FIVE QUESTIONS

If we wanted to begin changing operations tomorrow, we would start simply.

At the beginning of the day:

1. WHAT DEMAND IS ARRIVING?

Not just how much.

What type, when and with what variability?

2. WHAT USABLE CAPACITY DO WE ACTUALLY HAVE?

People. Skills. Beds. Equipment. Inventory. Time. Supporting services.

3. WHERE IS TODAY'S CONSTRAINT?

Where is work likely to stop moving?

4. WHAT CAN WE DO NOW TO PROTECT FLOW?

Before the queue becomes the crisis.

Then at the end of the day:

5. WHAT NEARLY FAILED — AND WHAT ARE WE CHANGING BEFORE TOMORROW?

That is the Operational Integrity Loop™.

Simple enough to remember.

Difficult enough to require real leadership.

THE REAL TEST OF OPERATIONS

We do not believe operational excellence means having every person working at maximum capacity.

Or every bed full.

Or every theatre running continuously.

Or inventory cut to the absolute minimum.

Or every department independently hitting its KPI.

Those things may sometimes represent efficiency.

They may also represent a system with no room to respond.

The better test is:

Can the organisation understand changing demand?

Can it identify its real usable capacity?

Can it see the constraint?

Can it move resources before the problem becomes failure?

Can it learn quickly enough that tomorrow is better than today?

Because the ultimate purpose of healthcare operations is not to make the hospital look busy.

It is not even to make every department look efficient.

IT IS TO MAKE THE PATIENT JOURNEY WORK.

So perhaps tomorrow's operational conversation should stop beginning with:

“How busy are we?”

And begin with:

“WHAT IS STOPPING THE WORK FROM MOVING?”

Then:

“WHAT CAN WE DO ABOUT IT BEFORE THE PATIENT FINDS OUT?”

SEE THE DEMAND.

TEST THE CAPACITY.

FIND THE CONSTRAINT.

PROTECT THE FLOW.

LEARN BEFORE TOMORROW.

THAT IS NOT JUST PATIENT FLOW.

THAT IS OPERATIONS.

References

Goldratt, E.M. and Cox, J. (2014) The Goal: A Process of Ongoing Improvement. 30th anniversary edn. Great Barrington, MA: North River Press.

Manning, L. (2023) ‘A systematic review to identify the challenges to achieving effective patient flow in public hospitals’, The International Journal of Health Planning and Management, 38(3), pp. 805–828. doi:10.1002/hpm.3626.

Tlapa, D., Zepeda-Lugo, C.A., Tortorella, G.L., Baez-Lopez, Y.A., Limon-Romero, J., Alvarado-Iniesta, A. and Rodriguez-Borbon, M.I. (2020) ‘Effects of Lean Healthcare on patient flow: A systematic review’, Value in Health, 23(2), pp. 260–273. doi:10.1016/j.jval.2019.11.002.

Zepeda-Lugo, C.A., Tlapa, D., Baez-Lopez, Y.A., Limon-Romero, J., Ontiveros, S., Perez-Sanchez, A. and Tortorella, G. (2020) ‘Assessing the impact of Lean Healthcare on inpatient care: A systematic review’, International Journal of Environmental Research and Public Health, 17(15), 5609. doi:10.3390/ijerph17155609.