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Demand forecasting and capacity management in primary care.

Health care reform (Forecasts and trends)
Medical students (Management)
Heroman, William M.
Davis, Charles B.
Farmer, Kenneth L., Jr.
Pub Date:
Name: Physician Executive Publisher: American College of Physician Executives Audience: Professional Format: Ma
gazine/Journal Subject: Business; Health care industry Copyright: COPYRIGHT 2012 American College of Physician 
Executives ISSN: 0898-2759
Date: Jan-Feb, 2012 Source Volume: 38 Source Issue: 1
Event Code: 010 Forecasts, trends, outlooks; 200 Management dynamics Computer Subject: Market trend/market
analysis; Company business management
Geographic Scope: United States Geographic Code: 1USA United States

Accession Number:
Full Text:
One of the goals of health care reform is to provide health care to an additional 46 million (1) currently uninsured
while decreasing costs by stressing prevention and access to primary care. Primary care providers are already in
short supply with more and more medical school graduates choosing the more lucrative specialties.

In 2009, Glabman reported that only 2 percent of fourth-year medical students planned to pursue careers in internal
medicine. The greatest number of unfilled matched residencies in 2007 was in family medicine where the mean
starting salary is $130,000. (2)

Primary care providers are traditionally measured and paid by the number of visits, yet there is necessary and time-
consuming work for patients that is "invisible" to payers and management such as telephone calls, test results,
prescription refills, advice, etc. (3)

The patient-centered medical home (PCMH) is an approach to care that responds to this crisis in primary care. The
PCMH was developed in collaboration with the primary care professional societies and the National Committee for
Quality Assurance (NCQA). The model replaces episodic care based on illness and patient complaints with
coordinated care and long-term healing relationships. (4)

There are six standards that align with the core components of primary care.

1. Enhance access and continuity.

2. Identify and manage patient populations.

3. Plan and manage care.

4. Provide self-care and community support.

5. Track and coordinate care.

6. Measure and improve performance. (5)

While all the standards are very important to increasing health and quality while decreasing costs, the enhanced
access and continuity principles are those most visible to the patient. Increasing access requires knowledge of
demand and capacity.
Staff model primary care

As a background, primary care clinics (family medicine, pediatrics, and internal medicine) in the military care for
active duty personnel, their family members, and retired families. Other than the unique readiness issues of active
duty, these primary care clinics are similar to those in civilian practices.

Providers are active-duty personnel, civilian government employees, and contracted physicians. The primary care
clinics are very similar to the staff model HMO where providers are salaried employees of the HMO, and the clinics
are owned by the HMO.

Like the civilian staff model, providers see only patients who are enrolled to the HMO and their clinic. Harvard
Community Health Plan and Group Health Cooperative of Puget Sound are well-known examples of staff model
HMOs. Like staff model HMOs, the military primary care clinics have a practice administrator who handles the
administrative and business aspects of the practices such as staffing, scheduling, template management, and
business planning.

The staff model practice has the opportunity to promote clinical guidelines, efficiency, coordination of care, and
monitor outcomes in a controlled and organized setting.

There are disadvantages of a civilian staff model. There can be operational problems, management problems and
providers can be forced to participate in HMO functions, taking them away from patient care.

Also, because of the salaried compensation, provider productivity can be reduced. (6) These disadvantages are
shared by the military staff model. Regardless of the practice model, there is the need for a greater understanding of
demand forecasting, and demand and capacity management.

Staffing ratios

Before demand forecasting and demand and capacity management can be improved, accurate and appropriate
enrollment must be in place. In the military PCMH, providers are assigned to teams, usually two to five per medical
home and patients are assigned to a single provider by name.

The correct number of patients per provider and available information and appointing systems that can identify these
patients with their providers are mandatory as a first step for successfully implementing the PCMH.

Demand forecasting

A forecast is a projection, not a prediction. In forecasting, lots of interlocking weak information is vastly more
trustworthy than a point or two of strong information. Good forecasting is always an iterative process that requires
good data, looking back as far as looking forward, and good judgment. (7)

In the context of health care, a demand forecast is defined as an estimate of the volume of care required by a given
population. In the primary care setting, that volume of care includes the number of visits but can also be the number
of mammograms, immunizations, prescription renewals, etc.


A demand forecast is important as input for determining the gap relative to the capacity of the practice to provide
health care. (8) This is critical for planning staffing and production that will affect all the PCMH principles but
especially planning and managing care, continuity and access. Too often planning for future capacity/visits in a clinic
is based on the number of visits delivered in the clinic the year before without taking into account the total demand of
the population.

In simple terms the demand forecast for a clinic's population can be determined by the historical visits delivered by
the clinic plus those visits and services obtained elsewhere. Of course there is also the unmet demand for services
that cannot be counted but must be kept in mind, since this unseen demand can become visible as capacity and
access increase. More planned and available preventive services may also increase demand.

In our work with the military clinics, we use the following visits in addition to the historical clinic visits to determine the
demand forecast: ER, urgent care, other primary care clinics in the group, and purchased primary care visits. Those
visits out of the local area are not included in the demand forecast.
After adjustment for local area, they are adjusted for "clinic deliverable," i.e., not all the visits can be recaptured
secondary to other factors such as hours, weekends, location, etc. We found that a practical adjustment of 75 percent
is a good starting point. Whether all of these visits are recaptured or not, this demand forecast number is good for
projecting "demand pressure" on the clinic for services, appointments, and phone calls from patients.

This demand pressure is used for determining the gap relative to actual clinic capacity. Narrowing the gap between
demand and capacity is critical to improving access and continuity of care. This analysis should be done for the year
for planning purposes and by the month for clinic operational purposes.

Capacity management

Capacity includes many factors:

* Number of available appointments

* Types of appointments

* Exam rooms

* Hours

* Access to available appointments (phone and/or online appointing)

* Access to clinical information

* Support (number and duties of support staff)

* Patient flow

* Access to the PCM team for advice and services not requiring a physical visit

Most importantly, capacity is dependent on provider availability, scheduled appointments, and ultimately the visits that
can be delivered to meet patient demand. Provider template management is the single most important factor in
ensuring a certain number of appointments (capacity) to meet demand.

The demand forecast or demand pressure should drive capacity management. Demand should always be a top
consideration when performing provider scheduling, i.e., hours, appointments, vacations, CME conferences, etc. In
addition to the number of appointments, the types of appointments should be as simple as possible so the
appointment clerks can make continuity the priority and fill them efficiently and accurately with the provider's patients.

We recommend "today" or acute appointments and "not today" continuity appointments. The only other type
necessary may be "procedures" to allow for specific preparations. Patient flow and clinic efficiency will affect
productivity/capacity and access.

Three or four exam rooms per provider are ideal but there should never be fewer than two per provider. Exam rooms
can be increased by extending clinic hours and staggering provider and staff lunches and work hours.

Opening the clinic early and closing after traditional business hours can not only better utilize existing exam rooms
but also offer appointments/capacity to meet the demand of patients before and after work and school and during the
lunch hour. This may also decrease the use of ERs and urgent care centers.

Optimizing patient flow through the clinic will ensure the efficient use of provider time while meeting the needs of
patients. Patient flow is affected most by readily available clinical and administrative information and an efficient and
effective support staff. A rule of thumb is never having a provider do what somebody else can do.

A Philadelphia internal medicine group reported the non-patient visit time spent by their five internists during a typical
day. This included per physician/day: 23.7 telephone calls and 16.8 e-mails. Every day they each dealt with the
following activities either during a visit or on the phone:

* 12.1 prescription renewals

* 19.5 lab reports

* 11.1 imaging reports

* 13.9 consultation reports

Among the phone calls:

* 26 percent were about "paper work" for administrative tasks

* 17.5 percent were to interpret a test result

* 35 percent were to give advice on an acute illness

* 5 percent were to see how a patient was doing in follow up

More than 84 percent of the calls could have been managed as well or better by the appropriate staff such as RNs or
clerical staff. (3) This team approach to patient care is an important element of PCMH and will free up the providers to
do what only they can do.

We recommend a structured evaluation of how provider time is spent and a formal plan to transfer those tasks that do
not require direct provider time to other team members. This will increase provider time better spent with patients and
will increase capacity.

The single most important action to increase patient flow/productivity is the team approach to care. Working with the
same team every day alone will increase productivity. This can be enhanced with clearly defined roles of each of the
members of the team. These should be standardized for the clinic and in writing. Standardization will not only
increase efficiency and productivity but will increase quality and safety. To ensure the successful implementation of
staff roles in the team approach to patient care, there should be measures of performance and monitoring to ensure

Decreasing unused appointments also will increase capacity. Unused appointments are walk-ins--unbooked + no
show. Manual or automated reminders such as phone calls, e-mails, or text messages can decrease no shows. In
addition to ensuring the correct number of appointments (capacity), the ability for a patient to access them is very

Call monitoring systems enhance access to available appointments by monitoring and decreasing phone
abandonment rate, talk time, and wait time. On-line appointing can decrease workload on the appointment clerks.

An excellent objective measure of capacity and access is the Institute for Healthcare Improvement's "third next
available appointment." It is defined as the average length of time in days between the day a patient makes a request
for an appointment with a provider and the third available appointment for a new patient physical, routine exam, or
return visit exam.

The goal is to decrease the number of days to the third next available appointment to zero days (same day) for acute
care and decrease the number of days to third next available appointment to two to three days for routine visits.9

Demand/capacity gap

The difference in the actual capacity and the demand or demand forecast is the demand/capacity gap. The gap can
be narrowed by increasing capacity or decreasing demand. Practically, if the gap is large, it creates frustrated
patients because there are no available appointments, increased ER and urgent care visits, and poor patient and staff
satisfaction. The goal is to project what the gap is expected to be and develop mitigation strategies to decrease the

We have found that if the gap can be reduced to within 5-10 percent of the actual demand/capacity gap, most of the
patients' needs can be met. Making the gap zero would require over staffing and is not desirable. It is important the
clinic manager know the demand and adjust the capacity to meet the demand.

If this is not possible, mitigating strategies can be developed such as outsourcing patients' acute care needs to an
urgent care center temporarily during heavy demand. Planning will allow proactive arrangements with the urgent care
center and marketing the solution to patients.
Demand management

While increasing capacity to meet demand is one way to decrease the projected gap, another way to close or narrow
the gap is to decrease demand. Demand management is a collection of proactive interventions focused on reducing
unnecessary health care utilization while simultaneously encouraging the appropriate use of health care resources.

This is a very important part of the PCMH with its emphasis on replacing episodic care based on illness and patient
complaints with coordinated care and long-term healing relationships. We have found that continuity with the same
provider and health care team, especially the RN, can alone decrease demand for services.

A trusted familiar relationship with a team that is accessible and reliable can decrease the demand for traditional
physical visits. For instance, the patient may be more likely to take advice over the phone or by secure messaging
from the provider or RN they know than from a contracted triage/advice service.

Prevention and education from the health care team can also decrease the need for visits. There are many services
that can be delivered without a visit and by another team member performing all or most of the encounter; preparing
prescription renewals, tests and consult results, advice, follow up, administrative forms (insurance, school, and work),

Payment reform will need to be addressed to ensure the primary care provider is fairly compensated for better patient
management and outcomes vs. the number of visits and procedures.


(1.) Zonies K. 7 Ways to save primary care. The Physician Executive. January/February 34(1), 2008.

(2.) Glabman, M. Primary Care Rocked by Rough Seas. The Physician Executive January/February 35(1), 2009.

(3.) Baron RJ. What's keeping us so busy in primary care? A snapshot from one practice. NEJM. 362:17, 2010.

(4.) Glossary of managed care terms. Priority Health, www.priorityhealth.com/glossaries

(5.) NCQA Standards for Patient-Centered Medical Home (PCMH) 2011

(6.) Managed Care - INFO. Staff Model. www.managedcareinfo.com/mcinfo/staff_model_hmo.htm

(7.) Saffo P. Six Rules for Effective Forecasting. Harvard Business Review. July/August 2007

(8.) DoD TRICARE Management Activity, Population Health Improvement Plan and Guide, Washington D.C.
TRICARE Management Activity, Government Printing Office. 2001 http://www.tricare.osd.mil/mhsophsc/DoD PHI
Plan Guide, pdf

(9.) Third Next Available Appointment, http://www.ihi.org/IHI/Topics/OfficePractices/Access/Measures.htm

In this article ...

Examine how a practical approach to demand forecasting and capacity management helps primary care clinics run
more smoothly and efficiently.

By William M. Heroman, MD, MBA, CPE, FAAP, Charles B. Davis, MD, FAAP, and Kenneth L Farmer Jr., MD,

William M. Heroman, MD, MBA, CPE, FAAP, is vice president of health plan design and management at TriWest
Healthcare Alliance. wheroman@earthlink.net


Charles B. Davis. MD. FAAP, is vice president of health plan design and management at TriWest Healthcare

Kenneth L Farmer Jr., MD, FAAFP, is executive vice president and chief operating officer at TriWest Healthcare

Gale Copyright:
Copyright 2012 Gale, Cengage Learning. All rights reserved.

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