# Demand and Capacity - Basic Concepts

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Demand and Capacity - Basic Concepts

**What is it and how can it help me?**

This guide introduces the basic concepts of demand and capacity. For a more comprehensive guide, see a comprehensive guide to demand and capacity.

**When does it work best?**

Reducing current waiting times to reducing waiting times and less requires a reduction in backlog of patients at every stage of the journey. Looking at and matching capacity and demand is a key approach to removing some of the visible and hidden backlogs along the patient pathway.

Waiting lists build up because demand for work sometimes exceeds our capacity to do that work. Evidence suggests that our capacity to deal with work varies more than the demand. The mismatch is due to variation (see understanding variation, natural variation and SPC) in both demand for work, and variation in our capacity to deal it.

Accurate analysis of care processes as well as a clear understanding of demand, activity, capacity and your queue is essential if you are to achieve effective and sustainable service change or redesign.

**How to use it**

Process mapping should underpin all service redesign, demand, capacity, activity and queue management, patient flow modelling and service planning. Process mapping, along with measurement of demand, capacity, activity and backlog, provides the evidence you need for service improvement. If you don't understand the processes of care, you risk changing parts of a process which will not improve the service from the patient's perspective and may actually incur more waits and delays.

Once the process map is complete, the next stage is analysing it by considering the following:

- Where are the delays, queues and waiting built into the process?
- Where are the bottlenecks? (See Managing Bottlenecks)
- What are the longest delays?

When measuring healthcare, you need to understand and reduce variation in order to improve patient flow. Variation can be seasonal, monthly, weekly, daily or hourly. Much of the variation in clinical systems is within our control.

Being able to analyse and understand current system variation is key to making changes which reduce overall patient journey times. The variation between demand and capacity is one of the main reasons why queues occur in the NHS, because every time demand exceeds capacity, a queue is formed showing itself as a waiting list or backlog.

If you are managing, delivering and planning clinical departments you need to understand the factors which impact on the service they provide. There are four key measures (capacity, demand, activity and backlog) that you need to understand and implement if you are to manage waiting lists, deliver effective patient focussed services and make informed decisions.

You should aim to measure demand, capacity, activity and backlog in the same units for the same period of time ie in minutes, over a 24 hour period, weekly or monthly so that you can compare the four measures on a single graph.

**How to measure demand **

Multiply the number of patients referred from all sources by the time it takes in minutes to process a patient. For example, an endoscopy takes 45 minutes to complete so five patients having an endoscopy would take 45 x 5 = 225 minutes.

**How to measure capacity****
**Multiply the number of pieces of equipment by the time in minutes available to the people with the necessary skills to use it. For example, two treatment machines x 480 minutes of session time = 960 minutes of capacity each day.

**How to measure activity**

Multiply the number of patients by the time in minutes it takes to process a patient. For example, 100 patients processed x 20 minutes each = 2000 minutes of work done each day.

**How to measure the backlog
**When measuring demand and capacity, you must first calculate the backlog, which is the number of patients waiting. This is normally shown in the number of minutes it will take the patients to be processed.

**Multiply the number of patients waiting by the time in minutes it takes to process a patient. For example, 100 patients on the waiting list x 20 minute treatment time each = 2,000 minutes backlog. On a daily basis, there may be more referrals (demand) arriving for a service which adds to the backlog. For example:**

**Figure 1**

Figure 1 shows that at the beginning of the week the backlog was 100 (five patients at 20 minutes per process) minutes of work. On Monday, an extra 100 minutes of demand for the service were received. This demand is added to the backlog to make a total of 200 minutes (ten patients). On Tuesday, 60 minutes (three patients) of demand were received, increasing the backlog to 260 minutes (13 patients). This demonstrates how the backlog increases. The backlog can be reduced by activity performed in a day. The amount of activity performed in a day is determined by the amount of capacity available. If we do not plan our capacity at the right level, the backlog will increase, even if we fully utilise it.

**Figure 2**

Figure 2 demonstrates that when the capacity is 40 minutes (two patients) per day, even at full capacity, our backlog increases. This is because there is a mismatch in demand and capacity.

If we plan our service so that average capacity is higher than average demand, waiting lists rarely build up and will decrease over time, as long as the capacity is utilised. The level at which we should set our capacity is higher than the average demand.

**Figure 3**

Figure 3 shows that the average demand for this service is 58 minutes per day, but due to natural variation, it can be as high as 80 minutes. Therefore, the capacity is set to demand at the 80th percentile which in this example is 74 minutes. More information on percentiles. To learn how to calculate them.

**Figure 4****
**

In figure 4, the average demand is 64 minutes per day; the capacity needs to be set to the 85th percentile of demand, which is 82 minutes. By setting it at this level, the backlog dramatically reduces when the capacity is fully utilised. If our capacity is under utilised, even when set at the correct level, the backlog will start to increase, as seen in figure 5.

**Figure 5**

This quick introduction demonstrates the need to measure your demand, capacity, activity and backlog on a daily basis. For a more comprehensive guide see a comprehensive guide to demand and capacity.

**Examples**

Case study / scenario / good practice / journal articles about capacity and demand |
Short description |

Applying service improvement methodologies to reduce waiting in radiography |
Reduction of waiting times in diagnostic stage of patient's journey from 19 weeks to2 weeks over a 5 month period by applying principles of capacity and demand management. |

Matching demand and capacity in cardiology |
A classic capacity and demand study. Straightforward approach to releasing capacity and matching available capacity to demand. |

**What next?**

This guide is a quick introduction to the theory of demand and capacity. The next step is to read the comprehensive guide: a comprehensive guide to demand and capacity

*Other useful tools and techniques on this website:*

Booking and Choice

**Additional resources**

**Books**

Goldratt E, Cox J ‘The Goal' Gower, Aldershot.

**Background**

The theory behind capacity and demand originates from the theory of constraints.

**© Copyright NHS Institute for Innovation and Improvement 2008**