By Mark Taylor

For years, Eugene Litvak has preached to American hospital executives about changing the way they operate. Few have heeded his admonitions.

But those who have adapted the methods of this former Soviet mathematician and systems engineer said they ave reaped millions of dollars in added revenues and avoided unnecessary construction costs, while reducing medical errors, overtime pay and ER waiting times.

Hospital executives who have hired Litvak, the CEO and co-founder of the Boston-based Institute for Healthcare Optimization (IHO), call him a genius and a pioneer of hospital operations management improvement.

His work has a huge potential economic impact because hospitals make up about one-third of U.S. health care spending ($971.5 billion in 2014), according to the U.S. Centers for Disease Control and Prevention. A reduction of even a few percent in hospital spending could save tens of billions annually — no small potatoes.

And it isn't just money. In 2013 up to 440,000 Americans died annually of avoidable causes in U.S. hospitals, quadrupling the 1999 estimate by the Institute of Medicine. Researchers attribute some of those deaths to the chaos that ensues from hospital and ER overcrowding. Litvak's methods have reduced overcrowding, decreasing hospital error and mortality rates, according to his clients.

How Litvak — a Ukrainian-born Soviet refusenik who arrived almost penniless on U.S. shores with his wife, Ella — came to be regarded as a guru of hospital operations management is a uniquely American tale. Litvak, who speaks with an accent as thick as borscht and holds advance degrees from prestigious Russian universities, punctuates his conversation with examples of dark, self-deprecating humor.

Litvak is a colorful character who grew up in Kiev; he was a rising academic star and had a brilliant career conducting research in computer systems reliability and telecommunications in St. Petersburg and Moscow. He published important research papers, gained an international reputation and was invited to speak in the U.S. But Litvak grew frustrated when his bosses refused permission, and the Litvaks applied for an exit visa in the late-1970s to emigrate.

"In the USSR, if you applied for an exit visa, you were fired the next day," Litvak said. "I was called a spy and a traitor. Once you apply for an exit visa, you cannot get a normal job. You're caught between a rock and a hard place. I was delivering telegrams, and my wife was washing floors."

After nearly a decade of menial jobs, the couple were allowed to leave in 1988 and settled in the Boston area. After working as a night hotel clerk, Litvak eventually was hired at Harvard University and later Boston University. While at BU, he discovered that hospital patient occupancy rates are extremely variable, with census patterns forming daily peaks and valleys.

"I learned that the cause of these patient spikes wasn't the overcrowded emergency rooms, but hospital operating rooms where surgeries are performed," Litvak said. "That was an 'Aha moment' for me."

For decades, hospitals attempted to resolve their overcrowding problem not by exploring their patient flow, but by building more emergency room beds and new patient wings, at a cost of $1 million to $2.5 million per bed. Litvak discovered that OR schedules, not bed shortages, were the real problem. Surgical ORs and ERs make up 80 percent of all hospital admissions. And while no one can predict how many ER visits will occur daily, elective surgeries are predictable.

"We found that OR surgery schedules compete for the same hospital beds as ER patients," he said. "Surgeries are among the most lucrative hospital procedures. So hospital CEOs cultivate surgeons and allow them to perform all of their surgeries on one day per week to accommodate their busy schedules."

But when a rush of patients flocks to the ER, potentially dangerous bottlenecks occur throughout the hospital. ER overcrowding means patients who need hospitalization may wait hours for a bed to open up, putting them at risk. Elective surgeries are canceled. Overcrowding also leads to excessive overtime pay, nurse burnout, short staffing and more frequent medical errors, studies have found.

Litvak eventually left BU and co-founded IHO in 2009 to consult for hospitals. Since then, his firm has attacked inefficiency in hospital operations in the U.S., Canada and Scotland, winning international acclaim. His methods have been validated by the Oak Brook, Ill.-based Joint Commission, several state hospital associations and published studies.

"What Litvak recognized — and that is the true genius of his approach — is that variability of patient flow is in our control," said Dr. Ellis "Mac" Knight, chief medical officer and senior vice president for the Atlanta-based health care consulting firm The Coker Group. "We can't control how many people get sick or get in car wrecks and come into the ER, but we can control the number of elective surgeries. He showed that if you can smooth out the number of elective surgeries scheduled throughout the week, you can eliminate the peaks and valleys and dramatically impact the efficiency and safety of hospital operations," he explained.

Knight, who worked with Litvak in his former post as a senior executive with Palmetto Health System in Columbia, S.C., said Palmetto boosted annual revenue by $3 million, primarily by improving "throughput" — the number of patients that can be seen and treated in a day.

He said Litvak's time in the USSR working against the bureaucracy there gave him infinite patience.

"He has been tilting at windmills for a long, long time," Knight said.

Litvak said his clients' return on investment is now measured in millions of dollars.

"They see a dramatic improvement in patient safety and reduced mortality, and avoid the high costs of building new patient wings and ER beds," he said.

James Anderson, adviser to the president at Cincinnati Children's Hospital, said IHO helped that hospital improve revenues by 34 percent and avoid spending $100 million on a planned patient tower it no longer needed. Anderson, the hospital's former president and CEO, said waiting times in the ER and OR also dropped.

"We not only improved patient satisfaction levels, but instead of running around like crazy because of patient overcrowding or sitting doing nothing when few surgeries were planned, our nurses and physicians got home in time for dinner, they made their kids' soccer games and life got a lot more orderly," he recalled.

He said significant quality improvements resulted after hiring IHO.

"There are fewer mistakes and adverse incidents, and the surgeons are happier because fewer of their scheduled surgeries are canceled," he said. "If his methods were applied to every hospital in America, we would see enormous increases in capacity, saving billions of dollars nationally."

Dr. Robert Lahita, chairman of medicine and vice president at the Newark (N.J.) Beth Israel Medical Center, said his hospital adopted Litvak's practices in its telemetry department.

"Telemetry is something all doctors want their patients to have," explained Lahita, who described telemetry as the heart monitors and other sophisticated equipment doctors use to keep track of ill patients. Lahita said Beth Israel has saved $10 million annually by using Litvak's processes, which he said decreased patient length of stay and improved patient flow.

Litvak said hospital leadership is the root of the problem.

He said eliminating the peaks and valleys requires significant organizational and cultural change. "Some hospitals don't call us until they're going under water, like a patient calling a priest when ready to depart this world," he said.