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The Time for Healthcare Leaders to Implement Lean Is Now – Stat!

by Helen Zak
December 7, 2017

The Time for Healthcare Leaders to Implement Lean Is Now – Stat!

by Helen Zak
December 7, 2017 | Comments (0)

“A bad system will beat a good person every time.” These sage words from W. Edwards Deming, sum up what many healthcare leaders face on a daily basis: bad systems working directly against the ability to deliver quality outcomes for patients.

For decades, industry has turned to lean principles and methodologies to help retain their competitiveness and solve operational problems of quality, cost, and delivery. Most industrial companies (car and electronics manufacturers, for example) practice this thinking to stay competitive. Lean is a necessity, not a luxury. 

One of the best examples of a full lean system in the United States is Autoliv, the world’s largest manufacturer of auto safety equipment and a maker of airbags.  It’s ideal that continuous improvement is who we are, not what we do, clearly expresses the company’s obsession with customer value and improvement as a differentiator in the marketplace. When times get tough, Autoliv leadership and its 70,000 employees worldwide double down on improvement, dedicating more time and resources to take out waste, improve quality, reduce cost, and to better meet customer needs.

Our financial institutions in the United States are another sound example of effectively putting lean thinking to work. Banks have turned to lean not only in the back office but also in customer-facing work. TD Bank, for instance, extended its retail operating hours in an effort to create more customer value. By staying open later and on weekends, TD Bank customers can stop by to make a deposit, use the bank’s copy machine, and get a dog treat. TD Bank leaders constantly search for ways to add customer value and take out waste at the same time.

In a recent article, Julie Pukas, head of U.S. Bankcard and Merchant Services at TD Bank, said, “Consumers’ desire for seamless transactions is permeating every industry and there are some game-changers who are really upping the ante when it comes to payments and customer experience. The companies that will win will do so by prioritizing seamless and frictionless customer experiences.”

The mantra “improvement is second nature,” at organizations like Autoliv and TD Bank is part of their DNA and culture, not additive work.

In healthcare, however, we struggle with improvement. Since 2001, when “Crossing the Quality Chasm,” was first published by the Institute of Medicine, remarkably little has changed. The report focused on closing the quality gap between what we know to be good healthcare and the healthcare that people actually receive. In 2017, poor quality and medical error is the third leading cause of death in the United States. What’s more, from a cost standpoint, we spend more on healthcare per capita than any other country in the world. So where is the improvement in how we deliver healthcare? Unfortunately, improvement in this industry is still viewed as a luxury, not a necessity. But that’s starting to change.

Pioneering leaders such as John Toussaint, who implemented lean thinking at Appleton, WI-based ThedaCare, Gary Kaplan at WA-based, Virginia Mason, and Eric Dickson at UMass Memorial Health Care each demonstrate that lean applied to healthcare can help solve the problems of quality, delivery of care, and cost. 

Virginia Mason Medical Center in Seattle, WA, is yet another example of lean in healthcare producing amazing results. Leaders at VMMC created the Virginia Mason Production System, a management method that seeks to continually improve how work is done so there are zero defects in the final product. Staff across the organization use this method to identify and eliminate waste and inefficiency in the processes that are part of the healthcare experience. Results at Virginia Mason are undeniable:

  • Saved $11 million in planned capital investment by using space more efficiently and freed an estimated 25,000 square feet of space using better space designs.
  • Reduced the time it takes to report lab test results to the patient by more than 85 percent.
  • Reduced inventory costs by $2 million through supply chain expense reduction and standardization efforts.
  • Reduced staff walking distance by 60 miles per day.
  • Reduced labor expense in overtime and temporary labor by $500,000 in just one year.
  • Increased productivity by ~93 percent in a few targeted areas by moving the most common supplies to point of use and creating kits containing frequently needed supplies.
  • Reduced premiums for professional liability insurance by 56 percent.

UMass Memorial Health Care, a healthcare provider in Central Massachusetts, also used lean methodologies to get out of a financial crisis. In 2013, the nonprofit healthcare system was losing millions of dollars each month. Patients were opting to go to competing hospitals, executives were resigning for other opportunities, and employee morale was at an all-time low. CEO, Dr. Eric Dickson, implemented lean management principles to identify and remove waste, among other goals. Employees throughout the system began finding new ways to improve operations and posted their suggestions on bulletin boards in each hospital department. In the span of two years, UMass staff implemented 20,000 ideas and turned a $57 million deficit into a $54 million surplus.

Intermountain Healthcare, based in Salt Lake City, has used lean or continuous improvement to save $143.7 million since 2009. Their hospital’s service outcomes are in the 80-95 percentile for Hospital Consumer Assessment of Healthcare Providers and Systems (HCHCAPS) overall rating. How? By focusing on the problems of quality, delivery, and cost. Leaders at Intermountain Health developed eyes for waste and refused to be satisfied with the status quo. Through its lean journey, the health system has implemented 57,293 employee ideas and more than 2,000 projects.

A Necessity, Not a Luxury

By now it should be obvious to healthcare leaders: The process used to build high-quality vehicles and the banking industry’s focus on customer service can, indeed, be adapted to healthcare in a way that improves operations, bolsters workplace culture, improves patient satisfaction, and lowers the cost of providing care. So why isn’t every hospital and healthcare system implementing lean today?

Healthcare leaders tell us change is difficult. And of course, it is. But not changing can be fatal.

Now is the best time to begin implementing change in healthcare – learning the principles of lean and the tools and resources to support a new way of thinking. Leaders who embrace the lean platform, act as role models, instill it in their teams, and support it across their organizations will quickly discover how beneficial lean thinking truly is.

What is at stake if you chose to adopt lean methodologies? Perhaps you turn your organization into a problem-solving machine. Perhaps, as people gain the freedom to fix operational issues in their own departments, they become more satisfied with their work. Perhaps your patient satisfaction rates increase two or three-fold. Perhaps your organization wins state or national recognition for lowering readmission rates, becoming a center of excellence, or a best place to work. Worse things could happen.

With your patients in mind, you can adopt lean principles and become a forward-thinking organization – able to withstand industry regulations and demands while generating a reputation for excellence in care.

And through making this change, you will discover lean is a necessity, not a luxury.

The views expressed in this post do not necessarily represent the views or policies of The Lean Enterprise Institute.
Keywords:  healthcare
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