Competition Equals Lean?

9/1/2004
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I was recently reading an article by Professor Michael Porter (co-authored with Professor Elizabeth Teisberg) in the June issue of the Harvard Business Review about the problem of the ever-rising costs of healthcare in combination with stagnant (and unacceptable) quality.  Being an economist, Professor Porter believes the best solution is to introduce more competition, especially at the level of specific treatments for specific diseases by letting patients choose between providers.

We’ve all wondered about the solution to the healthcare problem and Professor Porter may well be on to something.  But what I found striking about his proposal is his devout faith that competition will quickly reduce costs while dramatically improving quality.  Presto!  Competition equals lean, and all providers in healthcare will rise to a superlative level of performance.

Those of us in the lean movement have experienced something quite different:  Even in highly competitive industries like autos, we note that companies can go for decades – General Motors comes to mind – before they finally get their heads around the need to create a lean process for every significant activity in their business.  And in industries where there is no “Toyota” – healthcare comes instantly to mind – someone has to make a breakthrough in applying lean principles for the first time before anyone else will feel pressure to compete.  (Remember that if every player in an industry is fundamentally incompetent, competition can reduce provider margins but it won’t do much to reduce costs or improve quality for customers.)

So competition will surely be helpful in healthcare (as in every other sector of the economy), but it’s not likely to be sufficient. What can be sufficient is a relentless focus on creating a perfect process for every value-creating activity.  This must be at the level of the diagnosis and treatment paths for specific diseases, but it will also require a lean process for all of the activities supporting these paths: Delivery of medicines and other supplies on time with no waste and zero errors; provision of the information patients and caregivers need from scheduling, medical records, and laboratories exactly when they need it at low cost with zero errors; movement of every patient along their diagnostic or treatment path with no (costly) wasted steps, no delays, and no errors.

This is the real challenge of lean thinking for healthcare and I hope that all of us in the lean movement will share our process knowledge with our friends providing care in order to meet this challenge as quickly as possible.

 

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