Hospital CEOs manage staff time, inventory to cut costs – USATODAY.com
It's nice to see a major publication covering Lean and, especially, Lean in healthcare. This time, it was USA Today who, again, did a better job than the WSJ normally does.
The article highlights some of the opportunities and successes that hospitals are having using Lean methods such as kanban, just-in-time, and other Lean practices.
The New York City Health and Hospitals Corp. has recognized a one-time savings of $5 million from implementing a “just-in-time” materials delivery system. By rationalizing the types of gloves that physicians and staff use, they are also saving $4 million a year in supply costs.
St. Vincent Indianapolis Hospital used Lean to help reduce the number of walking steps for emergency department nurses by 78%.
Delnor Hospital in Illinois was able to use Lean redesign to eliminate the need for a planned $80 million expansion. This isn't an uncommon story when hospitals really start thinking Lean. Instead of the old mindset of “give me more,” hospitals find that they aren't using the space they already have as efficiently as they could. Or they find, like Delnor did, that “better flow” is the answer instead of “more rooms.”
Denver Health CEO Patty Gabow told of their savings of $27 million over the past few years and ThedaCare CEO Dean Gruner estimates “estimates $20 million was saved before they quit counting. He says if all hospitals achieve similar results, $400 billion could be saved on Medicare and another $1.3 trillion on the non-Medicare side.”
I wish the article hadn't focused so much on the cost saving side, although that's a reasonable thing for the paper to focus on considering that 99% of our healthcare reform debate is about cost, not quality. They go hand in hand, as you see in the St. Vincent's case. Freeing up time for nurses to spend more time with patients correlates with quality and outcomes and it also corresponds to better patient flow (less walking = less delay).
As is often the case, the interesting part is the reader comments.
One person asked, basically, if the CEO made the changes (as the news headline suggested), we need more administrators! I'm certain they said this with tongue firmly in cheek. The headline and the photo of Mr. Aviles, the CEO from NYC, sort of plays into the business media perceptions that CEOs “do everything.” For example, Jack Welch “implemented Six Sigma” at GE. The role of leader and certainly the CEO — that's important, but this is another case of glorifying the sole leader at the top of an organization. It's not exclusive to healthcare.
Another reader comment asked if “just in time” allowed for enough supplies for a catastrophe, like a major car wreck. Well, I would hope that would be the case. Many supplies won't have perfectly level usage every day, so any well-designed “just in time” or kanban system will have what we call “safety stock” — a planned “extra” inventory level to protect the hospital (and patients) from above average usage (or delivery problems).
Goal #1 with kanban was always “keep the line running.” This was true in manufacturing and it's especially true in healthcare. Make sure healthcare providers have what they need to get the work done for the patients. That doesn't mean you can hold infinite inventory. That's a problem for hospitals WITHOUT a just-in-time system — what happens on a day with a horrible catastrophe? Or if H1N1 is really bad? Well, hospitals plan for that, just as they plan for a regular seasonal flu season and maybe bump up their inventory levels for the season.
Somebody also misinterpreted the comments of Marc Hafer, from Simpler Consulting:
“Labor accounts for 70% of the cost of hospital care, Hafer says, which means some hospitals will resort to layoffs and reduce nurse-to-patient ratios.”
One reader clearly thought Hafer was recommending layoffs and reduced ratios. A Lean thinker knows he meant that it's UNFORTUNATE that some organizations will resort to just cutting labor. That's not the Lean way. ThedaCare, a Simpler client, follows a “no layoffs due to Lean” philosophy that Simpler preaches and my old organization, ValuMetrix, preaches as well.
So I think Hafer was somewhat misquoted, or at least quoted out of proper context, which is too bad.
They did quote him fairly when Hafer said:
“Changes people fear, such as rationing care, are not necessary to meet the goals,” Hafer says. “Improving patient outcomes and reducing costs are not tradeoffs — they complement each other.”
That's absolutely right.
Final thought, a comment from another reader that sums it up:
I can tell you first hand, that this “Lean” stuff really works. I have not found a better process out there for engaging the hearts and minds of the organization's staff AND to make dramatic rapid improvements that help patients, staff, and the the hospital! If every hospital in the US (or Canada for that matter) adopted the philosophies of Toyota, we could transform healthcare without need for Government control. Nice article!
Indeed.
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Any other cases to report of hospitals avoiding, delaying, or scaling back capital expansion due to Lean?
I know you wrote about some cases in your book, Mark (Memphis, I believe).
I wonder how much of that hospital capital spending is "waste" or unnecessary?
How much healthcare might that waste pay for if put to better use?? That could pay for health reform and expanded access right there.
There is a growing interest and demand for Lean over Six Sigma. Consultants all over are shifting their offerings so they can distance themselves from the negative perceptions of Six Sigma of taking too long and that Lean is better with results being realized faster. That may be intriguing and attractive but the two are not exclusive each to the other. Many are selling healthcare organizations short.
There appears to be a growing demand from healthcare leadership who recognize the potential gains but want no pain (read do it in 90 days or less). You can achieve short term wins and improvements with Lean and the process does work within limits. However, the utilization of Lean, Six Sigma DMAIC methods and tools that go with them, go hand-in-hand and are often essential to longterm sustainability. There is no problem that I have encountered in 10 years of practice that can't be solved using DMAIC methodology provided there is a defined work process involved. The problem solving process is the same, the solution sets differ. Value Stream mapping and Lean are just different techniques to defining the process and eliminating the waste and non-value contributing work. DMAIC approaches the problem by identifying defects in the process and creating solutions that eliminate the costly errors that cause waste and non-value contributing rework. Sometimes Lean techniques are applied to resolving the problem. In either case longer term success relies upon a control plan and monitoring performance metrics in order to realize the financial impact that most organizations seek.
Message to management…you want results fast and sustainable? It takes the cultivation of a culture that does not tolerate waste to achieve lasting results! Quit looking for the cheap and easy way out, it won't last. Provide the leadership and commit the necessary resources(it takes lots of functionality) to solving the problems that cost your hospital patient, physician and employee satisfaction. Get out in front of your organizations, provide direction, the education and support to knock down the barriers that interfere with people who want to do the right thing, and recognize those who are successful in their efforts. The bucks will follow!
[…] to scale back or eliminate the need for construction (including Delnor Hospital, cited in this USA Today article, who avoided an $80 million expansion). [William] Sisson, the only CEO of the three who […]