Lean Healthcare Transformation Summit 2012, Day 1

Here are some notes and key points from Day 1 of the Lean Healthcare Transformation Summit. There are over 500 people here from North America and around the world (including a group, again, of about 40 from different hospitals and one insurance company in The Netherlands). You can see my tweets and notes from others on Twitter at hashtag #HCsummit12. Follow us all day Thursday.

John Toussaint

John talked about the big picture of healthcare and global health systems, including concepts from his new book Potent Medicine.

He started his talk by emphasizing that “all around the world, costs are out of control and quality is not increasing fast enough” – healthcare is “on an unsustainable path.”

John shared data that says the average U.S. family of four pays $20,000 a year for healthcare, or more than the average MORTGAGE. Unsustainable. He also shared data that says, in the state of Wisconsin, the cost of a knee joint replacement ranges from $17,000 to $55,000 (in an apples-to-apples comparison) — why is that? How is that allowed by payers and patients?

He cited Dr. Deming and his book Out of the Crisis  (from 30 years ago), arguing against “Management by Objectives” and stating the need to switch to Lean management. John emphasized that Lean is really all about the scientific method and the “Deming Cycle” of PDCA/PDSA. John also made a Deming-like argument that employers need to stop selecting health plans based on who gives them the biggest discount (Deming said don't choose based on price alone). We need to choose based on VALUE.

Harold Miller

Healthcare economist Harold Miller  also talked about the big picture of healthcare and payment systems, talking about the dysfunctions in today's payment systems (in the U.S.). We are paying for activity, not for value.

Harold posed the question: “How can we reduce costs without rationing care?” (it is possible).

He shared data that suggests that 17% of Medicare patient admissions are preventable. But, the current payment system doesn't reward physicians for keeping people healthy. If we keep people healthy, hospitals and doctors get paid less. “Providers lose when patients win” in the current system. He also shared data that suggests there is “overproduction” (in Lean terms) where 20% of defibrillator procedures are unnecessary. But, we get paid for doing procedures.

He described payment scenarios that are “win/win/win/lose” – providing incentives to prevent admissions and help patients choose value – the hospitals, patients, and physicians win… the device makers might lose in these alternative payment scenarios. He shared a lot of really interesting, heady stuff on some of the problems with “shared savings” models… too much to get into at the end of a long day…

Miller also posed the question about why every industry except for healthcare provides warranties for their product or service (with a few exceptions in healthcare, like Geisinger Health System). Warranties would not guarantee outcomes, but would promise that the patient and payer don't pay for problems like infections and other follow up care.

Lean Dutch Healthcare

My friends from The Netherlands are attending the Summit for the third straight year. This year, Marc Rouppe van der Voort and Dr. Jacob Caron (Dr. “Loving Care”) presented about their hospital's five year Lean journey. (Update: here is video of their talk).

They have strived for an organic approach to Lean, where people pull on Lean leadership concepts and methods naturally and out of self interest (to solve problems) rather than having it forced on them.

They face rather universal problems in healthcare: “Our processes are broken and we don't have a method from improving them.” They looked to companies that had strengths in having good processes AND good process improvement methods, including Toyota, Scania, and others – not to become Toyota or to learn from them. They are searching for new ways of thinking.

Learning from Toyota, their priorities for kaizen activity are:

1. Increase problem solving capability
2. Process improvement

In 2011, they implemented 4,000 improvements through improvement boards that are posted in 75 departments. They started with this board in one department and there was pull (“self spread”) to those other areas. It wasn't forced.

They have shifted from implementing technical change or “tricks” (best practices) to putting change “in the hearts of people” – changing thinking leads to more sustainable change. Teams identify problems, bring forward ideas, and test to see if the ideas work. People tend to stick with their own ideas. Ideas from other people tend to not be sustained.

Marc and Jacob also elaborated on “loving care.” Good healthcare is more than a technically well-performed procedure. People need to be treated with respect at all stages of the care process.

Their true north is:

• No waiting
• No harm
• Loving care

Great stuff… I'll share more details and thoughts, especially from the Dutch presentation in a future post.

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