What’s the parallel between the world’s largest car manufacturer -Toyota – and the American Healthcare System? Read on to learn how total quality management and improved operational efficiencies can reduce waste and decrease spending in our healthcare system.
By Mark Graban and Rob Harding August 09, 2011
Enlist your employees to help find and eliminate waste in your organization’s processes.
Many hospital CEOs, including John Toussaint, M.D., the former CEO of ThedaCare, and thought leaders, including Donald Berwick, M.D., M.P.P., administrator for the Centers for Medicare & Medicaid Services, estimate that 30 to 50 percent of all health care spending can be described as waste — activity that provides no benefit to patients. This adds up to more than $1 trillion a year in the United States. Instead of merely slashing reimbursements or providing less care, there is a clear opportunity to do more — and provide the right care — with less waste and less spending.
The word “waste,” or muda in Japanese, is one of the most commonly used terms in Lean management, which is based on the Toyota Production System. According to Toyota, there are eight types of waste, each of which can be translated directly into health care:
Lean’s Eight Types of Waste
Examples of Waste Found in Hospitals
Defects
Lost or mislabeled laboratory specimens
Overproduction
Medications sent to inpatient units in 24-hour batches, leading to wasted medications if orders
Change
Transportation
Moving patients a long distance from the operating room to recovery
Waiting
Patients waiting weeks for an appointment, or waiting hours to be seen in the emergency department, resulting in exacerbated conditions
Inventory
Expired supplies due to overstocking and poor rotation of inventory
Motion
Staff walking in excess because high-use surgical instruments and packs are not grouped together in perioperative services
Processing
Staff writing or entering the same patient information into multiple forms or software screens
Human potential
Nurses dragging bags of dirty linen down the hallway; staff members unengaged in improvement activities
In health care, Lean teaches us to engage all staff members in a never-ending search for waste, making quality and process improvements that benefit patients, leading to lower costs. Reducing waste is very different, in mindset and practice, from traditional cost cutting, as Lean waste reduction looks at how the actual work is performed rather than focusing on spreadsheets, budgets and financial benchmarks. Reducing errors, improving throughput, reducing staff frustration — all of these tactics reduce costs.
A Lean Perspective on Waste
Traditional organizations might see that 60 percent or 70 percent of their expense is direct labor cost. This realization often leads to the idea that the clearest path to cost reduction is to eliminate people (again, often based on benchmarks). Lean methodology takes a different view: Waste reduction cannot be used to drive layoffs, as that would put an end to staff engagement in the improvement process — a core Lean principle.
Leading health care organizations that actively employ Lean tactics, including ThedaCare, Denver Health and Avera McKennan, all have “no layoffs due to Lean” commitments with employees. Engaging people to reduce waste through process improvement has led to significant savings at these organizations — more than $54 million at Denver Health, for example — along with quality and access improvement, thanks to a culture of collaboration. (more…)