Creating Value through Lean Enterprise Transformation
Lean management practices have become a primary method of maximizing customer value while minimizing waste across functions within an organization. For many industries—including health care—this has meant a transformation in they way they think as well as how they produce products and services for their customers.
With its origins in the automotive industry, Lean began as an answer to manufacturing problems faced by carmakers—namely delivering a product customers wanted in an efficient and timely manner. Henry Ford is credited as the first to integrate an entire production process in 1913, followed in the 1930s and ’40s, by the Toyota Production System invented by Kiichiro Toyoda, Taiichi Ohno and others. Together, the process improvement strategies based on standardizing flow production made it possible to obtain low cost, high variety, high quality, and rapid throughput times to respond to changing customer desires.
And in 1988, MIT researchers, led by Dr. James Womack, further distilled these flow production principles into a continuous improvement philosophy that focuses organizations on eliminating waste in order to better meet customer expectations. Today, Lean is practiced worldwide and in every industry. Known by many names—including Lean, Sigma Six, and Theory of Constraints—Lean hasfour basic principles at its core:
- Value creation: Know what the customer wants.
- Flexibility: Promote accountability and be responsive to change.
- Flow/Pull: Do the right work the right way.
- Pursuit of perfection: Innovate and listen to the customer. Focus on present needs, and let learning lead the way.
Successes in Health Care
Over the past several years, Lean has become an increasingly popular tool for improving patient throughput, decreasing supply costs, eliminating medication errors and increasing customer satisfaction.
Many industries—including health care—have adapted Lean strategies with notable success. Virginia Mason Medical Center’s success is near legendary. After implementing Lean, they increased capacity, thereby eliminating the need for several planned expansions, saving millions of dollars, and improving access to necessary services within the community. New York Presbyterian Hospital saved $47 million by reducing in- patient length of stay, and increasing throughput times in the emergency department, operating room, post-anesthesia recovery unit and ancillary testing.
At the local level, UCLA Health System implemented Lean in 2006, and achieved a significant improvement in patient satisfaction (from 38th percentile in 2007, to 98th percentile in 2010). “We leveraged key concepts from the Lean – Toyota Production System to develop a leadership model that creates an environment where every employee understands their role, and actively participates in delivering an exceptional patient care experience,” said David Feinberg, CEO.
UCLA’s Lean journey is high- lighted in a new book, Prescription for Excellence: Leadership Lessons for Creating a World-Class Customer Experience from the UCLA Health System (McGraw- Hill, 2011), by best-selling author Joseph Michelli. Michelli uses the leadership principles developed at UCLA to offer insights and tools that can help other health care organizations achieve similar levels of success, not only in the area of clinical care but also in the challenging realm of patient satisfaction.
Memorial Health System also recently implemented a comprehensive Lean program. Early results are promising: in just the last year, Long Beach Memorial Hospital has used Lean to reduce supply costs and improve patient wait times in the emergency department.
But Lean is a great deal more than a cost cutting tool—it is a management philosophy that combines a structured approach to process improvement, with key management techniques that focus leaders on creating value from the customer’s perspective. When Lean is deployed correctly, it enables organizations to better focus on identifying and meeting customer needs, and eliminating those things that customers don’t need or want, thereby creating greater value.
With the advent of Accountable Care Organizations, health care organizations must focus on developing effective collaborations between health plans, ambulatory care providers and physicians, and expanding their focus beyond the four walls of the hospital to the end-to-end care delivery process. In essence, today’s value streams will become more of a value chain linking public health, ambulatory care, primary care physicians and hospitals together. Lean can be used to gain a better understanding of this extended value stream, and to align key stakeholders to customer needs and expectations.
In order to accomplish these objectives, hospitals and health care delivery systems must develop new capabilities. Leaders will require new skills in stakeholder engagement, change management and systems thinking, and they will need to be able to move beyond traditional approaches of performance improvement that focus on incremental improvements to internal operations, to performance management that focuses on value stream optimization across the enterprise, and beyond.
The good news: Lean is easy to understand and employees can be trained in about 40 hours. A typical Lean improvement project is completed in five steps:
- Step one: Define the problem, and identify the stakeholders.
- Step two: Observe thorough documentation of the existing process (current state).
- Step three: Engage frontline workers in value analysis and process redesign. Identify waste (non-value-adding steps) in the process and redesign the process to eliminate waste.
- Step four: Test improvement ideas (find the low-hanging fruit) generated by frontline workers during the redesign step, which will start the journey toward the future state. The goal for all staff to work toward the ideal state is set by the future state value stream map.
- Step five: Implement the new process, standardize work and monitor performance.
Become a Change Agent
Given the increasing interest in Lean, and the demand for professionals with Lean skills, HASC teamed up with the UCLA School of Public Health and the Institute for Performance Excellence to provide Lean training and program development and deployment services to our members.
Lean training course will be offered throughout 2011. The multiple-session Lean Practitioners course provides a comprehensive introduction to Lean methods and principles for health care professionals, with tools designed to eliminate waste, reduce costs, improve quality and deliver greater value to organizations.
Over the next few months, HASC will be rolling out several new service offerings—including the Lean course—under the newly organized Hospital Operations and Performance Excellence (HOPE) initiative. “We are very excited to bring this new service to our membership, as hospitals and health systems embrace the concepts of Lean and empower front- line managers to directly impact the quality of care for patients by taking an active role in process changes,” says Michele Graynor, Vice President, Hospital Operations and Performance Excellence at HASC. To find out more about Lean and HASC’s related educational offerings, contact HASC at (213) 538- 0799.
About the author
Dr. Wortham is co-founder and executive director of the Institute for Performance Excellence, a firm focused on implementing performance improvement programs for health plans and health care delivery systems. She is a seasoned executive with expertise in health services management for both the public and private sectors. Key focus areas include performance improvement, physician integration and strategic planning. She currently teaches graduate courses in health services finance and marketing at the UCLA School of Public Health. Dr. Wortham recently launched a Lean/Six Sigma Healthcare certification program that is a collaboration between UCLA Extension and the UCLA School of Public Health.HASC welcomes feature articles and analyses on emerging issues from our hospital and associate members. Please contact Pat Wall, email@example.com, for guidelines on article submission.