“Leaning” Your Healthcare Organisation – A Recipe for Continuing success!

European Cost and Competitiveness

The Institute of Certified Public Accountants recently published its first tracking research report – CPA Business Barometer – on the state of the economy and the issues facing Irish business. Some real concerns emerged around costs and competitiveness for all European Businesses. There was specific evidence that subsidiaries of foreign companies are under significant scrutiny regarding costs that they incur. There is also concern in European political circles about the pace of growth in labour costs and productivity versus the emerging states in Europe and the Far East. These are big issues in assessing competitiveness.

The impact of all of this is clearly seen in the reduction of manufacturing jobs in the old Europe. Company closures have largely been brought about as a result of Central Europe’s high cost base and a change in global trading conditions. These factors will have an ever-increasing impact on Small and Medium Enterprises (SME’s) servicing the manufacturing sector in the old EU.

Public and semi-state sectors are also coming under increased competition as a result of EU regulatory changes. Some operations in these sectors are run on traditional and outmoded practices. Increased competition both within Ireland and across the EU will have a significant impact on the viability of these concerns.

Financial Controllers and Managers in SMEs and service sectors are, however, successfully fighting back through a number of initiatives that include:

Ø Moving business activities up the value chain
Ø Developing and marketing ‘knowledge centres of excellence’ within their own organizations
Ø Initiating programs for streamlining their core processes

These organizations have embarked on what we term Lean improvement initiatives using concepts and tools associated with the Lean Thinking philosophy.

What is Lean?

Lean Thinking was introduced by Toyota in the 1960’s as a systematic approach to identifying and eliminating waste or non-value-add activities in an organization through continuous improvement with the goal of creating value.


The term “Lean” is used because a Lean organization or business:
Optimizes human effort
Uses less space
Reduces the need for capital investment
Decreases amount of raw materials/supplies bought and consumed
Uses less time to produce and deliver products and services

Lean is therefore a strategy or system for remaining competitive through identifying and eliminating wasteful steps in products, services, or processes. The key principles of Lean are based on identifying 'waste' from the customer perspective, and determining how to eliminate it. Waste is defined as the activity or activities that a customer would not want to pay for and do not add value to the product or service from the customer's perspective. Once waste has been identified in the current or existing state, a plan is formulated to eliminate this waste and attain a desired future State in as effective and efficient a manner as possible.

Types of Wastes

Wastes can be typically divided into the following:


The 7 Wastes
Examples
1. Waiting
Employee or equipment idle time
2. Transportation
Any movement that does not add value
3. Processing Itself
Doing more work than necessary
4. Motion
Wasted walking or movement
5. Poor “Quality”
Errors or rework
6. Inventory
Storing excess inventory
7. Overproduction
Producing more, sooner, faster than required by the next step in the process

Lean Tools and Techniques

There are a number of techniques and tools available to achieve the objectives associated with Lean Thinking. The most popular and effective of these include Value Stream Mapping, Kaizen, and 5S.

Value Stream Mapping (VSM):

Value Stream Mapping (VSM) follows a product or service from beginning to end, and draws a visual representation of every step in the process that the product or process goes through, from receipt of raw materials or source of information from your supplier; to the processing of that product or service; to its final distribution to the end customer. A value stream encompasses all the value-add and non-value-added actions required to bring a product or service to a customer.

VSM provides a means for identifying non-value-add activities within a value stream and a platform to improve quality, efficiency, and productivity. As a result, process flow for that product or service is improved, while also inventory and floor space requirements are optimized.

The initial step in the VSM exercise is the development of a current state map that provides a detailed account of how a selected process works. Based on the findings of this current state analysis, a future state map is generated. This map provides a vision of what the organization could aspire to in improving flow, efficiency, and productivity. The future state map is subsequently implemented through a detailed plan that is tied to the organization’s business objectives.

Example of a Future Value Stream Map



Source: Stryker Orthopaedics, Limerick

Kaizen:

Kaizen is a philosophy focused on problem solving to achieve gradual, orderly, and continuous improvement throughout all the elements of a process. It is based on analyzing a process or system with a view to developing an understanding of how it works, and working out how it can be continually improved. Kaizen activities are aimed at adding value to every operating step in a process, and eliminating any waste from that process.

A Kaizen Event is a carefully planned, well structured team-based activity focused on solving problems in a process. The Event should be customer-driven, in that the improvements that it initiates and implements are aimed at getting a product or service of the highest quality to a customer in the least amount of time.

The Event is based on a Plan, Do, Check, Act approach to problem solving and achieving continuous improvement.



5S:

5S is a methodology aimed at removing waste from the workplace by means of improved workplace organization, visual communication, and overall cleanliness. The methodology is based around a number of activities or stages that are focused on cleaning and organizing the workplace to enable employees to carry out their daily tasks in as safe and efficient a manner as possible.

The 5S stages or pillars and the order in which they should be implemented are as follows:

Ø Sort
Ø Set in
Ø Shine
Ø Standardise
Ø Sustain

Your management and staff need to be familiar with all aspects of the 5S methodology before you commit fully to the concept. All your relevant staff should
receive appropriate training in the 5S aims, stages and implementation methods before commencing any pilot program.

Example of 5S Visual Display Cabinet

Source : Stryker Orthopaedics, Limerick




Benefits of Lean

All types of organizations are discovering the advantages of educating their people on Lean and applying its principles within their own organization. Some of these organizations are trying to function effectively in the face of mounting challenges such as a high cost base relative to their competition; declining market share due to process or cost problems, and limited capacity. In all of these cases, Lean can have an immediate, positive impact on business. Through the process of implementing Lean, the organization can find ways to achieve a number of benefits. Results will vary, but here are some typical savings and improvements:
Ø More operational flexibility
Ø Increased turnover
Ø Consistent product or service delivery
Ø Reduced lead times
Ø Reduced space
Ø Improvement in quality
Ø Reduction in operating costs

SME Case Study

Founded in 1986 Reagecon manufactures and distributes a comprehensive range of reagents, standards and laboratory equipment aimed at providing the correct result for analysts and technicians in all sectors. The company employs over 70 staff primarily in Shannon and reaches customers in some 30 countries through a network of European and Asian distributors. The business has grown strongly in recent years and expects to break the €10m turnover this year.

Early in 2005 Reagecon was introduced to the concept of Lean by one of its key customers. To begin that process they sent a small team to their customer’s site to see how it was done and on their return one of their members went on to get formal accreditation in the principles of Lean.

The application of the Lean program began with the introduction of a 5S program in all areas of the business. This included the manufacturing floors, the distribution warehouses, the customer care function and the administration functions. This was followed with an initial Kaizen blitz to begin addressing wasted time. Those first two programs saved the company approximately 2,500hours. This additional time released from their processes was extremely valuable as the business was growing and more needed to be done with the same resources.

So successful was the program that they have now invested in putting eight more Reagecon team members through formal accredited training on the principles of lean. That team has just now completed its studies and has been tasked with reviewing all business processes with a goal of using what they have learnt to drive more waste from the business.

The practical nature of the training coursework has meant that the team has already saved a further 500 man-hours as they completed the various modules of the course. Experience to date has convinced Reagecon that Lean is not just for large organizations and they expect much more to come from the program in the coming months.


Conclusion

On their own, the individual Lean concepts and tools will provide certain measurable benefits, but it is the combination of them and their systematic implementation that will lead to more dramatic gains. Successful Lean implementation requires commitment and involvement across all levels as an organization-wide change initiative.

The first step to any Lean initiative is to gain top management support. Effective communication of Lean Thinking throughout the organization is seen as a vital ingredient in its successful implementation. This has to begin at senior management level in any company. Management must appreciate and understand the financial opportunity and long-term business benefits of converting from traditional ways of doing business to a streamlined Lean approach. It is imperative to educate and train core staff in Lean Thinking, and to appoint a number of internal Lean Champions to drive improvements across the organisations core business processes.

Without significant change in how businesses organize and arrange the way that they work, any piecemeal change will do little more than maintain the status quo. The maxim should be that every process can be improved and, therefore, even if you think ‘it isn’t broke’, fix it anyway.

Finally, remember that Lean can be applied equally to all activities as diverse as manufacturing, logistics, financial services, construction, and government departments. Indeed anywhere where a business process exists.



Author

Joe Aherne is a Certified Public Accountant, with over 25 years experience in the multinational sector. He also has attained qualifications from the Marketing Institute of Ireland and from CITY Bank in the U.S.

Joe established the Leading Edge Group in 1995 a niche boutique consulting company supporting the US multinational and SME sectors. The company is now recognized as one of the largest independent Lean consultancies in Europe with over 600 projects completed successfully since its inception.

Joe launched in April 2005 the new International Standard in Lean comprising 4 levels of certification and leading to a Masters Degree in Quality Management: Lean Master Black Belt. (http://www.leanscm.com/ & http://www.leanhealthcareservices.com/ ) He is currently leading a major international drive promoting the adoption of Lean healthcare philosophies and practices

Joe Aherne CPA, Charter House, Cobh, County Cork, Ireland +353 21 4855863

Can Lean Thinking save our healthcare system?

Can Lean Thinking save our healthcare system?

That is a very good question.

I am not sure any one thing will ‘save’ healthcare. We are in a time of ‘white water’ change in medicine. New discoveries and new treatments race to the bedside. There will instead be a constellation of things that will improve our healthcare systems. The future of medicine is in the provision of personalized medicine. This is typically discussed in relationship to the Humane Genome project and molecular medicine. However, it is much more than that.

Personalized medicine is providing the ‘right care at the right time’. Often in the management of chronic conditions care is arranged ‘just in case’. Appointments are scheduled into the future ‘just in case’ you need to be seen. This is a symptom of the tradition of medicine that dictated care to the patient rather than negotiated care with the patient. Personalized medicine will change our healthcare processes dramatically in the future. Personalized medicine will require our systems to provide ‘customized’ solutions for patients. Medications are chosen based on a genetic analysis of the patient. Other patient needs will also become important to meet. After hours clinics already seek to personalize care. Patients will be able to request or pull services without long queues. Some systems already allow patients to go online and select their appointment time without ever speaking to a clerk. The services they pull will be those that have value for them. Lean will provide the basis for understanding the value added activities that will compose personalized medicine.

Lean Thinking is directed at reducing waste. This will allow a greater productivity for those value added services. For this reason management science will be as important as basic sciences in the healthcare of the future. So called ‘implementation science’ or ‘translational science’ is little more than systematically applying management theory in the delivery of evidenced based practices. Currently it has been estimated that approximately 50% of a clinician’s time is not necessary and not value added in the eyes of the patient. If this waste is eliminated then clinician’s will be able to spend more of their time caring for patients. This will reduce frustration for both clinician and patient.

Currently most facilities are organized around functional department such as laboratory testing, radiology, and medical clinics. Patients travel from one site, queue up and after being ‘processed’ in that department are sent to another department. Thus for a 2 minute blood test, 5 minute radiograph of the chest and a 10 minute doctor’s visit the patient may have spent all day go to and from these functional villages. The clinics of the near future should be organized into a “cellular” model which will allow all the services to take place within the clinic, rather than this functional “village’ model where patients travel between functions such as lab, clinic and radiology. In the future those functions will be provided at the point of care. Personalized medicine will become the ‘right care, at the right time, in the right place’.

Lean Thinking in healthcare is not just about how to reduce the administrative burden or waiting times of the patient. It is also important to consider the costs that patients undergo in accessing services. Even if the patient does not pay personally for their care, there is a cost. Much of that cost is hidden and does not occur in the clinic or hospital. It occurs as a result of the time and effort to get to the hospital or clinic. An easy illustration is trouble a patient undergoes in traveling to the office, finding a parking place, then walking to the office and then repeating at the other ‘villages’. The travel costs represent a barrier to many of our patients. Technology solutions will allow an amendment to the mantra of ‘right care at the right time’ by providing care at a distance. Telemedicine and telehealth combined with point of care testing will be a norm. This will move medicine away from the bricks and mortar of the clinic and hospital. The mantra will become ‘the right care, at the right time, in the right place, using the right technology.’

Lean thinking actually challenges healthcare administrators to develop systems that provide ‘the right care, at the right time, in the right place using the right technology.’ By applying Lean Thinking as new services and buildings are considered all of this is possible today. The future is here. But it will take administrators and physician executives prepared to think lean to fully capitalize on the changes. So you could say that Lean Thinking will be as important to ‘saving’ healthcare as any advance in the biological sciences might be.

Dr. Jeffrey Clothier
Associate Chief of Staff of Mental Health Service
Chief of Psychiatric Consultation and Emergency Psychiatry
Central Arkansas Veterans Healthcare System
Little Rock, AR 72205

Can Lean Thinking saving our healthcare system?

Can Lean Thinking save our healthcare system?

That is a very good question.

I am not sure any one thing will ‘save’ healthcare. We are in a time of ‘white water’ change in medicine. New discoveries and new treatments race to the bedside. There will instead be a constellation of things that will improve our healthcare systems. The future of medicine is in the provision of personalized medicine. This is typically discussed in relationship to the Humane Genome project and molecular medicine. However, it is much more than that.

Personalized medicine is providing the ‘right care at the right time’. Often in the management of chronic conditions care is arranged ‘just in case’. Appointments are scheduled into the future ‘just in case’ you need to be seen. This is a symptom of the tradition of medicine that dictated care to the patient rather than negotiated care with the patient. Personalized medicine will change our healthcare processes dramatically in the future. Personalized medicine will require our systems to provide ‘customized’ solutions for patients. Medications are chosen based on a genetic analysis of the patient. Other patient needs will also become important to meet. After hours clinics already seek to personalize care. Patients will be able to request or pull services without long queues. Some systems already allow patients to go online and select their appointment time without ever speaking to a clerk. The services they pull will be those that have value for them. Lean will provide the basis for understanding the value added activities that will compose personalized medicine.

Lean Thinking is directed at reducing waste. This will allow a greater productivity for those value added services. For this reason management science will be as important as basic sciences in the healthcare of the future. So called ‘implementation science’ or ‘translational science’ is little more than systematically applying management theory in the delivery of evidenced based practices. Currently it has been estimated that approximately 50% of a clinician’s time is not necessary and not value added in the eyes of the patient. If this waste is eliminated then clinician’s will be able to spend more of their time caring for patients. This will reduce frustration for both clinician and patient.

Currently most facilities are organized around functional department such as laboratory testing, radiology, and medical clinics. Patients travel from one site, queue up and after being ‘processed’ in that department are sent to another department. Thus for a 2 minute blood test, 5 minute radiograph of the chest and a 10 minute doctor’s visit the patient may have spent all day go to and from these functional villages. The clinics of the near future should be organized into a “cellular” model which will allow all the services to take place within the clinic, rather than this functional “village’ model where patients travel between functions such as lab, clinic and radiology. In the future those functions will be provided at the point of care. Personalized medicine will become the ‘right care, at the right time, in the right place’.

Lean Thinking in healthcare is not just about how to reduce the administrative burden or waiting times of the patient. It is also important to consider the costs that patients undergo in accessing services. Even if the patient does not pay personally for their care, there is a cost. Much of that cost is hidden and does not occur in the clinic or hospital. It occurs as a result of the time and effort to get to the hospital or clinic. An easy illustration is trouble a patient undergoes in traveling to the office, finding a parking place, then walking to the office and then repeating at the other ‘villages’. The travel costs represent a barrier to many of our patients. Technology solutions will allow an amendment to the mantra of ‘right care at the right time’ by providing care at a distance. Telemedicine and telehealth combined with point of care testing will be a norm. This will move medicine away from the bricks and mortar of the clinic and hospital. The mantra will become ‘the right care, at the right time, in the right place, using the right technology.’

Lean thinking actually challenges healthcare administrators to develop systems that provide ‘the right care, at the right time, in the right place using the right technology.’ By applying Lean Thinking as new services and buildings are considered all of this is possible today. The future is here. But it will take administrators and physician executives prepared to think lean to fully capitalize on the changes. So you could say that Lean Thinking will be as important to ‘saving’ healthcare as any advance in the biological sciences might be.

Dr. Jeffrey Clothier
Associate Chief of Staff of Mental Health Service
Chief of Psychiatric Consultation and Emergency Psychiatry
Central Arkansas Veterans Healthcare System
Little Rock, AR 72205

The Power of Lean Healthcare

As healthcare costs increase at a faster rate than other products or services, healthcare providers, in particular hospitals, are under continuous pressure to dramatically improve service, reduce costs, improve patient safety, reduce waiting times, and reduce errors and associated litigation.

However, hospitals are not making the necessary improvements in cost, quality, and safety. A report by the U.S. HHS Office of the Inspector General finds that 20% of consecutive inpatient stay sequences were associated with poor quality care, unnecessary fragmentation of care, or both. The current organization and management of hospitals is an imperfect system that cannot effectively address these issues. Major projects to restructure hospitals, dramatically reduce cost, and improve customer care have had little impact on quality or cost.

In simplistic terms, current healthcare systems are not designed to make the process or ‘value stream’ of care flow smoothly. Healthcare services are often ‘batch and queue’, with patients spending most of their time waiting until the Healthcare Professional is ready i.e. push versus pull. As the population matures, patient cycle times in the hospitals, post-care facilities, and laboratories become key measurements that need to improve.

Our belief is that Lean Healthcare can provide a solution to successfully address some of these concerns with minimal cost but maximum benefit.

Lean in Healthcare

The essence of Lean Thinking is to eliminate waste through understanding how the patient defines value and how to deliver that value. Lean Thinking focuses on creating an efficient, waste-free continuous flow built on a pull vs. ‘batch and queue’ approach aligned with the continual pursuit of a perfect system.


Examples of Healthcare Waste:

o Redundant capture of information on admission
o Multiple recording of patient information
o Excess supplies stored in multiple locations
o Excess time spent looking for charts
o Patient waiting rooms
o Excess time spent waiting for equipment, lab results, x-rays etc.
o Excess time spent dealing with service complaints


Hospitals are made up of a series of processes with diverse lines of business. As a consequence, they need to build their delivery systems with these lines of business in mind. Hospitals need to know the businesses that drive 80% of their value proposition. They need to streamline their organization systems and processes to fully support the process required to deliver high quality care.

Commitment and support for any lean initiative needs to not only come from top healthcare management but, even more critically, from the ‘bottom up’ for implementation. Decision making and system development need to be pushed down to the lowest levels of any healthcare organization.


Management consultants are normally engaged as Lean change agents rather than as Lean facilitators. Healthcare staff should lead any Lean implementation program. These people are best equipped to understand the work environment, issues, challenges, what will work and what won’t. An empowered and knowledgeable team is therefore essential to achieve sustainable improvements and long-term success in any Lean initiative. Put simply, Lean will not work without an educated workforce.

Examples of Lean Healthcare Performance Metrics

o Improved patient satisfaction
o Increased operating room utilization
o Reduced time between procedures
o Lower tools and supplies inventory
o Reduced laboratory space
o Improved cost effectiveness

Lean Healthcare Accreditation

A new Lean Healthcare Green Belt Certification program (http://www.leanhealthcareservices.com/) was recently developed to enable effective staff empowerment.

The on-line program represents the first International Healthcare Certification of its kind, and provides an essential ‘first step’ to not only understanding the theory but also the application of Lean tools and practices through detailed work assignments, in-line assessments, and final examination.

The program has been designed in association with the Irish Institute of Industrial Engineers, the Canadian Professional Logistics Institute, Lean Experts, and Healthcare Consultants in conjunction with the Leading Edge Group. It is open to personnel involved in any organization within the healthcare field, particularly those associated with hospitals, clinics, nursing homes, blood banks, laboratories, and pharmacies. Once these people have the ‘appropriate’ knowledge, they will be able to envisage and achieve results and, most importantly, meet the needs of patients now and in the future.

Please contact Joe Aherne CPA, Chief Executive Officer, Leading Edge Group, jaherne@leadingedge.ie; http://www.leanscm.com/; http://www.leanhealthcareservices.com/