Can Lean Hurt a Hospital Financially?

Health care fix a joint effort | | Appleton Post-Crescent:

I’m happy to announce a future podcast with John Toussaint, release date TBD. If you have any questions for him about the Lean efforts at ThedaCare or his new role, let me know.

In this article, Dr. Toussaint says:

“By streamlining — and working to continuously improve — operations, ThedaCare has saved $27 million the past three years, Toussaint said.

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‘We’ve seen a 5 percent improvement in productivity,’ he said. For certain cases, he said length of stay at the hospital has been reduced by 20 percent, costing patients and insurance companies less.

Right now, though, Toussaint said the health systems aren’t set up to reward providers for cutting costs. In fact, the opposite is true.

‘Our reward for providing better quality at a lower cost is $2,000 less per case from Medicare,’ he said.”

The payer system is still very much based around a “piecework” system — you do the work, you get paid. If you’re doing the right thing for the patient and don’t do work, you don’t get paid. That’s a messed up incentive. Another leading Lean hospital, Virginia Mason, has faced this same problem.

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I’ll be sure to ask him about this in our podcast discussion.

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Mark Graban's passion is creating a better, safer, more cost effective healthcare system for patients and better workplaces for all. Mark is a consultant, author, and speaker in the "Lean healthcare" methodology. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent project is an book titled Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also the VP of Improvement & Innovation Services for the technology company KaiNexus.


  1. neutron jerk says

    That’s great, can’t wait for the podcast!! Please ask Dr. Toussaint his view on what it will take for Lean thinking to spread throughout healthcare. Can it become part of “normal thinking” over time or will it always be a bit of a fringe movement?

  2. Dean Bliss says

    The whole “we’ll pay you for procedures, not for prevention or wellness” mentality from Medicare and Medicaid threatens to undermine our efficiency efforts. I applaud Dr. Toussaint’s efforts to reform the payment structure to encourage improvement and efficiency. Otherwise, whatever “help” we get from the government over the next couple years could result in, at best, some unfortunate outcomes.

  3. Doug Brickey says

    Shouldn’t avoiding unneeded procedures provide greater capacity for the procedures that are needed, thus allowing you to increase “throughput”? (Throughput seems to be a crude word to use to refer to patients, but I can’t think of a better one.) I’m guessing that the issue now for ThedaCare may be underutilized capacity.

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