Ah, summits. I once watched Coach Pat Summitt’s Tennessee Lady Volunteers take a 35 to 2 lead against my Northwestern Wildcats in the first few minutes of an NCAA basketball tournament game. That was too big of a deficit to overcome and we lost the game, even though it was a tie score the rest of the way, basically. Reading the paper, it makes me wonder about the deficit that the United States is in and what the future of healthcare looks like.
How did I start talking about basketball? Oh right, “summits.” Focus, Mark, focus…
I’m participating today and tomorrow in a healthcare executive summit to discuss Lean methods in healthcare with a number of CEOs, physicians, and other senior hospital leaders. It will be a combination of those who are already having success and some who are just learning and starting with Lean. I’m expecting some great discussion and knowledge exchange.
That event is why I cannot attend the Lean Enterprise Institute’s Lean Transformation Summit in Atlanta, where healthcare is sure to be a topic from two perspectives:
- the manufacturers who are having to pay more for healthcare every year for their employees and
- how do we use Lean to improve healthcare?
There have been a lot of summits at the White House lately, including a “Fiscal Responsibility Summit” (the same day a larger federal budget was proposed, go figure) and there is a Healthcare Summit being held today at the White House, as well (here is the official site for that).
Coincidentally, my Lean summit is in D.C…. just a mile or so from the White House. My ego isn’t big enough that I upset to be left off the Obama administration’s invite list… but I have to wonder and ask if ANYONE with a Lean perspective is there? Is there a SINGLE person in that room who knows about Lean and how it can help?
Summits are fine… but are we taking action and making progress? Will the actions we take actually lead to progress? And how do we measure progress?
The lead editorial in Wednesday’s USA Today (that makes it yesterday’s USA Today) talks about the summit and our federal budget.
The stark reality is that “the health care problem,” as it is known, is really two conflicting problems: lack of insurance coverage and exploding costs. Addressing the former but not the latter is a prescription for failure.
I don’t think it’s really part of our Lean scope to address challenge #1, unless we are able to reduce costs enough to use the same budget amounts to cover more people and provide more care. Controlling exploding costs is squarely in the Lean domain and that’s one aspect of what so many of us are working on in healthcare today.
The editorial also states:
“Obama’s plan would throw yet more money at health care….”
Where’s the fiscal responsibility in that?
Many of our political leaders still seem stuck in the mindset that the only ways to provide more care is to spend more money. They also believe that the only way to improve quality is to spend more money. And this money comes from where?
The good news is that Lean can help. It’s not a cure all, but it can help, if we get serious about spreading Lean and driving operational improvements in ALL of our hospitals.
When we hear politicians talk about reducing healthcare spending, they mean two one of two things:
- Reduce services
- Slash prices
Like it or not, the one way of controlling costs is to ration care, to deny care. This happens in the UK, where an organization (ironically called “NICE“) decides what treatments are not cost effective because you are too old.
A recent infrastructure to do this research in the U.S. was established in the recent “stimulus” package (pardon my quotation marks). It’s sounds good on the surface — conduct clinical research to determine what health care methods are most cost effective. Sounds good — until that research is used to deny care (except for the rich who can fly to India or the Caribbean with their doctors in tow). In the UK, the elderly could not get cataract surgery until they had already gone blind in one eye. To me, this is not “adding value,” this is rationing and the denial of care, although Democrats deny this will ever happen in the U.S.
The other method that Medicare and Medicaid are fond of (two organizations that pay 47% of our country’s health bills for seniors already) is cutting payments to physicians and hospitals. In the old auto industry, this was called “beating up on your suppliers and it didn’t lead to success for Ford, GM, or Chrysler. Just because you have economic power over your suppliers, you can arbitrarily say “I’m going to slash what I pay you by 5 or 10% each year. What else are you going to do?” The federal government does the same thing, by just slashing the price paid. This does not mean that costs are any lower, you’ve just bullied the supplier into a lower profit margin. What creativity does that take?
This is pervasive in other industries. When I worked for Dell, they would squeeze the supplier that warehoused and delivered parts “just-in-time” to the factories, paying them so little that suppliers kept going bankrupt or exiting the business, leaving Dell to scramble and quickly find a new supplier (one who was apparently naive enough to think Dell would learn it’s lesson or one arrogant enough to think they could succeed unlike the others).
Dr. Deming preached about the need for collaboration between customers and suppliers. You don’t beat up your suppliers, that’s short-term thinking. The long-term thinking was to partner up, working together to find TRUE cost improvement that could be shared by both parties. Toyota practiced this with their suppliers — look at their results. Look at the Big 3 and their supplier base? Whose approach seems better in hindsight?
Some would make the argument that by slashing prices, you’re “forcing” the supplier to find ways to get more efficient and to cut costs to maintain their profit margins. Is it playing out that way in health care? If prices are going to be cut, I’d rather see the federal government act more like Toyota and less like the Big Three (I’m sorry, “Big” Three or the “Detroit Three” as they’re now known).
Why can’t the government be a partnering customer and find ways to support Lean education for hospitals? Can hospitals that Lean is a way to truly cut costs — focusing on process and quality improvement instead of just laying off employees (another example of traditional business thinking).
Can get more industry partnerships (like the famous one in Pittsburgh) where manufacturers can lend their process improvement expertise to health providers to reduce costs AND prices in a Toyota/Deming style approach? The auto makers, for all of their business problems, even go out and help hospitals in the Detroit area and Toyota helps a hospital in Kentucky. We need more of that — manufacturers need to be a good customer and work together with their health suppliers. We don’t want the hospital getting “beaten up” even if they have doctors and an emergency room!
Another opportunity is to get hospitals, especially those that don’t compete with each other, to cooperate and share Lean methods with each other. This is no time to be selfish with your ideas and improvement success stories. A hospital in Alabama should be able to partner with a hospital in Alaska — using the phone and internet to work in a collaborative way. Each hospital shouldn’t have to re-invent Lean on their own.
We have to work together, in many ways, to cut the true costs of healthcare. Again, cutting costs is different than cutting prices. With Lean, hospitals are improving quality AND reducing costs. They’re doing so in a way that is better for the patients, better for the staff (by having a less stressful work environment) and is good for the hospital’s bottom line.
ThedaCare, a health system in Wisconsin, has estimated that they save more than $5,000,000 a year thanks to Lean. If we multiply that by 5,000 hospitals in the U.S., that comes to $25 billion dollars. That might be a drop in the bucket compared to the over $2 TRILLION (2 thousand billions) that we spend each year. But the potential might be greater than $5M per hospital. ThedaCare doesn’t claim to be perfectly Lean — they still waste in their processes that can be removed.
I hope our nation’s leaders can wake up and learn that there is a better way. Dr. Deming tried teaching us decades ago and Toyota has continually demonstrated how their approach results in better quality at a lower cost. Isn’t that what we want in our healthcare system instead of pushing an industry (or a country) to a point where it cannot be bailed out??
Thanks for reading! I’d love to hear your thoughts. Please scroll down to post a comment. Click here to be notified about posts via email. Learn more about Mark Graban’s speaking, writing, and consulting.