Reader & Book Reviewer Question: The Business Case for Lean Healthcare?
Dr. Jaap van Ede, a Dutch journalist and researcher on business improvement methods (such as Lean, Six Sigma, TOC, QRM, and TPM), has posted a summary and review of my book Lean Hospitals. The review is titled “A well-balanced introduction to Lean in hospitals.” His summary can be viewed at left (click for a larger view) or visit his website for the entire review.
One piece of constructive criticism is that I didn’t lay out a clear business case for Lean, or at least directly so, in the book. Fair enough, and I’ll address that here in this blog post.
I appreciate the kind words, including:
What I liked in particular is the practical line of approach. There are many inspiring examples, but Graban explains that you should experiment – of course without jeopardizing the quality of the care – to find out what works in your ward, laboratory etcetera. Typical Lean objectives like zero waste and creating a One Piece Flow should only serve as a direction for improvement, and the application of tools like 5S should not be exaggerated. It should always be kept in mind that the primary goal is more value for the patient. Lean tools are useful if these solve problems and reduce waste, with interfere with patient care.
But, Lean thinkers tend to focus on the gap between an ideal product or service and the actual condition.
Dr. van Ede writes:
There were only two things I missed in this well-written book: The concept of creating clinical pathways for patients with similar symptoms, and making a business case for Lean.
I tried to make conditions between patient pathways and the Lean view of value streams. For introductory Lean efforts, the focus is usually on mapping the current state, looking for opportunities to improve. Creating new clinical pathways might be part of the future state creation… but I can see where my book probably does a better job looking at the current state than it does making any recommendations about better future states.
On the business case question, this is a difficult one to address in a book that is read in so many countries (and is being translated into eight different languages). The “business case” in healthcare so often depends on the payer system and the dynamics in a particular country. Are “cost savings” realized by the healthcare provider or the payer? Are there truly opportunities to increase revenues by increasing throughput and capacity if the country pays a fixed sum based on population numbers?
I do try to share a wide range of benefits and data in the book, including:
- Quality improvement (whether traceable back to resulting cost reductions or not)
- Patient safety improvement (again, maybe tied back to cost)
- Cost reduction
- Revenue increase / capacity increase
- Prevention / reduction of capital spending
- Improved flow / reduced length of stay
The article shares this data:
[CEO Dr. Patricia] Gabow estimates that utilizing lean has yielded up to $127 million in financial benefit without the organization having to lay off any of its 5,400 employees.
While the articles, including this one, usually cite quality and patient care improvements, it’s the cost savings that gets the headlines. Healthcare is far too expensive in the United States, so that’s understandable. The cost of care is increasing more quickly in the other first world countries more quickly than they would like (and often rising to a point that seems unaffordable).
But I’d encourage the business case to take a more balanced view, such as the Lean / Toyota mantra of SQDCM:
- Delivery (meaning waiting time or access to care)
The general public knows costs are too high. What’s less widely known is that quality, safety, and access can be dramatically improved through Lean… and improving staff morale (by engaging them in improvement) is often the path for getting there.
How does your organization make or measure the business case for Lean? Is it all about dollars (or your currency) or is it a balanced group of measures?