I had a bit of a new year’s resolution about being positive and not fretting about organizations that don’t “get it” when it comes to Lean. But, resolutions are meant to be broken, I guess.
It’s very frustrating when I hear people in healthcare complain that their hospital or health system has equated Lean with cost savings — only focusing on cost reduction or primarily focusing on it. Hospitals that say to their staff that Lean is just about cutting costs (or demonstrate that) will fail to engage their most important asset — their employees.
I visited one hospital recently where standardized metrics boards in the hallways of different departments had a sheet of paper that summarized their Lean efforts… it simply listed the number of improvements (projects or other ideas) and the cost savings. It was millions of dollars. So, good for them. What was missing was anything equating Lean to safety, quality, patient satisfaction, patient flow, or other meaningful measures.
One can argue that it’s an ineffective strategy to focus only on cost. By the way, that’s been a very traditional healthcare management focus and hospitals can do cost cutting without even bringing the word “Lean” into the discussion. Health systems have been cutting costs by laying off staff for the longest time. Lean is a great alternative to that cost cutting approach.
I’d also argue that it’s not Lean at all to focus only on cost cutting. A hospital’s leadership can choose to focus on cost cutting… just please don’t call it “Lean.”A hospital's leadership can choose to focus on cost cutting... just please don't call it #Lean. Click To Tweet
Lean comes from the Toyota Production System, whether we are practicing Lean in manufacturing, healthcare, or other industries. The core definitions of the Toyota Production System that come straight from Toyota emphasize that Lean is focused on improving flow and improving quality. Cost reduction is an end result, not a primary goal.
If an organization is only focused on cost… and they’re calling that Lean, it’s disrespectful to Toyota, for what that’s worth. It’s also disrespectful to their patients and to their staff, which is more important. Saying Lean is only about cost is a classic case of L.A.M.E. – Lean As Misguidedly Explained.
I wonder, “How do hospitals get the idea that Lean is primarily about cost cutting?”I wonder, 'How do hospitals get the idea that Lean is primarily about cost cutting?' Click To Tweet
There is a consultant out there who peddles Lean as a cost reduction strategy. There’s probably many of them. There are traditional healthcare “cost cutting” consultants who have latched onto the Lean buzzword, but they’re not really teaching Lean.
One hospital I visited recently is about two years into their “Lean journey.” That journey is off to a bumpy start because they’ve focused primarily on cost. They had a national consulting firm “helping” them with this. They’re now trying to adjust their strategy (at least that’s some high level PDSA at work).
It’s also possible that healthcare leaders have an existing bias toward cost cutting. When they learn about Lean, they are maybe only learning about tools… so they think about how to apply those tools to cost reduction. They’re probably doing so because they haven’t learned that Lean is also a philosophy and a managerial approach.
I can’t imagine anybody has gotten the impression from my blog or my book Lean Hospitals (2nd edition) that Lean is only about cost cutting.
In the second edition, the word “cost” appears on 89 pages.
The word “quality” appears on 115. “Safety” on 86.
It’s intentional that the word cost is not in the subtitle: “Improving Quality, Patient Safety, and Employee Engagement.”
Even if people haven’t bought and read my book, I make the first chapter available as a free PDF on my website. I wish we could get that PDF into the hands (or iPads) of every healthcare leader and manager in the world.
Relevant Excerpts from Lean Hospitals:
Dr. John Toussaint says, in the foreword:
“These [Lean] improvements all lead to better quality and lower cost–in other words, better value.”
In various parts of Chapter 1 (which you can read for yourself), it says:
“In today’s world, the “need” for Lean in healthcare is very clear in terms of quality and patient safety, cost, waiting times, and staff morale.”
“Lean is very different from traditional “cost-cutting” approaches that have been tried in multiple industries, including healthcare.”
“Lean is a tool set, a management system, and a philosophy that can change the way hospitals are organized and managed. Lean is a methodology that allows hospitals to improve the quality of care for patients by reducing errors and waiting times. Lean is an approach that can support employees and physicians, eliminating roadblocks and allowing them to focus on providing care. Lean is a system for strengthening hospital organizations for the long term–reducing costs and risks while also facilitating growth and expansion.”
“In 1945, Toyota set out to improve quality, while improving productivity and reducing costs…”
“Rather than reducing spending by slashing payments or rationing care, Lean methods enable us to reduce the actual cost of providing care, allowing us to provide more service and care for our communities. A hospital that saves tens of millions of dollars by using Lean methods to avoid costly expansion projects is a hospital that costs society less, while providing the same levels of care, if not more.”
Good Quality Costs Less
Hospitals do have many opportunities, however, to improve the quality of healthcare delivery methods and processes in a way that also reduces costs. Across all U.S. hospitals, there is a large cost-savings opportunity from preventing errors and improving quality. For example, preventable adverse events from medication errors are estimated to cost hospitals $4 billion per year.
David Fillingham, CEO of Royal Bolton Hospital NHS Foundation Trust in the United Kingdom, has said, quite simply, “Good quality costs less.” This was proven to be true as a result of Bolton’s Lean improvements; the hospital reduced trauma mortality by 36% and reduced a patient’s average length of stay by 33%. ThedaCare documented similar results in cardiac surgery; mortality fell from 4% to nearly zero (11 lives saved per year), with a length-of-stay reduction from 6.3 to 4.9 days, and 22% lower cost. It might sound too good to be true, but many hospitals are proving that you can simultaneously improve quality, access, and cost.
Lean teaches us to see quality improvement as a means to cost reductions, a better approach than focusing directly and solely on costs. Bill Douglas, chief financial officer at Riverside Medical Center (Kankakee, IL), summed it up as the hospital began its first Lean project by saying, “Lean is a quality initiative. It isn’t a cost-cutting initiative. But the end result is, if you improve quality your costs will go down. If you focus on patient quality and safety, you just can’t go wrong. If you do the right thing with regard to quality, the costs will take care of themselves.”
In another sense, Lean is proving to be an effective methodology for improving patient safety, quality, and cost, while preventing delays and improving employee satisfaction. It can be done. Lean is working; it is effective. Lean helps saves money for hospitals, while creating opportunities for growth and increased revenue. Lean methods can benefit everyone involved in hospitals. Understanding Lean principles is just a starting point. The real challenge is finding the leadership necessary to implement these strategies and to transform the way your hospital provides care.
- Quality improvements are a means to cost reductions.
- Productivity improvements and cost savings can be accomplished in ways other than layoffs or head count reductions.
- Lean is focused on patient safety, quality of care, and improved service, not just efficiency, cost, and productivity.
Why is the “Lean is about cost cutting” mindset fairly widespread? What can we, as a Lean community, do about this?
If you have stories to share about your own experiences, please post a comment (which can be anonymous) or contact me (anonymity assured).
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Coming Soon – The updated, expanded, and revised 3rd Edition of Mark Graban’s Shingo Research Award-Winning Book Lean Hospitals: Improving Quality, Patient Safety, and Employee Engagement. You can pre-order today, with shipping expected by June.