An MD/CEO In Indiana Believes in Lean


Doctor takes pulse of Lutheran Health | The Journal Gazette:

Here's an article about Dr. Mike Schatzlein, Chief executive officer for Lutheran Health Network and Dupont Hospital, in Indiana.

“Schatzlein believes “lean engineering” – like that employed by manufacturers to standardize processes – can help. Dupont Hospital has tripled the number of surgeries started on time in the past few months by standardizing certain pre-operation processes. That's improved efficiency and reduced the likelihood of error, he said.

Schatzlein calls process improvement the “holy grail” – the only way you can get something out of nothing. But he doesn't think any amount of process improvement will be enough to solve the overarching problem of containing cost while providing care to the nation's uninsured.

“We can't afford all the health care we want as a society,” Schatzlein said.”

He's right, Lean is not a cure-all for any health system (be it in the U.S., Canada, or the U.K., each system having its own ills). But Lean is indeed a method that can improve both quality AND efficiency. More and more hospitals are learning this and it's continually reinforced through my experiences in hospitals.

Dr. Schatzlein sounds like the kind of humble leader who would fit with the Lean management philosophy:

Open-ended brainstorming is one of Schatzlein's strengths, said Kirk Ray, CEO of St. Joseph Hospital, who considers Schatzlein a mentor. He's not the typical guy just looking to fix things right away, Ray said.

“I think Mike is a very good listener.” The advice he does give is usually followed up with a “What do I know?” The undercutting humor “tends to put you at ease,” Ray said.

I am skeptical, though, about the use of rewards and incentives, as that goes against the notion that quality and performance are the result of a system, as Dr. Deming taught.

Goals for improvement, such as patient safety, will be gauged against widely accepted measures, like those used by Medicare & Medicaid Services to compare hospitals. After everyone understands the organizational goals, employees will get feedback on how they are doing and will be rewarded accordingly, whether with an award, money or a promotion.

The problem with incentives like this is that you're creating an extrinsic motivation for something that should be an intrinsic motivation — providing safe care. Normal people (not the crazies who purposefully harm patients) don't want to hurt patients or co-workers.

Creating incentives creates too many opportunities for gaming the system or for outright luck to create “winners.” Systems might reward those who might not have been performing differently than peers in other departments, but they ended up with better results through what Dr. Deming called a “lottery” of life. Incentive systems encourage people to game the system and they create fear of what happens if you don't hit your target (loss of a reward) — robbing people of their intrinsic motivations.

I'm glad Schatzlein and his hospital are using Lean process improvement methods. The idealist in me would also want them to look at quality improvement methods that don't require rewards and incentives for doing the right thing.

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Mark Graban
Mark Graban is an internationally-recognized consultant, author, and professional speaker, and podcaster with experience in healthcare, manufacturing, and startups. Mark's new book is The Mistakes That Make Us: Cultivating a Culture of Learning and Innovation. He is also the author of Measures of Success: React Less, Lead Better, Improve More, the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, and the anthology Practicing Lean. Mark is also a Senior Advisor to the technology company KaiNexus.


  1. It’s a bad idea not to allow incentives Mark. You’re talking about an industry not a single company. After all, Toyota didn’t become lean out of altruism but to gain a competative advantage. Most healthcare is not provided in hosptials but in small clinics around the world and each of those clinics requires some incentitive to have high quality and efficiency. Nobody wants to hurt people nor do they want to have to work longer or harder for the same amount of money.

  2. “… clinics require some incentives to have high quality and efficiency.”


    Is so, that’s a sad state of affairs.

    “nor do they want to have to work longer or harder for the same amount of money.”

    Better quality and safety should come through improved processes — which means weren’t NOT working harder. The people I see working hard in healthcare, working overtime and excessive hours are the ones dealing with waste and poor processes.

    When Lean methods help fix that, we’re not working harder or longer.

    I don’t understand your comment about “you’re talking about an industry not a single company.”

    The incentives at hospitals DO come from a single organization (the hospital or health system).

    I believe Deming’s lessons about the dysfunction, gaming, and problems caused by individual incentives (when performance is primary system-based) hold true in any system, including healthcare.

    I would be more in favor of GROUP or TEAM or ORGANIZATION based incentives. Individual incentives are too dodgy. How do you trace patient safety or quality results to a single person?? That’s what concerns me, not necessarily incentives in general.

  3. Ian –

    I’m not asking you defend the whole “we just need the right incentives” crowd (which is most of the world)…

    But let me put out this hypothesis:

    Would a large enough incentive bonus lead to zero errors? If so, what is that number??

    We just have to pay people enough so they “care” enough?

    I’d like to see someone test that hypothesis.

    I don’t know much about hospitals, but I doubt, from the articles I’ve read, that errors are due to a lack of caring (or a lack of incentives).

    If incentives would work, let’s fire the hospital administrators for NOT doing this earlier. Shame on them.


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