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.

‘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.

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

Subscribe via RSS | Lean Blog Main Page | Podcast | Twitter @MarkGraban

Please check out my main blog page at

The RSS feed content you are reading is copyrighted by the author, Mark Graban.

, , , on the author's copyright.

What do you think? Please scroll down (or click) to post a comment. Or please share the post with your thoughts on LinkedIn – and follow me or connect with me there.

Did you like this post? Make sure you don't miss a post or podcast — Subscribe to get notified about posts via email daily or weekly.

Check out my latest book, The Mistakes That Make Us: Cultivating a Culture of Learning and Innovation:

Get New Posts Sent To You

Select list(s):
Previous articleA “Lean Gamble” for This Company???
Next article5S Will Help You Fight Monsters?
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. 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. 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. 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.


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.